10 Things You Need to Know Before You File Your Income Tax Return
For someone who has to file income tax return for the first time, the process can be quite overwhelming. Here is a simple list of income tax return filing guidelines which will help you navigate the tricky area of income tax returns in India:
- Let’s begin with the answer to the simple question: Why do we file Income Tax (IT) returns? The answer to this is multi-fold yet simple - to assist in the development of the country, help you claim your income tax refund, prove your financial history for loan applications in the future.
- Some have the question - Is it mandatory to file income tax return? The answer to that is - Yes, if you fall under any of the criteria listed on the Government’s website. The IT department is the best entity to tell you who is required to file Income Tax Return (ITR).
- There are income slabs based on age and gender, which inform the individual about how much tax are they liable to pay on their income. For example, an individual aged below 60 years belonging to a Hindu Undivided Family (HUF) and having an income of up to Rs 2.5 lakh, the tax rate is 0%. The minimum income to pay taxes is different for different individuals based on their annual income.
- For an enterprise, it is the entity who has to file income tax return every year regardless of whether it made a profit.
- Even if someone is not “mandated” to file an ITR, there are some who should file income tax return - those looking to apply for a loan in the future, or apply for a job to another country. ITR serves as a legitimate proof of your income and can be used for such applications.
- There are two ways of filing an ITR. If you wish to know how to do income tax return online, the process is quite simple- log in to the official Government IT website. Fill the relevant forms; check if you are owed any income tax refund; submit the completed form online along with a Digital Signature Certificate or print out the ITR-V Form and post it to the IT Department’s Centralised Processing Centre within 120 days.
- The other way to file your ITR is by downloading the relevant forms online, filing them offline and posting them to the IT department.
- There are a bunch of requirements for filing income tax return. You will need bank statements, proof of investments, Tax Deducted at Source (TDS) certificate, Home Loan certificate, salary certificate, to name a few. Depending on your investments and deductibles, the list of documents required will vary. Again, it would be a good idea to check the official website for latest updates. Ensure you know your income tax requirement before you start filing it to avoid false starts.
- The income tax refund due to you is also calculated when you file your income tax return. There is no separate process for it. So, ensure you have all the relevant documents ready to claim the refund.
- Lastly, know that not filing your ITR when you have liable tax to pay can result in legal action from the Government and hefty fines.
So, use your acquired knowledge of the process to file your tax returns diligently.
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