Filing an ITR becomes mandatory for certain small taxpayers, even if their income is below the taxable limit. As per clause four of the seventh provision of Section 139(1) of the Income Tax Act, filing is mandatory under the following conditions:
- Expenditure over Rs 2 lakh in foreign currency
- Payment of electricity bills exceeding ₹1 lakh is also a condition to consider for mandatory filing, as indicated in the ITR form's relevant columns.
For Proprietorships
Individuals running a proprietorship business must file ITR if they meet any of the following conditions in the previous financial year:
- If his sales turnover or gross receipts in business Rs 60 lakh during the previous year.
- If sales turnover or gross receipts in the profession exceed Rs 10 lakh during the previous year.
- If aggregate TDS or TCS during the previous year is Rs 25,000 or more.
- Savings bank account deposits in aggregate is Rs 50 lakh or more.
Bank accounts serve as the primary source for verifying turnover and deposits. This includes cash deposits, contra entries, and UPI payments, which must be carefully tracked to distinguish income from non-income deposits
Conclusion
Understanding when and how to file your Income Tax Return is essential - whether you're a small taxpayer, a proprietor, or a learner in the field of taxation as it help you to avoid penalties and stay on the right side of the law.
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