Basics Of Income Tax

Table of Contents

Table Of Content…

What Is Income Tax?

We live in a country and use the public infrastructure like roads, transport, schools, and hospitals. We are protected through law and order and secured from foreign countries through defense (like the army).

Most of our needs are taken care of through provisions of such services by the Government and administration.

All these activities need money. And such money is collected by the Government in the form of various taxes and Income tax is the most significant of such taxes.

Income tax is an annual levy or tax on the income earned by a particular person during a financial year. It is charged and collected by the Central Government. Income tax is a direct tax charged to and collected from the same person, unlike GST.

Also Read: ITR Filing Online Process Step-By-Step

What Is Income Tax Return?

An Income tax return (ITR) is a form used to file information about your income and tax thereon to the Income Tax Department.

The tax liability of a taxpayer is calculated based on their income.

In case the return shows that excess tax has been paid during a year, then the individual will be eligible to receive an income tax refund from the Income Tax Department.

Why Should You File An ITR?

A lot of individuals seem to think that filing tax returns is voluntary and therefore dismiss it as unnecessary and burdensome. This is not a very healthy perspective on tax filing.

It is mandatory to file income tax returns (ITR) in India if any of the conditions mentioned below are applicable :

If the gross annual income is more than the basic exemption limit
- Those who wish to claim a refund on the excess tax deducted/income tax they’ve paid.
- If you have earned from or have invested in foreign assets during the FY
- If you wish to apply for a visa or a loan.
- All registered companies generate income, regardless of whether they’ve made any profit or not throughout the year.

As per the recent amendment, it is mandatory to file your return in the following cases even if your income is below the basic exemption limit

Have deposited an aggregate amount of more than Rs.1 crore in one or more current bank accounts; or
Have deposited an aggregate amount of more than Rs.1 crore in one or more current bank accounts; or
Have incurred an expenditure aggregate of more than Rs.1 lakh towards electricity consumption.

Types Of ITR Forms?

The department has notified 7 various forms i.e. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7 to date.

The applicability of ITR forms varies depending on the sources of income of the taxpayer, the amount of the income earned, and the category of the taxpayer like individuals, HUF, company, etc.

Usually, a salaried employee is liable to file a form under ITR 1 or ITR 2 based on the amount and the sources of income

ITR 1 or Sahaj: This Return Form is for a resident individual in the following cases:

Income from Salary.
Income from Pension.
Income from One House Property.
Income from Other Sources (excluding Winning from Lottery, bets on Race Horses, and other legal means of gambling).
Agriculture income up to Rs. 5000.
Total Income does not exceed Rs. 50 Lakhs.

ITR 2 : In addition to the income included in ITR 1, it will also include the following:

Total Income exceeding Rs. 50 Lakhs
Income from more than one house property
Income from Capital Gain (Short Term & Long Term)
Income from Other Sources (Including Winning from Lottery, bets on Race Horses, and other legal means of gambling)
Foreign Assets

Documents required for filing the return?

Permanent Account Number (PAN)
Aadhar Card
Form 16 – TDS certificate issued by the employer to provide details of the salary paid and TDS deducted on it, if any
Form 16A – If TDS is deducted on payments other than salaries such as interest received from fixed deposits, recurring deposits, etc. over the specified limits as per the current tax laws
Form 26AS – It is a consolidated annual tax statement. It has all the information about the taxes deposited against your PAN and all the income credited against your PAN.
Annual Information System – Recently introduced by the government, AIS is a statement that provides complete information about a taxpayer for a particular financial year. It contains information about taxpayers’ incomes, financial transactions, tax details, income-tax proceedings, etc.

What is the due date for filing the return?

The department has fixed different due dates for different types of assessments.

Applicability of tax audit also decides as to which due date is applicable.

The last date to file ITR for individuals/HUF/Firms is 31st July of the relevant assessment year (in case of no tax audit)
In the case of Tax Audit Cases, the last date to file the return is 31^st October of the relevant assessment year.

Sr. No.	Assessee Type	Due Date
1	Individual/HUF/ Firm	31st July
2	Tax Audit Cases	31st October
3	Transfer Pricing Cases	30th November

E-Verification

You need to verify your Income Tax Returns to complete the return filing process.
Without verification within the stipulated time.
An ITR is treated as invalid.
E-Verification is the most convenient and instant way to verify your ITR.

A financial planning platform where you can plan all your goals, cash flows, expenses management, etc., which provides you advisory on the go. Unbiased and with uttermost data security, create your Financial Planning at Rs. 99/-

Disclaimer: The views shared in blogs are based on personal opinions and do not endorse the company’s views. Investment is a subject matter of solicitation and one should consult a Financial Adviser before making any investment using the app. Making an investment using the app is the sole decision of the investor and the company or any of its communication cannot be held responsible for it.