Paying income tax for the very first time is a milestone for everyone who earns or gets an income in India and is subject to income tax. But for the beginners or first-timers, income tax return filing can be a daunting and tedious process. To make you aware of it and help you understand the tax implications here is a guide for you compiling the basics of income tax.
As per the new guidelines of the Income Tax Department, now every assessee subjected to pay tax has to file Income tax returns digitally. But there is an exception to this guideline where super senior taxpayers are permitted to file an income tax return in paper format. Along with the super senior taxpayers, taxpayers with income less than Rs. 5 lakhs and not claiming refund can file an income tax return in paper format. For online income tax return filing, the assessee must get registered himself on the e-filing website of the IT department.
Now let us dive deeply to know exactly what income tax return is? ITR is a form in which the assessee or the taxpayer discloses all about his income, claims applicable deductions/ exemptions and the taxes that are to be paid on the taxable income. Besides, details of taxes paid are shown in the income tax returns. In case of excess tax paid for a year, it will be claimed as a refund while filing income tax returns.
Assessees who are engaged in any business or profession have to disclose turnover, expenses incurred concerning the business, profits from business, etc. in detail of such business or profession. For individual taxpayers, the due date for filing an income tax return is July 31, or before the subsequent date immediately following the concerned year.
In case assessee could not file the return on time, he will be deprived of the following rights:
- The assessee will be denied to carry forward of losses (except house property loss) to future years.
- Delayed processing of refund claims.
- Complexity in taking house/ home loans.
- Late filing fee up to Rs 10,000 under Section 234F can be levied on the assessee.
- If there are taxes due as on July 31, levy of interest under section 234A.
Online income tax return filing or e-filing is a more comprehensive, convenient, and more reliable alternative to filing tax returns. In order to claim all the deductions you are eligible for, you can take assistance from numerous e-filing websites and services providers. All these e-filing portals assist you so that you may file your ITR on time and make the most out of it.
Now that we are finished with the disadvantages of filing Income Tax Returns, let us now jump to the benefits of filing ITR. Income tax filing is a legal obligation that is to be filed by all who falls under the category of the assessee. If your taxable income exceeds INR 2.50 lakhs in a particular financial year, you fall under the category of the assessee. Filing tax return is always advantageous in the below-mentioned situations:
- For visa and immigration processing.
- Assessees can make use of it as an income proof/ Net worth certificate.
- For claiming the excess tax paid by refund.
- Applying for higher insurance coverage.
- Since it’s a legal obligation, after filing you will get peace of mind.
Before filing the income tax return, you must be ready with some of the crucial documents, namely Form 16, Form 26AS, Form 16A, proof of tax-saving investments made, bank account details, etc. Moreover, rest what all documents you will be in need while filing your tax return mainly depends on your source of income. Sources of income include Salary, Rental income from House Property, Profit & Gains from Business or Profession, Capital gains on the sale of shares or mutual funds or capital assets, Other sources like bank interests, etc.
Income tax filing is significant for the growth of a country, but, unfortunately, a tiny portion of our country files an income tax return. Filing income tax return is done before or on July 31 for enjoying the advantages of filing income tax returns. Assessees need to ensure that they have computed the right taxable income so that they pay the correct tax levied on them. If assessee cannot determine the proper value of taxable income, he must contact a CA or an e-filing services provider to avail the just income tax return services. Numerous e-filing portals are there which present the same services at the most reliable and competitive prices.