So if your gross total income is below the threshold limit of ₹2.5 lakh (individuals below 60 years), ₹3 lakh (60-79 years) or ₹5 lakh (more than 80 years of age), but you meet any of the new criteria, you will have to file ITR.

The idea behind enhancing the return filing criteria is to catch the taxpayer where there is a mismatch between income declared and expenses incurred.

“Those having expenses not matching declared income are bound to be caught. Honest taxpayers need not worry and should rather feel satisfied that evaders are going to come in line," said Sudhir Kaushik, chief executive officer (CEO), Taxspanner.com.

Here are the criteria to keep in mind to find if you are liable to file ITR or not.

Expenditure limit

Under the seventh proviso to Section 139(1) of the Income-tax Act, 1961, even if the income is below the exempted limit, a person will have to file ITR in case he or she meets any one of the following criteria: a) paid an electricity bill of ₹1 lakh or more during the year; b) incurred an expenditure of ₹2 lakh or more for travel to a foreign country for self or any other person; c) deposited an amount of over ₹1 crore or more in one or more current accounts.

However, there is an exception to the rule in case of foreign travel.

“Foreign travel does not include travel to neighbouring countries or places of pilgrimage, as may be notified by the tax department. Hence, such foreign travel does not fulfil the criteria for filing an ITR," said Archit Gupta, founder and CEO, Cleartax, a tax return filing portal.

The income tax forms for assessment year 2021 have been amended to take a declaration from the taxpayer to state that if he or she is filing the return under the seventh proviso to Section 139(1).

Experts said taxpayers filing under these criteria will need to keep a record of the documents supporting the claims to respond to the tax department queries, if any.

“No document is to be provided while filing ITR. However, the department can check records of up to eight years if you do not have foreign assets, otherwise 16 years," said Kaushik.

Calculating income

Tax exemption on capital gains will no longer be considered while calculating the minimum tax-exempt income.

“Previously, any person who claimed the benefit of exemption from capital gains tax was not required to file ITR, provided his or her total income did not exceed the basic exemption limit after claiming such capital gains exemption under Sections 54 to 54GB of the Income-tax Act. However, post the Finance Act, 2019, amendment to the sixth proviso to Section 139(1) of the Act now requires every person to calculate the threshold limit or basic exemption limit without giving effect to the exemption benefit under Sections 54 to 54GB," said Suresh Surana, founder of RSM India, a tax consulting firm.

So, if your income before claiming exemption under Sections 54 to 54GB is more than the basic exempted limit, you will have to file ITR.

For example, if you had a gross total income of ₹2 lakh and capital gains of ₹3 lakh on the sale of a house, which you invested under Section 54 EC to claim exemption, you will still be liable to file returns as your gross total income will be calculated as ₹2 lakh plus ₹3 lakh ( ₹5 lakh). Until last financial year, your gross total income would have been considered ₹2 lakh, in this case.

Foreign assets

Remember that in any case if you have any foreign assets, you are required to file ITR, even if you don’t have any income in India.

“Every individual being a resident and ordinarily resident in India, having any asset, including financial interest in any entity located outside India or signing authority in any account located outside India will be mandatorily required to furnish ITR, irrespective of the fact whether the resident taxpayer has taxable income or not," said Surana.

So assess your liability to file ITR carefully this time.