Income Tax: An Introduction The two main types of taxes in India are direct and indirect. Direct taxes are levied directly upon an individual’s income while indirect taxes are levied indirectly. Indirect taxes include goods and services tax, service tax, and income tax.
Under the Income Tax Act, 1961, every individual who receives income in India owes income tax. In accordance with the Income Tax Act, there are five types of income, namely, salary, property, capital gains, business, and professional incomes. Individuals, Hindu undivided families, associations of individuals, bodies of individuals, firms, and companies are taxed under the Income Tax Act.
Tax Returns – What Are They?
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Tax Returns allow the taxpayer, whether an individual, a firm, or Hindu undivided families, to disclose their income, claim exemptions and deductions applicable to their income, and declare the amount of tax they owe. The taxpayer’s Income Tax Return also shows the amount of taxes paid.
To determine how much tax a taxpayer owes, a taxpayer files an income tax return every financial year.
Do you know what the benefits or advantages of filing your tax returns are?
The following are some of the benefits of filing an Income Tax Return:
A person who has filed their INCOME TAX RETURN will be able to apply for a home or car loan, as most banks ask for them.
In order to claim a refund, you must file a return with the income tax department in order to claim the refund.
If you are incurring capital losses, you cannot carry them forward if you have not filed an income tax return.
Visa processing: If you intend on traveling overseas, it is possible that you will be asked to present your income tax return receipt from the previous year at the time of the visa interview.
If you intend to purchase a policy worth Rs. 50 lakh or Rs. 1 crore, you may be required to submit your income tax returns.
In order to be considered for any government tender, you should also have receipts from your income tax returns from the past few years. The receipts are required as proof of your financial stability.
If you do not file income tax, what should you do?
The consequences of failing to file an IT return can be severe if an eligible taxpayer fails to do so. There can be a maximum of three to seven years of imprisonment as well as a minimum penalty of 50% of the tax liability and interest from the date of receiving notice from the IT Department until the tax return is filed.
The Income Tax Return (ITR): Important Information
Pay the tax first, then file the return
In order to file an income tax return, the taxpayer needs to determine the amount of taxable income earned and the amount of income tax due during the previous year. Taxes due should be paid prior to filing the return. You can pay the tax online or through Challan 280 by depositing cash or a check into the bank.
Returns not filed on time
Taxpayers who have missed the due date of filing their income tax return can still submit a “belated income tax return” within the last day of the assessment year. However, losses or accumulated depreciation cannot be carried forward, and in case of errors, the belated return cannot be revised.
Non-filing of the ITR: Penalty
The Income Tax Act, 1961, stipulates that filing of ITR is a mandatory requirement and failure to do so is punishable up to Rs. 5,000. In addition to the interest or other consequences of nonpayment, this penalty applies. However, you may be able to waive it off or reduce it if there is a genuine reason that the ITO accepts.
A step-by-step guide to filing income tax returns online:
By clicking here, you can set up an e-filing account for your income tax returns
Use your PAN and password to log in
Your e-filing account must be linked to your Aadhaar. You must e-verify your itr filing online using the Aadhaar OTP. This can be done by selecting the “Link Aadhaar” option under Profile Settings. It is necessary to complete the linking process by providing information such as the name on the Aadhaar card, the Aadhaar number, etc.
Under Quick Link, select Form 26AS. The taxes you paid during the year are summarized on Form 26AS. This will include TDS, advance tax, and self-assessment tax.
Select the correct Income Tax Return (ITR) Form from the table at the end of this article.
Fill in all the information on the ITR by downloading the Excel utility:
- Name
- PAN
- Address
- Date of birth
- Email address
- Your mobile number
- Choose whether the original or revised return
- Other taxable income
- Investments
- Taxes deducted
- Bank details
Conclusion for Income Tax Return
It is a requirement for every taxpayer, regardless of whether they are individuals, Hindu undivided families, companies, associations of persons, etc. to submit income tax returns to the income tax departments. You can file your income tax return online as well.
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