All those residing within India have to pay tax on their income to the Government of India as per the Income tax rules and regulations. Whether you are an individual, association or a firm, LLP, local authority or a Hindu undivided family, your income for each financial year is taxed in accordance with Income Tax laws. Hence filing your Income Tax return (ITR) on an annual basis is important.
You may be wondering, “What is an income tax return?” It simply refers to the form which you utilize to enter information of your yearly earning and other details and submit to the department. This includes income from salary, profit in business, sale of house or property, dividend or capital gains and interest received among others. Each taxpayer has to pay tax on the basis of the yearly income. If you have paid tax in excess during a year, the money is refunded back to you by the Income tax Department.
Income Tax rules dictate that if you earn more than the limit that is exempted from being taxed by the Government, you are compulsorily required to file your tax return according to the tax slabs for each year. Filing your ITR post the due date may attract a penalty and also become a deterrent in getting a loan or visa approved in the future.
Now that you know what an income tax return is, let us take a look at the list of people as well as enterprises that are mandated by law to submit the same. This includes:
When you sit down to start the process of filing your income tax return, apart from your salary slips, bank savings account passbook, Aadhar card and PAN card, there are a few other documents that you will require to ease your tax filing process:
-Form 16: It is provided by your employer and contains details of the salary paid by them to you and the tax deducted at source (TDS) on it.
-Form 16A: It contains details on TDS deducted on interest received from deposits such as fixed or recurring bank deposit.
-Form 16B: If you sell a property, TDS applies on the amount received from you by the buyer, the details of which are present in this form.
-Form 16C: TDS details of the rent paid by your tenant to you are recorded here.
-Form 26AS: This form represents your comprehensive statement of taxes against the PAN number. It includes TDS by your employer, bank or any other organization that has made a payment to you. Advances taxes or self-assessment taxes paid, proof of tax saving investments such as deductions as prescribed from Section 80C to 80U including life insurance policy or a term plan are also listed.
You can now submit your tax return sitting at home if you have an internet connection. This has been made possible with e-filing that uses pre-approved tax preparation software by the Income Tax Department. More and more taxpayers are increasingly filing their returns online given its benefits such as:
ITR forms for taxpayers
With all the information on what is an income tax return behind you, do understand that there is no one ITR form that fits all. The Income Tax Department has different forms for each taxpayer depending on the category of income generation:
After you have submitted your tax return, you can check its status online easily on the e-filing website of the Government of India. Depending on whether or not you have created a login account on the website, here are a few simple steps to check your ITR status:
After you have duly submitted your tax return, the Income tax Department generates a verification form that lets you authenticate the e-filing of your taxes done online. This is allowed only for those who file their returns without digital signature. Let us take a look at how to download the ITR V form online
Take a print out of the document and sign it. Send it by post to CPC Bangalore within 120 days of having e-filed your tax return. The other option is to generate Aadhar OTP via net-banking, ATM etc and complete e-verification of your ITR.
As a citizen of India, it is your responsibility to file your tax return. It also helps the government provide for its citizens. Even though your decision to file an ITR is voluntary, here is why you should do so:
1. Paying tax on your yearly income to the government on time as per the rules laid out by the Income Tax Department is a sign of responsibility. Failure to do so can make you liable for a penalty. It is easier to conduct business transactions if you have been regularly paying tax on your earnings
2. Taking the decision to volunteer and submit your ITR even if it is not compulsory can help you in many ways. Take for instance, registering an immovable property in a state which requires proof of the last 3 years income tax returns.
3. If you plan to apply for a loan or credit card in the future, having an ITR record may come to your advantage. It is a good idea to have your spouse’s ITR data as well to get that home loan if applying as a co-borrower. Credit card companies as well as other financial institutions prefer to see your previous years returns before initiating a transaction.
4. Even if your income is less than the prescribed levels to file an ITR, doing so might help you in claiming adjustment against any loss that you or your business suffers in the short or long term. It encompasses various losses not enlisted in the ITR for a financial year, on which no exemption can be claimed in the future.
5. You lose the legal option of filing a revised return if you haven’t even submitted an original return. This can be a disadvantage if you really have to file a revised return under any circumstance.
Now that you know the answer to ‘what is an income tax return?’ let us look at the benefits of e-filing listed below that make it the preferred route for a majority of taxpayers. Some of them are:
1. Not only is your ITR acknowledged quickly, refunds for e-filing too are processed promptly as compared to offline returns.
2. There are fewer chances of error when paying your return online given the built-in validations of the e-filing software. This coupled with the seamless online connectivity makes e-filing a better option.
3. You can submit your ITR round the clock from the comfort of your home or anywhere else, without any limitations of time and place as per your convenience.
4. Unlike paper based ITR which is liable to misuse in the wrong hands, e-filing assures that your income details remain confidential and secure.
5. You can easily access your past returns which are safely stored online when e-filing your taxes.
6. Once you have e-filed your tax returns for a financial year, a confirmation receipt is sent immediately, as well as a notification on your registered email id.
7. Detailed instructions are available to help you e-file your IT return online easily without any hassle.
8. Not only can the tax to be paid debit directly from your bank account, the refund processed is credited as well. You can also pay later as you e-file your tax return by instructing the bank to debit your account for the payable tax using electronic banking.
Now that you have extensive information on tax filing, it is important that you make the necessary investments that can help you save tax. You can opt either for a term plan that offers life cover or go for the Invest 4G plan from Canara HSBC Oriental Bank of Commerce Life Insurance that invests your savings while offering financial protection in the form of life insurance. You can choose from 7 funds depending on your risk appetite from a basket of 4 different portfolios to create wealth in the long run.
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