E-filing Income Tax Returns in India – An Overview
Income Tax Return is a form which is used to file the income tax with the Income Tax Department.
Income tax is a tax imposed by the Central Government on income of a person.
Filing income tax is every citizen’s responsibility. The IT department verifies these declarations of income and if any amount has been paid in excess, the department refunds the amount to the assessee’s bank account. All entities are required to file the taxes on time to avoid penalty.
The form that contains information of income and tax paid of an assessee is called Income Tax Return. The Income Tax Department of India has various forms for it such as ITR 1, ITR 2, ITR 3, ITR 4S, ITR 5, ITR 6 and ITR 7.
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Things to Remember During Income Tax Return Filing
- Do not wait for the due date to file the IT return.
- Always collate all the documents needed to file ITR
- Pick the correct IT return form. This is important.
Why file IT returns?
The advantages of filing for IT returns are:
- Loans: Bank loans like education loans, vehicle loans, personal loans, can be availed easily as they require last three year’s IT returns.
- Visa: As Immigration centres scrutinize many documents and IT returns proofs is a mandatory document for visa applicants.
- Avoid penalties: Hefty amounts would be charged for non-filing of income tax returns and hence it is always better to file it to avoid legal repercussions.
IT Tax Refunds & Taxpayers Responsibility
A taxpayer becomes eligible for tax refund when an excess amount of tax is paid than the actual tax liability. In order to claim the refund the taxpayer must have filed the returns within the due date.
Tax payers usually receive notices by the IT department to ensure they complete the filing process without any delays. Any loss against house property, depreciation, business loss and any form of loss not set off against the income can be carried forward to the subsequent years.
How to File your Income Tax Return Online?
A Detailed Process
To file your IT returns, gather all documents like bank statements, last year’s return and Form 16
- Register at the website using the PAN number. It becomes your ID.
- View Form 26AS. It shows the tax deducted by the employer. The TDS on Form 16 should match this amount.
- Download the ITR Form that is applicable to you. If you do not know the right form, consult StartupGenie.
- Complete the entire form by filling in the required details and then submit it.
- Click the Calculate Tax button, to know your payable amount.
- If applicable, pay the required tax.
- Enter the challan details on the tax return section of the form.
Due dates for filing IT return
- July 31: A firm or individuals who are not liable for audit.
- September 30: A company or other who is liable to audit.
- March 31: All individuals and companies filing belated returns.
StartupGenie recommends making use of Google Calendar to get early notification of due dates and on time ITR filing.
Income Tax Return acknowledgment
Once ITR is filed, an acknowledgment slip in duplicate is issued. It consists of details like:
- Permanent Account Number
- A brief statement of taxable income
- Tax paid
Who should file income tax return?
IAs per the Income Tax Department the entities required to file IT returns annually are:
- Every company, be it Private limited, LLP or partnership irrespective of the income or loss must file IT returns
- Individuals enjoying income from mutual funds, bonds, stocks, fixed deposits, income from interest, house property,etc
- Individuals receiving income from property under charitable trusts, religious trusts or income from voluntary contributions
- Individuals or companies who want to claim tax refunds
- Salaried persons whose gross income before deductions under section 80C to 80U exceeding the exemption limit
- All individuals with foreign income, foreign assets, NRI’s and tech professionals on onsite deputation.
- People who have opted for one job from another are also eligible.
For business tax return filing:
The IT Department of India has rules for all businesses operating throughout the country to file income taxes each and every year. If need be, TDS return can also be filed and advance taxes can be paid to ensure that the business complies with the IT rules and regulations.
Proprietorship Tax Return Filing
A proprietorship firm is run by a single person called the proprietor. Proprietorship is not a separate legal entity, that is, both the proprietor (business owner) and the business are the same. Due to this, ITR filing for proprietorship is the same as that of the proprietor.
Proprietors are required to file IT returns year after year. The procedure is no different from that of individual income tax filing.
Requirements for filing proprietorship tax returns:
Proprietors within 60 years of age and whose income exceeds Rs.2.5 lakhs are required to file proprietorship tax returns. Proprietors above 60 years but less than 80 years of age and whose total income exceeds Rs 3 lakhs are eligible.
Proprietors above 80 years must file their IT returns if their total income exceeds Rs 5 lakhs.
Partnership Firm Tax Return Filing
As per the Income Tax Act, all partnership firms are treated as separate legal entities and are applicable for tax rates that are on par with LLP’s and companies registered in India.
Requirement for filing partnership firm tax return
Irrespective of income or loss, partnership firms are required to do IT filing. If the firm has been commercially inactive with no registered income, a NIL income tax return should be filed within the stipulated date.
LLP Tax Return Filing
All LLPs or Limited Liability Partnerships are considered separate legal entities and their income tax rate is similar to that of all companies registered in India. The Income Tax Act declares that all LLP’s must file their tax returns irrespective of the loss or gain they have incurred in that year. If the LLP has seen no business activity or registered income, then a NIL income tax must be promptly filed.
Company Tax Return Filing
All types of business structures like Private Limited Company, Limited Company, Limited Liability Partnership company, One Person Company are registered under the Ministry of Corporate Affairs. All such companies are mandatorily required to file IT returns as prescribed by the Income Tax Act.
Requirement for filing company tax returns
Any company that is registered with the Government of India and operating on Indian soil is required to submit its filed IT returns. This is equally applicable for those companies that have been dormant with no business transactions and no registered income or expenses.
Documents required for Income Tax Filing in India
To fulfill IT filing in India, the following documents are necessary:
- Bank statements
- Proof of investments
- T.D.S. Certificates in Form 16 or 16A as applicable
- Documents on purchase and sale of investments/assets
- Challan of tax paid such as advance tax or self-assessment tax
- If PAN is applied but not received, a copy of filed PAN application and its acknowledgment
- In case not applied for PAN, a PAN application form duly filled in and two passport size photographs
- For businesses – a copy each of the audit report, balance sheet, trading, profit and loss account, personal account of proprietor or partners
- Statement of receipts and payments when no regular books are maintained
- Receipts of payment of insurance premium, provident purchase of NSCs, new equity shares, mutual fund, NSS, donations, etc. to support claimed deductions
FAQs on Income Tax Return
My company deducts TDS. Do I still have to file my tax return?
Yes, you need to file. There is a difference between filing income tax return and deducting TDS. You file a tax return as a proof of the payment of all the taxes due. The IT return would also help you while applying for a visa or a loan.
How do I pay tax to the government?
You can make the payment directly to the Government on the official website of the IT Department. You may pay through net banking, along with Challan 280.
Can I file income tax returns for years I missed?
Yes. You can file delayed IT returns for all the years lapsed so far.
Is it necessary to attach any documents along with the return of income?
Income Tax Return (ITR) forms are known as attachment less forms. It means, the taxpayers do not need to attach any supporting document (such as TGS certificates, investment proofs etc.). You do not need to attach these documents whether you file your return electronically or manually. However, you must retain these documents with you in proper order. You may need to submit these to the authorities in certain situations like inquiry, assessment, audit and so on.
If I have paid excess tax, how will it be refunded to me?
You can claim for refund of your excess tax amount while filing your IT Return. Your refund will be credited into your specified bank account via ECS transfer. Please check that no mistakes are made while mentioning your bank details (IFSC code, account number etc) on the ITR form.
Is it necessary to file a return of income when I don’t have any positive income?
It’s necessary for you to file a return in time even if you do not have any positive income. If you have incurred a loss in any financial year, you may want to carry it forward for adjusting with the positive income in the subsequent years. This will be allowed only if you file your IT return on time, with a mention of the loss incurred.