I didn't file ITR in FY 2021-22 despite ₹58,000 STCG from shares, ₹1 lakh from FD. Should I file ITR-U now?

In an email, she shared an interesting tax situation: In FY 2021-22, her daughter had short-term capital gains of ₹58,000 from shares and ₹1 lakh interest from bank deposits. However, she didn’t file ITR that year as both STCG and deposit income were below the basic exemption limit.

As there are still a few days left before the March 31 deadline, Aravinda wants guidance on what her daughter can do now.

Following is the mail that Aravinda wrote to us:

Replying to the query, CA Dr Suresh Surana said there is no need to file ITR-U in this case. Aravinda can ignore the message sent by the tax department. Dr Surana provided reasons for this as follows:

As per the Income Tax Act, 1961, an individual must file the return of income if his/her total income during the previous year exceeds the basic exemption limit of ₹2,50,000 under the old regime.

Further, if the return is not filed within the prescribed time limit, section 139 (8A) provides an opportunity to file ITR again. This facility is available for taxpayers who have failed to file ITR during the prescribed period or have underreported the total income. Further, such returns can be filed up to 24 months from the end of the relevant assessment year.

As per tax rules, if a resident individual or Hindu Undivided Family (HUF) has a total income (excluding short-term capital gains) below the tax-free limit, the remaining portion of that limit can be used to offset short-term capital gains.

In this case, your daughter’s non-capital gains income is ₹1,00,000, allowing her to utilise the remaining ₹1,50,000 of the exemption limit to cover the ₹58,000 short-term capital gains entirely.

Since her total income remains well below the basic exemption limit of ₹2,50,000 under the old tax regime for individuals below 60, she is not liable to furnish the income tax return under section 139(1).

Given the position above, the assessee was not required to file the original return, and therefore, the obligation to furnish an updated return under Section 139(8A) does not arise and hence, you may consider disregarding the message.

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