Do you need to file ITR and disclose your foreign travel expenses?

People are splurging on foreign travel as international travel opens up after two years of COVID-19 pandemic. After taking a mood booster, knowing the income tax compliances for travelling abroad is essential.

Where an individual incurs foreign travel expenses exceeding Rs 2 lakh during the year, he/she must disclose the amount of foreign travel expenses by filing the income tax return even if their income before deductions is below the basic exemption limit as per the Income Tax Act. The basic exemption limit is Rs 2.5 lakh for individual taxpayers, but as per the old tax regime, it is Rs 3 lakh for senior citizens and Rs 5 lakh for super senior citizens. 

Let’s understand with an example. Suppose your total income during the Financial Year (FY) 2021-22 is Rs 1.8 lakh, and you have travelled to Singapore in June 2021 and spent Rs 3 lakh. In such a case, you are obliged to file an income tax return in India for the FY 2021-22 and disclose the amount of foreign travel expenses. If the expenditure would have been less than Rs 2 lakh, it is not necessary to file ITR.

It is important to understand that the requirement of filing ITR and disclosure of foreign travel details shall apply even if the amount is spent in foreign currency and is equivalent to Rs 2 lakh or more. The said Rs 2 lakh limit is the aggregate limit of the financial year. Hence, suppose your income is below the basic exemption limit, and you have spent Rs 60,000 for visiting Singapore, Rs 1.6 lakh for visiting Japan and Rs 40,000 for visiting Sri Lanka during the same financial year, you are required to file ITR and disclose such expenses since the total foreign expenses have crossed Rs 2 lakh limit.

Moreover, ITR filing applies even in cases where you have spent an amount on others for foreign travelling. For example, your income is below the basic exemption limit, but you have sponsored a foreign trip for your parents, and the expenditure for the same exceeds Rs 2 lakh. In such cases, too, you must disclose the said expenses and file ITR.

For ITR filing of FY 2021-22, below are the conditions as per the IT Act where the individuals/HUF must file ITR even if their income is below the basic exemption limit:

  • If total deposits in one or more current accounts exceed Rs 1 crore during the financial year
  • If total foreign travel expenses for self or any other person is Rs 2 lakh or more during the financial year
  • If the total electricity bill payment is Rs 1 lakh or more during the financial year
  • If total business sales/gross receipts during the financial year exceed Rs 60 lakh
  • If total professional gross receipts exceed Rs 10 lakh during the financial year
  • If the aggregate of TDS and TCS is Rs 25,000 or more during the financial year (In the case of senior citizens, and increased limit of Rs 50,000 shall apply)
  • If total deposits in one or more savings bank accounts are Rs 50 lakh or more during the financial year

Hence, if you fall under any of the above conditions, you are required to file ITR mandatorily.

For any clarifications/feedback on the topic, please contact the writer at namita.shah@cleartax.in

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