INTRODUCTION An Income tax return (ITR) is a form used to file information about your income and tax to the Income Tax Department. The tax liability of a taxpayer is calculated based on his or her income. In case the return shows that excess tax has been paid during a year, then the individual will be eligible to receive an income tax refund from the Income Tax Department.
As per the income tax laws, the return must be filed every year by an individual or business that earns any income during a financial year. The income could be in the form of a salary, business profits, income from house property or earned through dividends, capital gains, interests or other sources. Filings of ITR According to the Income Tax Act, income tax has to be paid only by individuals or businesses who fall within certain income brackets.
Mentioned below are entities or businesses that are required to compulsorily file their ITRs in India: All individuals, up to the age of 59, whose total income for a financial year exceeds Rs 2.5 lakh. For senior citizens (aged 60-79), the limit increases to Rs. 3 lakh and for super senior citizens (aged 80 and above) the limit is Rs. 5 lakhs. It is important to note that the income amount should be calculated before factoring in the deductions allowed under Sections 80C to 80U and other exemptions under section 10. All registered companies that generate income, regardless of whether they’ve made any profit or not through the year.
Those who wish to claim a refund on the excess tax deducted/income tax they’ve paid. Documents required to fill ITR It is important to have all the relevant documents handy before you start your e-filing process. Bank and post office savings account passbook, PPF account passbook Salary slips Aadhar Card, PAN card Form-16- TDS certificate issued to you by your employer to provide details of the salary paid to you and TDS deducted on it, if any Interest certificates from banks and post office New Forms of ITR The new IT return forms include relief measures announced due to the COVID-19 global pandemic.
These new tax return forms were recently notified by the Central Board of Direct Taxes. The forms have the following features: Wider scope of taxpayers: The tax net has been widened to include individuals, Hindu undivided families (HUFs) as well as partnership firms who have deposited more than Rs 1 crore in a bank, incurred personal travel expense of Rs 2 lakh plus or paid a power utility bill of more than Rs 1 lakh. Separate schedule: A separate schedule called Schedule DI has been allotted in the new form to enable the tax payer to indicate the amount invested or spent on which he/she needs a tax rebate.
The earlier amendment prohibiting joint owners of a house from filing tax return, either with ITR-1 or ITR-4, has been done away with. Advantages of Filing ITR
1. Prompt processing The acknowledgment of Income Tax Return (ITR) is quick. More importantly, refunds, if any, are processed faster than paper-filed returns.
2. Better accuracy E-filing software with built-in validations and electronic connectivity is seamless and minimizes errors considerably. Paper-filings can be prone to errors. Also, when any paper-based form is migrated to the electronic system, there is a possibility of human error in data entry.
3. Convenience No time and place constraint in filing returns online. E-filing facility is available 24/7 and you can file anytime, anywhere at your convenience.
4. Confidentiality Better security than paper filings since your data is not accessible to anyone either by design or by chance. With paper filings details of your income can fall in the wrong hands at your chartered accountant’s office or in the Income Tax Department’s office.
5. Accessibility to past data You can easily access past data while filing returns. Most e-filing applications store data in a secure manner and allow for easy access at the time of filing subsequent returns.
6. Proof of receipt You get prompt confirmation of filing, both at time of filing and subsequently, via email on your registered email id
7. Ease of use E-filing is friendly and the detailed instructions make it easy even for individuals not very conversant with the internet
8. Electronic banking Convenience of direct deposit for refund and direct debit for tax payments. You have the option to file now, pay later – decide what day to debit your bank account for tax payment, among other convenience features. CONCLUSION As per the tax laws laid down in India, it is compulsory to file your income tax returns if your income is more than the basic exemption limit.
The income tax rate is pre-decided for taxpayers. A delay in filing returns will not only attract late filing fees but also hamper your chances of getting a loan or a visa for travel purposes.