Worried About Filing I-T Returns? It's Easy And Important

Income tax returns are one of the most elaborate love stories of income and expense written by you and scrutinized by the Income Tax department.

Taxes are the most dreaded substance on earth it seems. Albert Einstein himself said “The Hardest Thing in the World to Understand is Income Taxes.”  However, its not that difficult to file your taxes. There is nothing in the taxes that is so difficult that you cannot understand it if you attempt to. Also, it is not always taxing to pay and file your taxes as tax returns have their own advantage. To know more… read on…

The Income Tax Department has made the entire process of filing ITR online.

The last date of filing return for individuals is approaching. Section 139 of Income Tax Act, 1961 entails that an individual having a total income (or the total income of any other person in respect of which he is assessable under this Act) exceeding the maximum amount of income not chargeable to tax (Basic Exemption Limit) is required to file the return of income before on or before 31^st July of assessment year. For example, the returns for the period ending 31 March 2017 needs to be filed by 31^st July 2017. The government has extended deadline to 5th August.

The basic exemption limits are:

Every year, the process of filing an Income Tax Return (ITR) is made easy and simple. The Income Tax Department has made the entire process of filing ITR online. Gone are the days when one used to stand in long queues for filing the returns. Now everything can be done at the click of your mouse. You only need to ensure that you have all the documents with you while filing the returns. Relevant documents are Bank statement, Form 16, Form 26-AS & details of investment in case of salaried person and Bank Statement, details of business income, Form 16A (TDS certificate) in case of others.

Steps to file an ITR

• Login to website : incometaxindiaefiling.gov.in
• Select an appropriate form of return (In case of a salaried person - ITR 1 or ITR 2 and In case of person having income from business or profession only - ITR 3 or ITR 4)
• Download return preparation software for selected return form.
• Fill the return offline and generate an XML file.
• Save the file into your folder after validating it.
• Create a user id and password on the income tax website using your PAN card number.
• Login to the website and submit return (select submit return).
• Browse to select the XML file and submit it.
• On successful upload, an acknowledgment receipt will be generated.
• Press the print option to print the ITR V form / acknowledgement receipt.

Before filing online, you have to make your computation of income. All your income has to be put under five heads. The five heads of income are Salary, Income from House Property, Income from Profits and Gains of Business or Profession, Income from Capital Gains and Income from Other Sources. You need to categorise all your income under one of the heads.

In case of salaried person, most of the taxes are usually deducted by the employer itself and one needs to file the returns, stating the amount of income earned and tax deducted. Usually, the full amount of tax is already deducted by the employer. But one needs to take note of any other income like interest income on which one needs to pay taxes themselves.

Don’t forget to claim what is due to you: The deductions and the exemptions

For each of the heads, there are deductions/exemptions available. Be sure to claim them. You  should have the relevant proofs regarding the deductions availed subject to the conditions prescribed under the Income Tax Act, 1961. The deductions/exemptions that can be claimed by salaried person are mainly the deductions specified in Chapter VI of the Income Tax Act, 1961. Click here to see what these deductions are. Apart from Chapter VI, there are other allowances also which are available like Leave Travel Allowance, House Rent Allowance etc

Taxpayers having income from business professions can claim deduction for all business expenses like travel, food and hotel expenses in Business etc. Business persons can also claim allowable deduction for depreciation of asset used for business purposes. (Proof of such expenses claimed should be carefully maintained)

Precautions to be taken while filing an Income tax return:

• One has to ensure that the return is filed on or before the due date.
• Suitable form to be identified, according to the applicability. Incorrect returns form should not be filed.
• Taxpayer should download Form 26-AS and should confirm actual TDS/TCS/Tax paid. In case of any discrepancies, appropriate action should be taken to reconcile it.
• One needs to carefully study the documents required for filing returns like bank statement/passbook etc.
• Taxpayer should ensure that details like PAN, address, e-mail address etc. are correctly filed.
• In case of refund, it should be ensured that the Bank details are given.

Why do we need to file Income Tax returns?

Basically, an ITR receipt is a key to treasure of benefits. Some of the significant benefits are given below.

For obtaining loans: Most banks demand an ITR as a mandatory document for processing the application for any kind of loan -- be it educational, housing, vehicle loans etc. The rationale behind this requirement it is that the banks want to check and assess an individual’s financial capacity before granting any loan.

Refund of Income tax: Where the Tax deducted at source against an individual or advance paid is greater than the final assessed tax amount, refund of the excess tax paid can be claimed by. In order to claim such refund, the individual has to select the appropriate option in his ITR.

For VISA application: Certain countries like UK, USA, and Australia have stringent procedures regarding grant of VISAs. The procedures usually require production of ITRs filed for past 3-5 years. The ITR gives assurance of an individual’s stable source of income in India.

Important document for a Self-employed person: ITR filing is very beneficial for businesspersons, partners, consultants and lawyers as it acts as a proof of income (ITR receipt) in absence of other documents available to salaried taxpayers such as Salary slip and Form 16 (issued by employer).

Carry forward of losses: The provisions of the Income Tax Act provide that a loss carried forward to subsequent years can be set-off against income thereon (subject to certain conditions) thereby reducing the tax liability in future.  The losses can only be carried forward if the same have been appropriately disclosed in an ITR. Hence, filing a Return of Loss saves tax liability in future.

Consequences of non-filing of ITR

Non-filing of return within the time limit prescribed under the Income Tax Act may attract penalty of Rs 5,000 and non-payment of taxes attracts interest. For returns of Financial Year  2017-18 and onwards, penalty of Rs 5,000 will be charged for returns filed after due date. If returns are filed after 31st December, a penalty of Rs 10,000 shall apply. However, penalty will be Rs 1,000 for those with income up to Rs 5 Lakh.

Reading the above, I am sure you will be motivated to file your returns. It is easy and important to file the returns. So remember the date - 5 August, 2017. Let’s be compliant and contribute our bit towards the building of our nation.