What is Income Tax?

About Income Tax

Income tax return filing is the form where a assessee files the information about his income and tax there on with the Income Tax Department at the end of every financial year.

Filing of these returns should be done with the specified due date.

Sometimes it happen that you may pay more tax than required for a particular financial year, in such a case you will be refunded the excess amount you paid from the income tax department. Sometime you may also pay a less amount, in such a case you will have to pay the remaining amount.

Why to file income tax return?

It is important for every assesse to file income tax return. Irrespective of the fact that currently they are in India or outside India. It is mandatory to file IT return.

If any person’s total income exceeds to Rs. 2,50,000 IT return should be files and if not exceded to 2,50,000 even then it is always good to file IT return.

An income tax return is a important document that can be used at the time of availing lone, as it have the information about your financial condition, which shows your capacity to repay the Loan amount.

If you are planning to do you higher studies abroad or want to take up a job outside india then income tax document will be used as a proof of income for at least last 3 Financial years.

Who can file income tax return?

• Those individuals having income from capital gain i.e. stocks, mutual funds, etc., house property, interests, fixed deposits, etc.

• Those individuals having income from salary only, can file with or without Form-16.

• Those individuals who in the Financial year have switched jobs, can file in multiple Form-16

• Those individuals having foreign assets, foreign income, who are NRI

Due dates for filing returns

1. 31^st July in case of the individuals who do not require audit under the law.

2. 30^th September in case of the companies, working partners of the firm, or individuals who require Audit as per the Law.

3. 30^th November in case of any person who is required to furnish a report in the Form No. 3CEB u/s 92 E.

Simple ways to file income tax return in India

Each citizen in our country gets preoccupied every year when they file income tax return. Tax Filing is not necessarily a difficult process to comprehend. It primarily involves a procedure where one needs to disclose their income and taxes paid by them to the government. Primarily, 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 taxpayer.

The deadline to submit the investment proofs in order to claim tax returns was 31st January 2017. In case of investments made under Section 80C, the deadline was 31^st March 2017. The last date for filing tax returns was 5^th August. However, a time span from October to November is there to verify the tax return.

The Income Tax Scenario  in India

In India, two types of tax are presently executed. These are:

Direct Tax

Indirect Tax

When a tax is paid on the income absolutely to the government, then such a tax is referred as Direct Tax. However, the tax imposed on eateries, theatres, e-commerce websites and more, along with the goods and service they provide is referred as an indirect tax. Thereafter, the generated tax money is forwarded to the government.

 Indirect taxes exist in the form of:

Service tax

Value added tax or VAT

However, after the introduction of GST, there now exists a unified tax system. GST does not demand multiple tax returns. As a result, a person engaged in more than one business is not required to file a separate return; rather a single GST return will successfully serve all the purposes.

What happens after income tax return is filed?

There is a way 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 have also been credited to the PAN, the taxpayer 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/- 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).

Types of Income Tax Return

There are various income tax return types, namely

ITR 1 (SAHAJ)

ITR 4, ITR 5

ITR 6

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 along with news agencies, universities, and other  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 taxpayer while visa and immigration processing.