ITR Must If Aggregate Of Total Taxable Income Before Deduction Exceeds Exemption Limit - Tax Queries

I am a 30-year-old self-employed professional resident taxpayer. My taxable income is Rs. 4 lakh after availing myself of various deductions and exemptions.  This does not include any capital gains. Please let me know whether I am required to file my income tax return (ITR)?

An individual taxpayer has to file his/her income tax return (ITR) if the aggregate of his/her taxable income from all sources before various deductions under Chapter VIA exceeds the exemption limit applicable to him/her based on his/her age. 

For an individual below 60 years, the basic exemption limit is Rs. 2.50 lakh, whereas for those between 60 and 80 years, and those over 80 years, it is Rs 3 lakh and Rs 5 lakh, respectively, up to which he/she does not have to pay any income tax.  

A resident individual taxpayer is eligible to claim a rebate of up to Rs. 12,500 against his/her tax liability under Section 87A, provided his/her net taxable income after all the deductions etc. does not exceed Rs. 5 lakh. Since your income does not exceed this threshold limit of Rs. 5 lakh, you are entitled to rebate under Section 87A against your full tax liability of Rs. 7,500, and you do not have to pay any tax. However, you are still required to file your ITR as aggregate of all your taxable income from all the sources exceed Rs. 2.50 lakh, the threshold limit applicable to you.

The liability to pay tax and liability to file your ITR are two different things, and one may have to file his ITR even if he/she does not have any tax liability.

My tax has been deducted under the old regime of income tax by my employer. But now I notice that if I opt for the new regime while filing my ITR, I will save a lot of money, as I have no savings at all. Kindly let me know if I can opt for the new regime while filing my ITR?

The employer is required to deduct the required tax while paying the salary to an employee. An individual taxpayer has options under two different tax regimes to choose from. Under the new tax regime, the tax rates are lower as compared to under the old tax regime, but one has to forgo various tax benefits, such as house rent allowance (HRA), leave travel allowance (LTA), Standard Deduction, and deductions under sections 80C, 80CCD, 80D, 80TTA of the Income Tax Act, 1961.

Since the tax required to be deducted would depend on which tax regime the employee wishes to have, the employer has to ask the employee to request to intimate his/her preferred tax regime, and the employer will deduct the tax accordingly. The choice conveyed to the employer is limited to the quantum of tax which the employer has to deduct. The actual exercise of choice between these two tax regimes has to be done while filing the ITR by the due date in case you do not have any business income. 

So, though you had opted for the old tax regime with your employer, the choice was not final, and it is not binding on you, and you can exercise this choice while filing your ITR. So, though the tax has been deducted under the old tax regime, you can still file your ITR under the new tax regime, provided you do it by the due date of filing the ITR, because once the due date is over, you will have to file your ITR only under the old tax regime.

The author is a tax and investment expert

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