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CBDT Notifies Conditions for Compulsory filing of Income Tax Return

CBDT Notifies Conditions for Compulsory filing of Income Tax Return

Filing of Income Tax Return – Section 139(1) of the Income Tax Act, 1961 prescribes the categories of the person who is required to file their return on or before the due date of filing return. Such a person includes:

  • 1. A company or a firm
  • 2. Any person other than a company or firm, if his total income during the previous year exceeds the maximum amount chargeable to the Income Tax.

In addition to the above, the following persons are also required to file income tax returns compulsorily as per clauses (i) to (iv) of the seventh proviso to section 139(1):

ClauseCompulsory filers category
Clause (i)The person depositing Rs. 1 crore or more in one or more current accounts with a bank or co-operative bank
Clause (ii)The person who has incurred expenditure on foreign travel for self or any other person exceeding Rs. 2 Lakhs
Clause (iii)The person who has incurred expenditure exceeding Rs. 1 Lakh towards electricity consumption
Clause (iv)The person who fulfills such other conditions as may be prescribed

The CBDT issued Notification No. 37/2022 dated 21st April 2022 by which a new Rule 12AB has been inserted referring to clause (iv) as above by which following persons have also been notified who shall be required to file their income tax return compulsorily:

RuleConditions for compulsory filing of ITR
12AB(i)If the total sales, turnover or gross receipts in the business exceeds Rs. 60 Lakhs during the previous year
12AB (ii)If the gross receipts from profession exceed Rs. 10 Lakhs during the previous year
12AB (iii)If the aggregate of TDS/TCS during the previous year is Rs. 25,000 or more (Rs. 50,000 or more in the case of senior citizens),
12AB (iv)If the deposits in one or more saving accounts in the aggregate are Rs. 50 Lakhs or more during the previous year.

If you fall under any of these categories, you should prepare all the necessary documents and file your ITR on or before the due date of filing the return i.e. 31st July.

Chartered Accountant in Pimpri Chinchwad

Can an exemption granted to buildings used principally for religious or educational purposes be extended to residential accommodation for nuns and hostels for students?

This issue was answered by the Hon’ble Supreme Court in the case of the GOVERNMENT OF KERALA & ANR. VS MOTHER SUPERIOR ADORATION CONVENT –  2021-VIL-43-SC by holding that residential accommodation for nuns and hostels for students would be eligible for exemption when Section 3(1)(b) of the Kerala Building Tax Act, 1975 exempted buildings that are used principally for religious, charitable or educational purposes or as factories or workshops from building tax under the Act.

It was held that first and foremost, the subject matter is “buildings” which as defined, would include a house or other structure. Secondly, the exemption is based upon user and not ownership. Third, what is important is the expression “principally”, showing thereby that the legislature decided to grant this exemption to buildings that are “principally” and not exclusively used for the purposes mentioned therein. The dominant object, therefore, is the test to be applied to see whether such a building is or is not exempt. Fourthly, religious, charitable, or educational purposes are earmarked by the legislature as qualifying for the exemption as they do not pertain to the business or commercial activity. Fifthly, what is important is that even factories or workshops which produce goods and provide services are also exempt, despite profit motive, as the legislature obviously wishes to boost production in factories and services in workshops. What is important to note is that the expression “used principally for” is wider than the expression “as” which precedes the words “factories or workshops”.

A reading of the provision would show that the object for exempting buildings that are used principally for religious, charitable, or educational purposes would be for core religious, charitable, or educational activity, as well as purposes directly connected with religious activity. 

It is obvious that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect. We must first ask ourselves what is the object sought to be achieved by the provision and construe the statute in accord with such an object. And on the assumption that any ambiguity arises in such construction, such ambiguity must be in favor of that which is exempted.

Chartered Accountant in Pimpri Chinchwad

Zero Tax on Salary of Rs. 10,00,000? Is it possible?

Zero Tax on Salary of Rs. 10,00,000? Is it possible?

Yes, even if your salary is up to Rs. 10,50,000, you will not be required to pay the taxes after reading this article.

1. Standard Deduction

⦁ Assumption – Salary Considered – Rs. 10,50,000. If even if it is less, you can still save the taxes to zero and yes, you heard it right – Legally, without having the sleepless nights of getting notices from the Income Tax Department.

⦁ the government provides the Standard Deduction of Rs. 50,000. So your taxable salary is Rs. 10,50,000 – 50,000 = Rs. 10,00,000.

2. Deduction under Section 80C. Confused about what comes under 80C – Read Below –

⦁ PPF, EPF, LIC premium, Equity-linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for the purchase of property, Sukanya Samriddhi Yojana (SSY), National saving certificate (NSC), Senior citizen savings scheme (SCSS), ULIP, tax saving FD for 5 years, Infrastructure bonds, etc.

⦁ The maximum deduction which can be claimed here is Rs. 1,50,000. Hence, considering you invest Rs. 1,50,000, your taxable salary becomes – Rs. 10,00,000 – Rs. 1,50,000 = Rs. 8,50,000 (taxable salary).

3. Deduction under Section 80CCD (1b) – National Pension Scheme –

⦁ You can claim a deduction of Rs. 50,000 by investing under NPS. Yes, it has restrictions for the withdrawal, but this will help you in building a retirement corpus.

⦁ The taxable salary after investing here will become – Rs. 8,50,000 – Rs. 50,000 = Rs. 8,00,000.

4. Deduction Under Section 80D – Medical Insurance –

⦁ Indians, yes you heard it right we Indians have started giving importance to Insurance policies and yes now we don’t ask ” Wapas Kitna Milega Kuch Nahi Hua To” – With this change in mindset and living in a pollutive environment we require medical insurance. “Sone pe Suhaga” is it will even save your taxes.

  • ⦁ For self, spouse & children – There is a cap of Rs. 25,000 or 50,000 (in case of senior citizen)
  • ⦁ For Parents – There is a cap of Rs. 25,000 or 50,000 (in case of senior citizen)
  • ⦁ Even body checkups are allowed and a deduction up to Rs. 5,000 can be claimed. But the upper limit is mentioned above.
  • ⦁ If your parents are senior citizens, and they don’t have medical insurance and they aren’t filing their Income Tax Return and if you paid for their medical treatment, you can claim up to Rs. 50,000.
  • ⦁ Hence, after section 80D, the taxable salary shall become – Rs. 8,00,000 – Rs. 25,000 = Rs. 7,75,000.

5. Interest on Housing Loan – Section 24b of Income Tax Act –

⦁ We Indians grow up hearing “Apna Ghar Apna Hi Hota Hai” and our minds start thinking about it as soon as we start family planning.

⦁ Interest on housing loans is allowed till Rs. 2,00,000 every financial year. Hence, your taxable salary becomes – Rs. 7,75,000 – Rs. 2,00,000 = Rs. 5,75,000.

6. Interest on Education Loan / Purchase of Electric Vehicle / Donation Under Section 80G —

⦁ Education has become very costly and middle-class parent cannot afford to pay from their pocket, hence education loan is taken by the number of students. The interest component of the loan is deductible under section 80E.

⦁ The world is shifting from Petrol/ Diesel to EVs and yes, you can even claim a deduction of up to Rs. 1,50,000 on interest paid for the purchase of EVs. The deduction is available u/s 80EEB. (Vehicle should be financed, notional interest cannot be claimed).

⦁ If none of the above is applicable, then donations are also allowed as deductions. Provided you are donating to charitable trust or NGOs which has got the certificate from Income Tax.

⦁ Now the overall objective is to reduce the taxable income from Rs. 5,75,000 to Rs. 5,00,000. Considering Rs. 75,000 deductions are claimed by using the above section. Then you need to pay zero taxes. Confused? Happy? How How? Let us see –

⦁ Now the Taxable salary is Rs. 5,00,000. The tax on income up to Rs. 2,50,000 is exempt from tax. Thus the tax payable would be Rs. 12,500 (5% slab from Rs. 2,50,000 to Rs. 5,00,000. Hence 5% of Rs. 2,50,000 is Rs. 12,500).

7. Rebate under section 87A –

⦁ If your income is Rs. 5,00,000 or lesser, you can claim a rebate under section 87A for a maximum of Rs. 12,500. Hurrah the tax payable is Rs. 12,500 (tax calculated above) – Rs. 12,500 (rebate u/s 87A) = 0 (Zero).

“Start Planning, you can thank us later “

⦁ Upcoming article – How to pay zero taxes on Rs. 20,00,000 salary. Stay tuned.