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As the calendar flips to a new financial year, the much-anticipated date has arrived for taxpayers and financial enthusiasts alike—the opening of the Income Tax Return (ITR) filing season.
But amidst the paperwork and number-crunching lies a captivating narrative of responsibility and opportunity. So, fasten your seatbelts and get ready for a fascinating dive into the world of ITR.
What is the ITR declaration?
An “ITR declaration” refers to the process of creating and filing an income tax return (ITR) with the appropriate statutory authorities based on a taxpayer’s income in a given financial year.
Failing to file an ITR or doing so inaccurately can result in legal repercussions such as penalties or even prosecution.
What are the benefits of ITR?
1. A major advantage is that you may request a refund if more taxes were paid than required.
2. Another benefit includes fulfilling requirements for obtaining credit, visas, investment proof, and other important applications.
3. Filing an ITR can also lead to increased financial transparency and credibility in the event of any future scrutiny or audit.
4. It allows one to carry forward losses incurred from past years, which can then be adjusted against the current year’s income tax liability.
5. In addition, timely income tax declarations enable individuals to avoid accumulating additional penalties and interest on late submissions.
6. Furthermore, it establishes a sound foundation for tax planning by aiding in identifying assets requiring higher risk management.
What are the steps to file an income tax return?
Firstly, gather all relevant documents like Form 16, salary slips, and investment proofs.
Go to the official website of the Income Tax Department or log in to the e-filing portal and select the ITR form as per your designation and income type.
Carefully fill out the form with accurate information such as name, PAN number, bank account details, etc.
Right before submitting, check for any errors in filling out the form. Also, remember that the deadline for filing ITRs is July 31st. You can also do an e-filing of income tax.
Once filled out, upload your digital signature certificate (DSC). Other things to keep handy are your Aadhaar card number/Enrolment ID, your bank account linked to your Aadhaar, and your mobile numbers too.
What are the documents required for ITR filing?
Regardless of the income source, some of the mandatory documents are-
- PAN Card
- Aadhaar card
- Form 16 (for salaried employees)
- Bank Statement of one year
- Tax Saving documents
- Rental Income (if any)
- Dividend Income (If any)
- Life insurance premium receipts
- Medical insurance receipts
Which ITR form do you need to file?
Various types of ITR forms are available, and selecting the appropriate one can often become confusing for taxpayers. The different categories of taxpayers are accounted for under different sections and have specific ITR forms assigned to them.
For example, ITR-1 is meant for anyone earning less than 50 lakhs from salary, pension, or any other source of income. Similarly, ITR-2 is for individuals and Hindu United Families (HUF) who have a salary of more than 50 lakhs from the income sources mentioned for filing ITR-1.
What happens if you miss the last date for filing ITR?
Failing to file your Income Tax Return (ITR) can result in several penalties that you should be aware of. Firstly, if you do not submit your ITR on time, the tax authorities may impose a late filing fee.
The authorities calculate the penalty for late filing based on the duration of the delay and your total taxable income. Furthermore, failure to file an ITR prevents you from claiming refunds as there is no record of any excess taxes paid in relation to your actual liability.
Moreover, if the IRS (Internal Revenue Service) has reason to believe that failure to turn over information results in substantial understatement of tax they could impose multiple penalties such as “substantial understatement.” If you fail to comply with accurate disclosure rules, the tax authorities may assess an accuracy-related penalty on taxes due.
Filing an Income Tax Return may seem overwhelming at first sight but if you are diligent with collecting necessary documents and payments beforehand, it will only require some basic effort towards ensuring that you fulfil your responsibilities on time.
It is common for the whole transaction to mismatch when the system updates TDS data, so it is best not to submit the ITR before June 15. The last day to file ITR this year is the 31st of July, as per reports.
The long list of individuals who must file Income Tax Returns includes salaried employees earning above the basic exemption limit, self-employed businessmen and professionals, senior citizens with taxable income, and individuals receiving capital gains or foreign income, among others.
An income tax return must be filed by every person with taxable income whose accounts are not subject to audits. It is required to submit the return online if the total income is more than Rs. 5 lakh.
No, it is not compulsory to file an ITR for everyone. It is mandatory only for individuals whose taxable income exceeds the basic exemption limit or who fall under any of the other criteria specified by the Income Tax Act, 1961.
When tax returns are not filed, income tax authorities will perceive tax evasion as the underlying motive. Section 276CC of the Income Tax Act states that one may be imprisoned for a maximum of seven years if they fail to file an income tax return.