You are here: Home » Economy & Policy » News
Business Standard

Govt seeks to grow tax base, makes filing must for TDS/TCS above Rs 25,000

In the case of senior citizens, the aggregate of Rs 50,000 apply; rule came into force on April 21

TDS | tax returns | CBDT

Shrimi Choudhary  |  New Delhi 

Tax experts say this will ensure people who have the ability to incur large expenses do not escape paying taxes

Seeking to expand the taxpayer base, the government has widened the scope for filing returns even if a person’s income is below the taxable limit.

The new rules cover those whose aggregate tax deducted at source (TDS) or tax collected at source (TCS) during a fiscal year is Rs 25,000 or more. In the case of senior citizens, the aggregate of Rs 50,000 will apply.

The new amendment, which came into force on April 21, has been introduced to detect discrepancies between the expenses and incomes of people who do not have to file tax returns, according to government sources.

The move will ensure better governance, they said.

Further, those who deposit Rs 50 lakh or more in a savings bank account in a fiscal year are covered under the new regime. Businesses whose turnover exceeds Rs 60 lakh and professional receipts are more than Rs 10 lakh are supposed to file returns.

This implies small businesses and professionals (such as local kirana/grocery stores and local artists) have to file returns if they meet the above thresholds.

In order to make compulsory for such persons, the Central Board of Direct (CBDT) has introduced the seventh provision to Section 139 (1) of the I-T Act.

These rules may be called the Income-Tax (Ninth Amendment) Rules, 2022. They will come into force on the date of their publication in the official gazette, the notification said. Tax experts say this will ensure people who have the ability to incur large expenses do not escape paying .

“These amendments have widened the list for mandatory return filing as it added four additional conditions. Prescribing low thresholds, especially for the TDS/TCS credit, would cover a larger taxpayer base, facilitating the detection of mischief,” said Sandeep Jhunjhunwala, partner, Nangia Andersen LLP.

Broadening the tax base

ITR filing mandatory if:

  • Person having turnover/receipts of more than Rs 60 lakh from business
  • Aggregate of TDS/TCS exceeds Rs 25,000; Rs 50,000 for senior citizens
  • Person having receipts of over Rs 10 lakh from profession
  • Aggregate deposit in savings account exceeds Rs 50 lakh

According to Jhunjhunwala, making tax filing mandatory for those with professional receipts exceeding Rs 10 lakh would add to their filing compliance because such taxpayers (carrying out business) might be maintaining books of accounts prescribed under Section 44AA of the IT Act, he said.

In 2019, the government had broadened the tax-filing criteria on similar lines -- for those depositing Rs 1 crore and more in the current account; spending Rs 2 lakh or more on foreign travel; paying electricity bills of Rs 1 lakh and more; claiming tax exemption on investment in houses, etc.

“It appears the rule has been introduced to strengthen compliance and ensure that the persons meeting the above thresholds file returns, irrespective of their income,” said Mitesh Jain, partner, Economic Laws Practice.

The latest official data suggests India had 82.2 million taxpayers, including individuals and companies, until 2019-20. According to current income tax laws, filing is mandatory only for individuals if their income/expenditure/investment meets certain defined criteria.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, April 22 2022. 21:14 IST