You Must File ITR If Income Before Deductions Exceeds Exemption Limit

You can still file your ITR for financial year 2022-23 by December 31, 2023 by paying penalty. You are liable to pay income tax on your salary even if the receipt of income is delayed. You can claim deduction on education loan taken for higher studies if the same has been borrowed from an approved lending institution

Balwant Jain

Updated on: 4 November 2023 8:57 am

Income Tax Return, deductions

I am working as a software developer in a private company. My company deducts tax at source (TDS) from my salary. I have taken a loan for one of my relative who deposits the EMI amount every month into my account which then gets debited from my account immediately. I have not yet filed my income tax return (ITR) though my salary is slightly above the minimum slab, because due to the rebate under Section 87A of the Income-tax Act, 1961, no tax is deducted from my salary. I wanted to know whether the amount deposited in my account for repaying the equated monthly instalment (EMI) on the loan is taxable and whether I should file my IT return or should I ignore it.

The loan, taken by you for your relative, which is being repaid by him through credit to your bank account is to be treated as repayment of the loan taken by your relative from you and is not taxable in your hands. Though you are not required to pay any tax on your salary income due to rebate available under Section 87A, you are still liable to file your ITR as per the provisions of the income tax laws which requires you to file your ITR if your income before various deductions exceeds the basic exemption limit.

Do note that the requirement to file an ITR is not dependent on your liability to pay tax. So you have to file your ITR even if there is no tax liability. You can still file the ITR for financial year 2022-2023 by December 31, 2023. Since your income does not exceed Rs 5 lakh, you will have to pay a late fee of Rs. 1,000 for having failed to file your ITR by the due date i.e., July 31, 2023.

My salary was stopped from August 2022 to March 2023 and was paid in full in April 2023. What will be the tax treatment? In which financial year will it be counted?

Under the provisions of income tax laws, salary becomes taxable upon its receipt or it becoming due even if not received during the year. Though disbursement of your salary has been postponed, but the same had accrued to you. Therefore, you are liable to pay tax on it, though the employer is required to deduct tax at the time of payment, and the liability to pay tax as an employee and the liability to deduct tax at source from salary paid to employee are at variance and is creating a problem for you (the employee).

Your salary will become taxable during the financial year 2022-2023. Since the same has been paid in April 2023 and tax has also been deducted on it, you can claim credit for the tax so deducted.

I took a loan of Rs. 5 lakh from my father for doing my masters in finance. I am repaying the loan in instalments along with the interest to my father. Will I be able to avail any tax benefit on the repayment as well as interest?

Under Section 80E of the Income-tax Act, 1961, a deduction of only interest paid in respect of loan taken for higher studies is allowed subject to certain conditions. One of the primary condition to be satisfied for this is that the loan should have been taken from approved financial institutions or approved charitable institutions. Therefore, the interest being paid by you to your father on the loan taken for your higher studies does not qualify for deduction.

There is no provision for deduction for repayment of education like the one which is available for repayment of home loan.

The author is a tax and investment expert

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