What is Income Tax Return Filing?
Income Tax Return filing is the process of providing a declaration about the Income and Expenditure of the taxpayer to the Income Tax Department. This declaration is used to determine the tax liability of the taxpayer.
The tax liability is decided based on the current tax rate slab. The income tax department prescribes this tax slab.
ITR Filing is mandatory for Taxpayers whose income exceeds the prescribed income limit. This process is regulated under the Income Tax Act 1961.
The declaration contains details about the income earned during the period of 1st April to 31st March.
(If you want to know the income tax payable by you, then you can use this calculator - Income Tax Calculator)
Who Should File an Income Tax Return?
Following has to file Income Tax Return:
- Individuals (Resident of India & NRI’s) – Mandatory for people exceeding the prescribed income limit. Optional for others
- Sole Proprietors
- LLPs and Partnership Firm
The ITR filing is mandatory for Partnerships Firm, Sole Proprietorship Firm, Companies, and LLPs irrespective of their turnover, income, profit or loss.
Benefits of Filing Income Tax Returns
There are numerous benefits of Income Tax Return Filing. Some of them are as follows:
Proper Documentation of Financials
ITR Filing documents are proof of financials. Proper financial documentation is a must for availing loan or visa.
To Avoid Notice from the Income Tax Authority
In case of late or wrong submission of ITR, notice is served by the Income Tax department.
Carry Forward Losses
With ITR Filing, losses can be carried forward against house property & depreciation.
Income Tax Refund
At the time of Income Tax Return filing, you can claim for Income Tax Refund.
For Speedy Visa Processing
For speedy visa processing, embassies ask for the submission of Income Tax Return for the last 3 years.
Due Dates for the Income Tax Return Filing
ITR filing due dates differs in case of the individual and corporate taxpayer. In the case of individual, income tax return filing due time is 31st July for the people earning salary.
People who are earning their income from business or self-employment need to file their income before 31st March.
While income tax return filing is mandatory till 30th September in case of companies and taxpayers for who tax audit is compulsory.
How to File an Income Tax Return?
A taxpayer can file his Income Tax Return online on the Website of Income Tax Department. However, it is advisable to take the help of industry professionals.
Taking assistance from professionals can help in filing the right declaration of income, get an appropriate refund and avoid penalties for late or incorrect filing.
A 15-digit acknowledgment number will be generated once the Income Tax Return is filed. After this, you have to verify your tax return. ITR can be filed using Net banking accounts.
Documents for Income Tax Filing
The following shall be required in case of ITR Filing:
- Basic information such as PAN, Aadhar card number, and detail of the current address will be required.
- Bank account details will be required of the given financial year. For ITR filing, it is a mandatory disclosure.
- Other disclosures regarding income from salary, fixed deposits, savings bank account are also required.
- Information regarding deduction claimed under section 80.
- Information regarding TDS return filing and advance tax payments.
What are the different ITR Deductions Available?
Deduction under Section 80C
The amount paid or deposited in PF, PPF, LIC premium paid, NSC (National Savings Certificate), ULIP, principal repayment of housing loan, tuition fees, term deposit in the bank, deposit in Senior Citizen savings scheme, etc.
Deduction under Section 80D
It can be claimed by individuals as well as HUF for medical insurance & preventive health checkup.
Deduction under Section 80E
Individuals can request for an 80E deduction for the repayment of interest on the loan, concerning a loan obtained for a higher education.
Deduction under Section 80EE
An additional deduction can be claimed under this section like interest paid on housing loan paid through EMI.
Deduction under Section 80G
The deduction under section 80G is claimed in respect of the donations to specific funds, charitable institutions.
Common Mistakes at the time of filing Income Tax Return
Some of the common errors which must be avoided at the time of ITR Filing are listed below.
Selection of the wrong form
One should select the correct ITR form based on the income and category of the taxpayer.
Selection of the Wrong Assessment Year
Correct assessment year must be ensured at the time of ITR filing; otherwise, it may attract double taxation and unwanted penalties.
Incorrect input of details
At the time if ITR, it must be ensured that personal information of the assessee such as name, address, E-mail Id, mobile number, PAN, date of birth are correct.
Not disclosing the complete source of Income
All the income generated from any source other than the primary reference must be fully revealed irrespective of the fact that it is taxable income or exempt.
TDS is not reconciled with form 26AS
Form 26AS must be reconciled with form 16.
Verification of return
After the Income tax return filing, it must be e-verified through net-banking, or EVC process on mobile number and via email.
Penalty for Non filing of Income Tax Return
There are specific penalty provisions in case taxpayer does not file ITR on time. The penalty is charged, on the late payment of income tax. The maximum amount for penalty is Rs 10,000/-.