Income Tax Return(ITR)
I ncome tax in India is a tax paid by individuals or entities depending on the level of earnings or gains during a financial year. The earnings may be both actual and notional. The government imposes a tax on taxable income of all persons who are individuals, Hindu Undivided Families (HUF’s), companies, firms, LLP, association of persons, body of individuals, local authority and any other artificial juridical person. Levy of tax on a person depends upon his residential status.
The most important reason to file ITR in India is because the government mandates it beyond a certain income. Further, producing proof of tax returns, even voluntarily, helps with availing certain financial products and services. Typically, for loans and other credit options, you are required to show tax returns of the past three years in order to qualify. Also, since losses incurred in previous years cannot be shown for exemption at a later stage, it helps to have them on record via income tax returns filing. Doing so allows you to reduce your tax liability against in the subsequent years.
We, Compliance Hands, a team of more than 50 qualified professionals like CA, CS, Advocates etc, having experience of more than 5 years of handling tasks like this and have completed more than 2000 projects. We ensure all the compliance on time and you can carry on your business without any hiccups.
Who to File Income Tax Return(ITR)
As per the Income Tax Act of 1961, any individual who is under 60 years of age and earns a total income of Rs.2.5 lakh or more in a financial year is required to file ITR. Read on to know who else is eligible.
Any individual between the ages of 60 and 80 years with total annual income of Rs.3 lakh or higher
Any individual over the age of 80 years with total annual income great than Rs.5 lakh
Any Company, Firm, LLP, Society, Trust, or organisation operating in India regardless of whether it is in profit or loss
Any Indian resident who owns an asset or has any financial ties to an international entity
Any individual who wishes to carry forward losses that have been incurred
Types of ITR
ITR-1: This ITR form is also called Saral and is for resident Indians having Income from Salaries, one House Property, Other Sources (interest, family pension etc.), and Agricultural Income up to Rs 5,000. This form does not apply to an individual who has invested in Unlisted Equity Shares or is a Director in a company or has a total income of over Rs 50 lakh.
ITR-2: This ITR form is applicable to Individuals and HUFs who don’t have income from profits and gains of business or profession.
ITR-3: Individuals and HUFs having income from profits and gains of business or profession need to use this form.
ITR-4: This form applies to resident Indian Individuals, HUFs and Firms (other than LLP) having income from Business and Profession up to Rs 50 lakh, which is computed under sections 44AD, 44ADA or 44AE. An Individual, who is either a Director in a company or has invested in Unlisted Equity Shares, can’t use this form.
ITR-5: This form applies to assessees other than Individual, HUF, Company, and persons filing the ITR-7 Form.
ITR-7: This form is applicable for the persons, including companies, who required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) of the Income Tax Act.
Due Date of ITR filing:
|
Particulars AY: 2020-21 |
Due Date |
|---|---|
| Individuals, HUF, BOI, AOP (Income Tax Return by Assesse whose Books of Account are not required to be audited) | 30th November 2020 |
| Filing ITR Due Date for (Assessee who are required to furnish report under sec 92E) | 30th November 2020 |
| Due date of filing the Income Tax Return by businesses whose Books of Account are require to be audit | 31st October 2020 |
As per the section 234F of the Income Tax Act, 1961, the taxpayer must pay penalty for delay in filing of ITR.
Penalty for late filing of ITR
|
E filing Date |
Income below INR 5,00,000 |
Income above INR 5,00,000 |
|
Upto 31st July 2020 |
0 |
0 |
|
After 31st July 2020 to 31st December 2020 |
1000 |
5000 |
|
After 31st Jan 2021 to 31st March 2021 |
1000 |
10000 |
1. ITR Receipt is an important document: Having an ITR receipt is important because it is more detailed than Form 16, entailing your income and taxation along with revenue from other sources.
2. Use as address proof: ITR receipt is sent to your registered address, which can serve as residential proof.
3.Helps the bank loan documentation process easier: Being a diligent income tax filer makes it easier for banks to assess your source of income when you apply for loans like an auto loan, home loan etc. Banks usually ask for copies of tax returns filed for previous 2-3 years at the time of applying for the loan to ascertain income capacity of the individual.
4. Compensate losses in the next financial year: Unless you file the ITR, you cannot recompense your expenses/losses in the previous financial year to the current. As per the income-tax provisions, if tax returns are not filed on time, unadjusted losses (with some exceptions) cannot be carried forward to future years. Hence, to ensure that the losses are carried forward for future adjustment, a tax return would be required to be filed.
5. Helps to avoid extra interest: If you don’t file ITR, the belated return could lead to extra interest at 1% per month for the remaining tax payable by you. For example, banks would deduct tax from interest on fixed deposits exceeding a certain threshold. To claim a refund of tax deducted by the bank (if any) on the interest income, a tax return would be required to be filed regardless of the taxable income.
6. Avoid penalties or scrutiny from the tax department: From FY 2017-18 Rs 10,000 would be levied for non-filing of ITR. This black mark will remain for years to come.
7. Credit Card Processing: Banks can reject your credit card application if you haven’t filed your ITR.
8. For a hassle-free visa application procedure: At times visa authorities ask for copies of past tax returns, hence to apply for a visa a tax return would be required to be filed. Embassies, especially those of US, UK, Canada etc. when processing your foreign visa application, are particular about your tax-compliance.
9. To buy an insurance policy with a higher cover: If insurance companies have reasons (non-compliance) to believe that you are a tax-evader, they will not give you policies with more cover.
10. Makes life easier for freelancers and independent professionals: Freelancer or self-employed people don’t have Form16. This is the only document they have to show that he has filed the ITR. Without this, they can face funding issues and transactional problems.
“The power to tax is the power to PROSPERITY .” — John Sherman
Income Tax Return Filing
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