ITR 2020: Not filed Income Tax Return yet? Here are the consequences you may face
Filing of ITR is necessary for carrying forward any losses sustained during the year for set-off in subsequent years
Individual taxpayers are required to file tax returns compulsorily, before the due date, if their gross total income of the financial year, as computed per the provisions of the law, surpasses the basic exemption limit. There are certain categories of individual taxpayers for whom furnishing of ITR is mandatory, irrespective of whether their income exceeds the exemption limit:
Non-residents and foreign asset holders
Non-resident individuals are taxable in India on income, which is either received or has accrued/ arisen in India. Thus, an individual non-resident, having India-sourced income, exceeding the basic exemption limit (`2.5 lakh, irrespective of age) is required to file the ITR. Additionally, a resident individual, holding any asset outside India, either in an individual capacity or in his capacity as a beneficial owner, is required to file ITR even if his total income is below the basic exemption limit.
Interestingly, filing of ITR is necessary for carrying forward any losses sustained during the year for set-off in subsequent years. Likewise, an individual whose income has suffered deduction of tax at source (TDS), but his final tax liability is below taxable limit must file the return of income to claim a refund of TDS.
Implications of Form 26AS
Income Tax department accords the taxpayers a statement in Form 26AS containing details of various taxes deducted from the income of taxpayers. The CBDT has recently revamped the form to include additional details right from taxpayers’ high-value transactions to information about pending/completed proceedings. Every taxpayer must download their Form 26AS from the income tax portal and check the receipts appearing in the Form 26AS. If income reflected in Form 26AS is more than the basic exemption limit, one must file a tax return to avoid scrutiny assessment.
With effect from AY 2020-21, taxpayers have been allowed to opt for an alternative/simpler tax regime, which offers six slabs with low tax rates to taxpayers, if they forego a set of 70 exemptions and deductions available under income tax laws (including LTC, HRA, standard deduction, deduction under chapter VI-A, etc.).
Under this new regime, the basic exemption limit for all individuals will be `2.5 lakh, regardless of their age. Consequently, filing of ITR shall be mandatory for all individuals opting to pay taxes under the new regime and having gross total income exceeding `2.5 lakh.
Consequences of non-filing of ITR
While filing ITR has its benefits, non-filing of the same can lead to penalty and prosecution. Accordingly, a person must check whether or not they are liable to file ITR.
Source: Financial Express