Income Tax Slabs: Do you need to file ITR if your annual income is below Rs 5 lakh
Income Tax Slabs: In both the income tax options, an individual's basic income tax slab is Rs 2.5 lakh per annum.
While presenting the Union Budget 2020, Finance Minister Nirmala Sitharaman gave an earning individual two options when filing their income tax return (ITR). The first option allows you to forfeit all tax exemption benefits and get zero income tax slab on your annual income up to Rs 5 lakh or else one can remain in the old income tax slab and avail income tax exemptions under various sections on your investments.
Though, in an old regime, one would get zero income tax on income up to Rs 2.5 lakh only. So, it is a bit confusing whether an income taxpayer has to file income tax when his or her annual income is less than Rs 5 lakh. As per the tax and investment experts, if an earning individual has a yearly salary above the basic income tax slab means Rs 2.5 lakh per annum. One needs to file an income tax return to claim the income tax benefit given by the government in either of the income tax regimes.
Jitendra Solanki, a SEBI registered tax and investment expert speaking on the matter said, "If an earning individual's annual income is more than basic income tax slab of Rs 2.5 lakh per annum, then one must file the income tax return to claim the income tax benefit on income from Rs 2.5 lakh to Rs 5 lakh in both the income tax regime." Though, Solanki sustained that if an individual's income is less than Rs 2.5 lakh per annum, they can skip the ITR filing.
CS Sudheer, CEO & Founder at IndianMoney.com, said, "If your income is up to Rs 5 Lakhs you pay zero tax (in both income tax regime), but you must still file ITR to claim the income tax exemption from Rs 2.5 lakh to Rs 5 lakh). The income tax exemption is Rs 2.5 Lakhs a year for citizens below 60 years and Rs 3 Lakhs a year for senior citizens between 60 to 80 years. If you are earning anything above these limits, it's compulsory to file ITR. One can claim a rebate on tax payable if the taxable income is up to Rs 5 Lakhs under Section 87A (in old income tax regime)."
Sudheer, commenting upon the earning individual opting for the old income tax regime said, "If your income is up to Rs 5 Lakhs and you don't file ITR, you will get a tax notice. Filing ITR is mandatory if your income is more than the basic exemption limit (Rs 2.5 Lakh a year) for citizens below 60. You must declare total gross income by filing ITR. You then claim tax exemption and tax deduction like HRA, standard deduction, Chapter V1A (Section 80C to U), home loan interest, and so on. After claiming all deductions under income tax laws from total gross income, if net taxable income doesn't exceed Rs 5 Lakh, you get a rebate under Section 87A."
Manikaran Singhal, SEBI registered tax and investment expert cleared the confusion on both income tax regime, "In both income tax options, any earning individual's basic income tax slab is Rs 2.5 lakh per annum. To avail the income tax exemption on income from Rs 2.5 lakh to Rs 5 lakh in a particular financial year in either of the income tax slabs, an income taxpayer will have to file one's income tax."