Income Tax Return Filing
Government of India has framed Income Tax Law, and as per the law, individuals are entitled to pay tax on taxable income. Income Tax is levied on individuals, Hindu Undivided Families (HUFs), companies, firms, LLP, association of persons, body of individuals, local authority, and any other artificial juridical person. According to these laws, levy of a tax on a person depends upon his residential status. In accordance with the Income Tax Act, 1961, and the Income Tax Rules, 1962 it is mandatory for Indian citizens to file income tax return with the Income Tax Department at the end of every fiscal year. Returns should be filed prior the due date.
What is Income Tax?
Businesses and individuals are entitled to pay tax within their jurisdiction on their generated income. Tax is levied on them by government of India. As per the law, taxpayers must file an income tax return annually to determine their tax obligation.
Income Tax is calculated at particular rates on the total income earned by an individual and thus paid to the central government. It is the job of Central Board of Direct Taxes (CBDT) to administer direct taxes.
The functioning of Income-tax is done following the regulations of Income-tax Act, 1961.
Types of Taxes
A tax that an individual pays directly to the government falls under the category of direct tax. Taxpayers are not liable to pay direct tax instead it is levied by the regulator. Here, the liability of taxpaying cannot be transferred to another taxpayer.
Taxes which can be passed or imposed on to another entity or any other individual are known as Indirect Taxes. Usually, indirect Tax is Tax imposed by manufacturer to supplier and further is transferred to the consumer. Theatres and e-commerce websites impose taxes on customers for the service they avail or goods they purchase. This tax is, in turn, passed down to the government.
Due Dates of ITR filling
Individual and corporate both have different due dates for ITR filing. The due date for individuals who depend on salary is 31st July. Those who are self-employed or own a business need to file their income tax return before 31st March.
Though, income tax return filing is compulsory till 30th September in case of companies and taxpayers.
Different ITR Deductions Available
Deduction under Section 80C
The amount paid or deposited in PPF, LIC, PF, NSC (National Savings Certificate), principal repayment of housing loan, ULIP, tuition fees, deposit in Senior Citizen savings scheme, term deposit in the bank, etc
Deduction under Section 80D
Individuals, as well as HUF, can claim this for medical insurance and preventive health checkups
Deduction under Section 80E
If a loan is obtained for higher education, an individual can ask for the deduction of an 80E for the repayment of interest on loan.
Deduction under Section 80EE
With the help of this section, an additional deduction can be claimed like interest paid on housing loan paid through EMI.
Deduction under Section 80G
This deduction is applicable in case of donations to charitable institutions.
Benefits of ITR filling
Easy Loan Approval
Individuals who need to apply for loan will realize the benefit of ITR. All significant banks ask for a copy of ITR.
Carry Forward Losses
With ITR filing, loses can be forward against house property and depreciation.
At the time of visa processing, embassies ask for a copy of your tax return for the past couple of years.
Income and Address Proof
Income tax return works as proof of your income and address.
Income Tax Refund
ITR helps you in claiming for Income Tax Refund.
In case you fail to file for your ITR then the tax office has the right to impose a penalty of upto Rs5, 000.
Penalty for non-filing of ITR
Incase taxpayers do not file an ITR on time they are liable to pay certain penalty under penalty provisions. The penalty will be charged on the basis of the late payment of income tax. The maximum amount of penalty is Rs 10,000.
Common Mistakes to Avoid At the Time of ITR Filing
Selecting the Wrong form
Be careful while selecting the form. Select the correct ITR form based on the income and category of taxpayer.
Make sure your personal information such as name, address, E-mail id, PAN, mobile number, date of birth are authentic and correct.
Wrong Assessment Year
At the time of ITR filing do not overlook the importance of selecting the correct assessment year; otherwise, it may attract double taxation and unwanted penalties.
TDS is not reconciled with form 26AS
Form 26AS must reconcile with form 16.
Not mentioning the complete source of income
You must mention all source of income other than primary source irrespective of the fact whether it is taxable or income or exempt.
How to file an Income Tax Return?
For filing ITR online, Assessee needs to register himself/herself with the income tax department. For registration visit income tax website; https://incometaxindiaefiling.gov.in/e-Filing/Registration/RegistrationHome.html
A taxpayer can visit the website of Income Tax Department to file for Income Tax Return. However, it is advisable to concern an industrial professional for help.
Guide of professionals can help in filing the right declaration of income, provide you an appropriate refund and avoid penalties for late or incorrect filing.
Once the income tax return is filed a 15-digit number will be generated. After this, you have to verify your tax return. Net banking accounts can also be used to file for ITR.
Documents Required to File ITR
Make sure you have all the documents ready before starting the e-filing process.
- Bank and post office savings account passbook, PPF account passbook
- Salary slips
- Aadhar Card
- PAN Card
Form-16- TDS certificate provided by your employer containing all the information regarding the salary credited to you TDS deducted on it, if any
Interest certificates from banks and post office
Form-16A if TDS is withdrawn from your payments other than salaries such as interest received from fixed deposits, recurring deposits etc. over the defined limits as per the current tax laws
Form -16B from the clientele if you have traded a wealth, showing the TDS deducted on the amount paid to you
Form-16C from your lodger for mentioning the informnation regarding the details of TDS deducted on the rent received by you, if any
Form 26AS your consolidated annual tax statement. It consists of all the prerequisite data regarding the taxes deposited against your PAN:
TDS deducted by banks
TDS deducted by employer
TDS deducted by any other organization for payments made to you
Advance taxes deposited by you
Self-assessment taxes paid by you
Tax saving investment proofs
Proofs to claim deductions under section 80D to 80U (health insurance premium for self and family, interest on education loan)
Home loan statement from bank
Frequently Asked Questions
Income Tax is a tax levied upon the individual’s income and collected by the central government. Income Tax is calculated at specified rates on the total income of an individual and thus paid to the central government. The central board of direct taxes (CBDT) is responsible for administrating direct taxes.
- PAN Card
- Form 16/Form 16 A, providing information about your source of income
- Bank Details (Statement/Passbook)
- Aadhaar card
- 26 AS
- Tax deposit receipt
- Loan Details (Home loan/Educational Loan details consisting EMI summary)
- Receipt of LIC
- Any medical policy premium paid
- PPF passbook
- Any investment detail
- 80G details (If any donations were made)
- Quick Processing
- Keep a record of every previous filing