Can you file an income tax return without last year’s return?

Last Updated at: March 14, 2020
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Can you file taxes without last year's income tax return

In this post, we address a common question – can you or should you file an income tax return when you haven’t filed any in the previous years? The simple answer is yes if you meet all eligibility conditions of tax filing. We also cover a scenario where despite being eligible, you missed filing last year’s income tax return, and mention why you should consider filing a nil return.

  1. Understanding the tax system – what is a previous year’s return?

The income tax system in India and most other countries is based on an April to March assessment. This assessment of the previous year (that is 1 April 2019 to 31 March 2020) is filed in the current financial year of 2020-21. The deadline generally for an individual’s income tax filing is 31st July, while for those who need to get their accounts audited is 30th September.

  1. Is it compulsory to file an income tax return?

Yes, based on the financial year 2019-20, if your gross total income (excluding deductions) exceeds the basic exemption limit of Rs. 2.5 lacs worth of income, above which tax is charged, you need to file ITR. While income till Rs. 5 lacs per annum becomes tax-free, a return would still need to be filed if the income is between Rs. 2 – 5 lacs. Thus, even if you did not have any income in the last year, and hence did not file a return, you would mandatorily have to file a return this year if these conditions are met.

  1. Could a return be compulsory even if I did not file last year’s return and have no receipts?

Yes, based on the Budget announced recently in February 2020, even if you had no receipts, and therefore did not file a return, in this current year if you’re meeting the following conditions –

  1. Payment of an electricity bill exceeding Rs. 1 lacs a year, or
  2. Incurring an expenditure exceeding Rs. 2 lac rupees on a foreign holiday, or
  3. Withdrawing more than 1 crore from one’s bank account.

File your income tax now

  1. What if you realize you missed filing a previous year’s return?

In case you’ve missed filing your tax return for the financial year 2019-20 on time, you could still do that by 31st March 2020, albeit with a penalty between ₹ 5000-10,000, based on the date of filing the belated return.

  1. Filing a nil return, here’s why you should

In case you did not incur any income beyond the taxable threshold, you could still file a ‘nil return’. This is a declaration from you to the tax department stating that your income does not fall in the taxable bracket. Moreover, in case your bank or any other organization has deducted tax (commonly called TDS), the same can be claimed as a refund by filling the nil return. It can also serve as proof of income while applying for welfare schemes, scholarships, and loans.

We are presenting a comparison of the pre and post-budget 2020 tax rates in the table below:

Taxable Income Range (In Rs.)

Tax Rate prior to Budget 2020 (Existing)

Tax Rate Post Budget 2020

0-2.5 lakh Exempted Exempted
2.5-5 lakh 5% 5%
5-7.5 lakh 20% 10%
7.5-10 lakh 20% 15%
10-12.5 lakh 30% 20%
12.5-15 lakh 30% 25%
Above 15 lakh 30% 30%

 

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Can you file an income tax return without last year’s return?

320

In this post, we address a common question – can you or should you file an income tax return when you haven’t filed any in the previous years? The simple answer is yes if you meet all eligibility conditions of tax filing. We also cover a scenario where despite being eligible, you missed filing last year’s income tax return, and mention why you should consider filing a nil return.

  1. Understanding the tax system – what is a previous year’s return?

The income tax system in India and most other countries is based on an April to March assessment. This assessment of the previous year (that is 1 April 2019 to 31 March 2020) is filed in the current financial year of 2020-21. The deadline generally for an individual’s income tax filing is 31st July, while for those who need to get their accounts audited is 30th September.

  1. Is it compulsory to file an income tax return?

Yes, based on the financial year 2019-20, if your gross total income (excluding deductions) exceeds the basic exemption limit of Rs. 2.5 lacs worth of income, above which tax is charged, you need to file ITR. While income till Rs. 5 lacs per annum becomes tax-free, a return would still need to be filed if the income is between Rs. 2 – 5 lacs. Thus, even if you did not have any income in the last year, and hence did not file a return, you would mandatorily have to file a return this year if these conditions are met.

  1. Could a return be compulsory even if I did not file last year’s return and have no receipts?

Yes, based on the Budget announced recently in February 2020, even if you had no receipts, and therefore did not file a return, in this current year if you’re meeting the following conditions –

  1. Payment of an electricity bill exceeding Rs. 1 lacs a year, or
  2. Incurring an expenditure exceeding Rs. 2 lac rupees on a foreign holiday, or
  3. Withdrawing more than 1 crore from one’s bank account.

File your income tax now

  1. What if you realize you missed filing a previous year’s return?

In case you’ve missed filing your tax return for the financial year 2019-20 on time, you could still do that by 31st March 2020, albeit with a penalty between ₹ 5000-10,000, based on the date of filing the belated return.

  1. Filing a nil return, here’s why you should

In case you did not incur any income beyond the taxable threshold, you could still file a ‘nil return’. This is a declaration from you to the tax department stating that your income does not fall in the taxable bracket. Moreover, in case your bank or any other organization has deducted tax (commonly called TDS), the same can be claimed as a refund by filling the nil return. It can also serve as proof of income while applying for welfare schemes, scholarships, and loans.

We are presenting a comparison of the pre and post-budget 2020 tax rates in the table below:

Taxable Income Range (In Rs.)

Tax Rate prior to Budget 2020 (Existing)

Tax Rate Post Budget 2020

0-2.5 lakh Exempted Exempted
2.5-5 lakh 5% 5%
5-7.5 lakh 20% 10%
7.5-10 lakh 20% 15%
10-12.5 lakh 30% 20%
12.5-15 lakh 30% 25%
Above 15 lakh 30% 30%

 

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Avani Mishra is a graduate in law from the National Law Institute University, Bhopal. She qualified the Company Secretary course with an All India Rank 1 and is a recipient of the President’s Gold Medal for her academic distinctions. She also holds a B.Com degree with a specialization in Corporate Affairs and Administration.