Filing an Income Tax Return (ITR) is a critical responsibility for Indian citizens, and neglecting this duty can lead to legal consequences such as penalties and increased tax scrutiny.
It is crucial to understand that all individuals in India are required to file their income tax returns, regardless of whether their income is taxable or if they owe any income tax. Filing the ITR by July 31 of the financial year helps individuals avoid penalties.
Under the Income Tax Act in India, certain groups residing in specific regions of select states are eligible for exemptions from paying income tax.
These exemptions are granted based on predefined criteria such as income thresholds, socio-economic standing, and the occupations of individuals within these communities.
These targeted tax relief measures aim to alleviate the financial burden on marginalized populations in these areas, promoting fair opportunities for all citizens.
Exemptions for Residents of Northeastern States and Union Territories
According to Section 10(26) of the Income Tax Act in India, members of Scheduled Tribes residing in Tripura, Mizoram, Manipur, Nagaland, Assam, Arunachal Pradesh, and the Ladakh region of the Union Territory of Jammu and Kashmir are exempt from paying income tax. Rohit Jain, Managing Partner at Singhania & Co., emphasized these provisions.
Exemptions for Individuals in Certain Areas
Section 10(26) of the Income Tax Act outlines that specific categories of income are exempt from income tax obligations. This exemption applies to income generated within designated areas or states, such as dividends or interest on securities.
Specifically, this exemption benefits members of Scheduled Tribes residing in areas designated within the Constitution.
"This exemption also applies to individuals living in specific areas within these regions, including the North Cachar Hills District, Karbi Anglong District, Bodoland Territorial Areas District, Khasi Hills District, Jaintia Hills District, and Garo Hills District in Meghalaya," noted Rohit Jain. "The exemption covers income generated within these specified areas, including income from dividends or interest on securities. However, income from renting property or conducting business outside these regions is not eligible for the exemption."
Additionally, the states of Manipur, Tripura, Arunachal Pradesh, Mizoram, Nagaland, and the Ladakh region are also included under this exemption.
Claiming Tax Exemption
To claim a tax exemption under Section 10(26), individuals must file an income tax return (ITR). These individuals need to disclose their income and the applicable exemption based on the nature of that income.
Individuals belonging to Scheduled Tribes residing in several northeastern states and the Ladakh region of the Union Territory of Jammu and Kashmir are required to submit Income Tax Returns (ITRs) if their earnings exceed the limit set by the Income Tax Department.
It is essential for these individuals to declare their total income and avail of the exemptions provided under Sections 10(26) and 10(26AAA) of the Income Tax Act.
ITR Exemption for Certain Senior Citizens
For income tax purposes, an individual resident aged 60-79 is considered a Senior Citizen, while someone aged 80 years or older is classified as a Super Senior Citizen.
These classifications impact tax benefits and exemptions, and adherence to regulations for each category is crucial for accurate tax filing and financial planning.
Under Section 194P of the Income Tax Act, individuals who are 75 years old or above and receive pension income along with interest income from a specified bank account can opt out of filing their Income Tax Return (ITR).
To proceed with this option, qualifying seniors need to complete a declaration in Form 12BBA. This form must be submitted to the designated bank where the pension and interest income is received. The bank will then assess and deduct the applicable income tax based on the information provided in the form.
