The Finance Minister Nirmala Sitharaman while presenting the Union Budget 2020 gave an earning individual two options while filing their income tax return (ITR). Either you forfight all tax exemption benefits and get zero income tax slab on your annual income up to rs 5 lakh or remain in the old income tax slab and avail income tax exemptions under various sections on your investments. However, in old regime, one would get zero income tax on income up to Rs 2.5 lakh only. So, it has become bit confusing as to whether an income taxpayer needs to file income tax when his or her annual income is less than Rs 5 lakh. According to the tax and investment experts, if an earning individual has an annual income above the basic income tax slab means Rs 2.5 lakh per annum, then one will have to file an income tax return to claim the income tax benefit given by the government in either of the income tax regimes.
speaking on the matter Jitendra Solanki, a SEBI registered tax and investment expert 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 lak to Rs 5 lakh in both the income tax regime.” However, Solanki maintained that if an earning individual’s income is less than Rs 2.5 lakh per annum, then one may 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).”
Commenting upon the earning individual opting for the old income tax regime Sudheer 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 gross total 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 gross total income, if net taxable income doesn’t exceed Rs 5 Lakh, you get a rebate under Section 87A.”
Clearing the confusion on both income tax regime Manikaran Singhal, SEBI registered tax and investment expert said, “In both income tax options, an 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.”