Income tax return filing in India

Income tax return filing in India

Amidst the hustle and bustle of our busy lives, each citizen in our country gets preoccupied every year while filing their tax returns. Tax Filing is not necessarily a difficult process to fathom. It primarily involves a procedure where one needs to disclose their income and taxes paid by them to the government. Mainly, filing tax return enables us to declare our annual income, as well as keeps a record of the amount of tax money one paid. Moreover, it guarantees that all previous dues had been cleared by the tax payer. One crucial step is to verify whether the tax deducted has been credited to the tax payer’s PAN. The tax deducted by the employer will reflect in Form 16, but to make sure that all other taxes (advance tax, TDS on interest and other incomes) have also been credited to the PAN, the tax payer needs to check out Form 26AS online. In the case of any inconsistency, the deductor should be immediately notified and the mistake should be rectified. When an income tax return is filed, the CPC, Income Tax Department analyzes it. Afterwards, when the assessee realizes that some income was not reported, it is possible to file a rectification request. Any company irrespective of its domain - public, private, foreign or domestic is entitled to file a Mandatory return. Moreover, any firm whether- Limited Liability Partnerships (LLP) or Unlimited Liability Partnerships is also required to do the same. Return of Income is mandatory and needs to be filed in the case of a person whose taxable income exceeds Rs. 2, 50,000/- (as per slab limit) in a particular financial year. Section 139 of the Income Tax Act 1961 manages the variety of returns to be filed against the person or any organization for that matter, who has not filed tax returns before the expiry of the prescribed deadline. As per the rules, for senior citizens (above 60) the basic exemption limit is Rs 3 lakh and Rs 5 lakh for very senior citizens (above 80). There are various income tax return types, namely ITR 1 (SAHAJ), ITR 4, ITR 5, ITR 6, and ITR 7. Individuals, who are salaried employees having, one house property and other sources like interest and so on, choose ITR 1 (SAHAJ), for filing their tax return. Income Tax Form ITR 4 forms are used by proprietorship firms. This type is suitable for individuals and Hindu Undivided Families earning from a proprietary business. However, Income Tax Form ITR 5 is used by most partnership firms. Companies such as private limited company, public limited company and other for-profit companies choose Income Tax Form ITR 6. Political parties, news agencies, universities, and entities in receipt of income from property held in trust for charitable or religious purposes resort to Income Tax Form ITR 7. However, income tax return filing is more of an obligation, precisely a legal one. Additionally fulfilling this obligation can benefit in various situations. For instance, one can claim higher insurance cover, or avail home or personal loans and so on. This legal obligation can also benefit the tax payer while visa and immigration processing. When filing income tax return several documents are needed. As per Income Tax Department, salaried employees require Form No.16 to be issued by the tax payer’s employer summarizing their income from salary and tax deducted at source. Additionally, there is Form No 16A which is issued by all the payers who have deducted tax during their transaction with the tax payer. It also demands account statements of all the accounts operated through the year. Moreover, details about a recently purchased property or existing property on rent along with details about the rent received and receipts of municipal taxes paid during the year need to be disclosed as well. Any documents related to sale & purchase of shares in the existing year is essential for calculating capital gains. In the case of advance tax payments, tax challans need to be revealed. Finally, documents involving tax implications should also be present for quantifying taxes. The Income Tax Department assures the tax payers are provided with all the available options to file their tax returns. Firstly, the return can be filed in a paper form. Secondly, in this digital age, IT returns can be filed electronically with a digital signature. Thereafter, this electronically filed and then duly signed Form ITR-V must be submitted in a bar-coded paper format. This year the last date for e-filing income-tax returns has been extended to August 5.Though the initial deadline for filing income tax returns for was July 31, 2017, but the authorities decided to extend it. In addition to this, a number of modifications were made by the authorities. The primary one being linking PAN with Aadhaar made compulsory. The returns will be processed by the income tax department only after the two ID proofs are linked and verified. Henceforth, if the tax payer cannot file tax return themselves, then one should trust their instincts and choose a trustworthy organization to file their returns. The password of e-filing account should be securely kept in case it has been created by the organization recruited by the taxpayer.