Basics of Income Tax Return Filing
The advent of e-filing facility has made tax filing quick and easy. But if your filing returns for the first time, there are a few essential things that you must know. This post will shed light on five such vital points.
Filing tax returns was considered a challenging and time-consuming process in the past. But with the introduction of e-filing or online filing in 2006/07, it has become easier than ever before. However, even with the process becoming easy, some people, especially the first time returns filers find the process overwhelming.
While you can always get professional help for filing tax returns, there are a few important things that you must know, which are:
- Who Should File Tax Returns?
Every resident Indian with an annual income of more than Rs. 2.5 lakhs before the permissible deductions as per Section 80C to 80U of the IT Act must file ITR. Even NRIs having a source of income in India should compulsorily file tax returns if their earnings in India is more than Rs. 2.5 lakhs.
Even if your annual income is less than Rs. 2.5 lakhs, you can still file “NIL Return” for recordkeeping. While this is not mandatory, it is considered to be a wise practice.
- What are the Different ITR Forms Available?
There are seven types of ITR forms from ITR-1 to ITR-7 for all the different types of taxpayers. For instance, salaried individuals with a single house property and combined income from salary and other sources not more than Rs. 50 lakhs are required to file ITR-1 form.
Similarly, all the different forms are for different categories of taxpayers. Make sure that you select the right ITR form while filing tax returns to avoid any discrepancies.
- What is the Deadline for Filing Tax Returns?
The ITR filing deadline is 31st July every year. You will have to pay the penalty if you fail to file the returns before this deadline. For late returns filed between 1st August and 31st December, the penalty is up to Rs. 5,000. For filings after 31st December, the penalty is up to Rs. 10,000.
Moreover, if tax evasion is above Rs. 25 lakhs, it could lead to an imprisonment of 6 months to 7 years. But note that the late filing penalty could not be more than Rs. 1,000 if your taxable income is less than Rs. 5 lakhs.
- What are the Documents Required for Filing Tax Returns?
It is better to keep all the documents ready before you start the filing process. The important documents you will need are
- Form 16 (for salaried taxpayers)
- Form 26AS to know the total tax deposited in a financial year for your PAN
- Interest certificate if you have invested in bank deposit accounts
- Details of all the tax-saving investments
- Salary slips
- Bank account statements
- Detailed information on the home loan, insurance premium, and investments in shares, mutual funds, and gains from selling a property
- How to File ITR Online?
When you visit the income tax filing website for the first time, you will have to create an account. You can then download the returns software from the portal for filing tax returns. Provide detailed information about your income from all the different sources and the deductions you have used while filling the ITR form.
You can then click on the “Calculate” button to know your total tax liability. The amount could either be payable by you or payable to you in case if you have already paid a higher tax amount than you should have paid. In case if tax is payable, you can pay the same online. You can then submit your ITR form and receive the ITR-V (ITR-Verification) form for the same for recordkeeping.
Start Preparing Your ITR in Advance
Most people wait for the deadline to file their tax returns. This often leads to a host of costly last-minute errors. When you file tax returns in advance, there is a prescribed duration within which you can also make changes to your form in case of any errors.
So, take advantage of this facility by filing tax returns well before the 31st July deadline.