Salaried employees are those who receive a fixed amount of compensation from their employer regardless of the working hours.
An individual below 60 years of age is required to file his income tax return if gross total income for the financial year 2023-24 (assessment year 2024-25) exceeds 2.5 lakh.
The last date to file income tax return for the financial year 2023-24 (assessment year 2024-25) is 31st July, 2024.
If your accounts are required to be audited by a chartered accountant in practice, then the last date to file your income tax return for the financial year 2023-24 (assessment year 2024-25) would be 31st October 2024.
The due date for salaried individuals to file income tax return for the financial year 2022-23 (assessment year 2023-24) was 31st July 2023. However, you can still file your income tax return on or before 31st December 2023 by paying late fee for delay in filing income tax return before 31st July 2023.
There can be cases where your employer is either deducting full tax from your salary for the whole year or they don’t. An employee might assume that they are not required to file an income tax return because their employer has completely deducted tax from their salary income and deposited it with the government. If you are one of them, then your assumption is wrong.
As per our current tax laws, an individual is required to file income tax return with the department if gross total income for the financial year exceeds the basic exemption limit. We also have few cases where you are required to file an income tax return irrespective of your income.
Basic exemption limit for financial year 2022-23 (AY 2023-24)
For the financial year 2022-23 (assessment year 2023-24), an individual who is below 60 years of age is required to file his/her income tax return if the gross total income exceeds Rs 2.5 lakhs. This basic exemption limit is the same irrespective of the tax regime you have selected to pay taxes for the financial year 2022-23 (AY 2023-24).
An individual who is aged 60 years or above during the financial year is referred to as a senior citizen.
In case of a senior citizen, the basic exemption limit is Rs 3 lakhs if old regimes have been selected to pay taxes. If you have selected a new tax regime to pay taxes, then the basic exemption limit is Rs 2.5 lakhs.
For super senior citizens (aged 80 years and above), under the old tax regime the basic exemption limit is 5,00,000 INR and Rs 2.5 lakhs in the new tax regime.
Basic exemption limit for the financial year 2023-24 (AY 2024-25)
Basic exemption limit depends on the tax regime you have selected to pay income tax for the financial year 2023-24 (AY 2024-25).
Income tax slab has been revised for an individual taxpayer in the new tax regime applicable to the financial year 2023-24 (assessment year 2024-25).
As per this change, the basic exemption limit for an individual irrespective of age is 3 lakhs if he/she has opted to pay taxes as per the new tax regime. Which means, a new income tax slab will be applicable under the new tax regime for the income earned between 01/04/2023 to 31/03/2024.
Basic exemption limits for the old tax regime are unchanged for the financial year 2023-24 (AY 2024-25).
What is gross total income?
Gross total income includes all your income for the financial year such as salary, income from house property, profit and gains from business or profession, capital gains and all other taxable incomes.
Interest from saving bank account, dividend, interest from fixed deposit and profit from share trading are also included in gross total income.
In order to calculate gross total income, you are required to classify your income under the following five different heads and then add them together to arrive at gross total income.
- Salaries
- Income from house property
- Profits and gains from business or profession
- Capital gain
- Other sources
You are required to calculate income under each head after claiming deduction if any to arrive at net income taxable under the above heads.
For instance, in order to calculate income under the head salaries, you are allowed to deduct eligible exemptions such as house rent allowance as applicable and standard deduction under section 16.
Importance of gross total income for income tax return filing
You must have noticed that we have said an individual is required to file his/her income tax return when gross total income for the financial year exceeds the basic exemption limit. Then we have said what is the basic exemption limit based on tax regime and age.
Therefore, if the gross total income exceeds the limit of 2.5 or 3 or 5 lakhs, as discussed above based on age and tax regime, then you are required to file income tax return with the department for the financial year.
Suppose, you don’t have any income other than salary for the financial year 2023-24 (AY 2024-25). If as a salaried individual, your gross total income after claiming HRA, LTA and standard deduction does not exceed 2.5 lakhs for the financial year, then you are not required to file income tax return. If you have selected to pay taxes under the new tax regime for the financial year 2023-24 (AY 2024-25), then the limit is 3 lakhs.
Assume for a moment that you have also earned Rs 40,000 interest from saving accounts and fixed deposits with banks during the financial year 2023-24 (AY 2024-25) in addition to a salary income of 2.5 Lakhs. In this case, if you have chosen the old regime, then you will be required to file your income tax return (ITR) mandatorily as gross total income (salary + interest from savings and fixed deposit accounts) exceeds 2.5 lakhs. In this case gross total income is 2.9 lakhs. If you choose to pay tax under the new regime under section 115BAC, then you are not required to file income tax return (ITR) for the financial year 2023-24 (AY 2024-25) as in this case the basic exemption limit is 3 lakhs.
Interest from saving bank accounts and fixed deposits are chargeable to tax under the head income from other sources.
Please note, your employer knows how much salary you have earned during the financial year. They don’t know how much interest and dividend you have earned unless you have disclosed it to them. It’s your responsibility to calculate tax at the end of the financial year before filing your tax return. If any tax to be paid for the excess income not disclosed to your employer, then it must be paid before filing income tax return. You may require to pay interest based on tax not paid and your date of filing.
Cases where you must file your income tax return?
Income tax return filing will be mandatory in following cases irrespective of the gross total income.
- When you have spent Rs 2 lakhs or more in a financial year for travel to a foreign country;
- Deposited amount for the financial year exceeds 1 Crore INR in current account maintained with a bank;
- Electricity bill exceeds 1 lakh INR;
- Income from foreign countries;
- Holding assets in foreign countries;
- Deposited 50 lakhs or more in a financial year in a saving bank account;
- TDS or TCS exceeds Rs 25,000 or more in a financial year;
- Claiming tax refund.
If you are still confused or don’t know what to do, then better consult a tax professional before filing your income tax return. Let us know if you like our article “When should a salaried employee file an income tax return in India?”.
