It is that time of the year when individuals file income tax returns. The last date for filing your return is July 31. Only individuals whose incomes exceed certain levels must file tax returns. Certain factors determine whether you must file returns, and each circumstance has its gross income threshold. You must file a tax return if you earn more than a certain threshold.
Read on to find out about these factors and everything you need to know about filing tax returns.
Why is Income Tax Returns Important to File?
An income tax return is a legal document that stands as your proof of income. Even if you are not eligible for filing a return and are not mandated by the Income Tax department, it is advisable to file your IT return. Apart from financial discipline, filing income tax returns has several advantages.
To put it simply, your Income Tax Return is a summation of all your incomes from various sources in the said financial year, your tax liabilities, the tax you have already paid and any refunds you are liable to. It is important to file your income tax return as it is a disclosure of your income. It is considered legal proof of your income.
Filing your income tax return on time has many benefits. You can apply for refunds if your tax liability is lower than what you have already paid. Income tax returns are also important while applying for loans. Some banks also ask for IT returns against an application for credit cards. If you are a corporation, you can apply for tenders. If you are a startup, you can apply for funding if you have filed your income tax returns timely. Even if you are not eligible for income tax returns, it is advisable to file your returns as it is a legal proof of your income and can be used later for loans or credit cards.
Additional reading: What Is Income Tax Under the Income Tax Act?
Who Is Required to File an Income Tax Return?
Any individual who is less than 60 years of age and has an annual income of more than Rs. 2.5 lakhs must file income tax returns, according to the Income Tax Act. For senior citizens, the cut-off is Rs. 3 lakhs, and for those who are more than 80 years old, the cut off is Rs. 5 lakhs.
There are many other criteria for an individual or a company to fulfil for filing income tax returns. They are as mentioned below:
A company must file income tax returns if the company has incurred an income or a loss during the financial year.
You have to file your income tax return if you are a resident of India but have property or financial interest in an entity outside India. The same is true is you are a resident of India but have signing authority in a foreign account.
The return has to be filed for any income from property under a charitable trust, religious purposes, research or for a political party, medical institution, hospital or any other institution.
You must file a return if you have entered into any transaction under the Annual Information Return.
Return filing is compulsory if you want a refund.
Penalties for Non-Filing Income Tax Return?
Penalties for non-filing an income tax return are as follows:
A penalty of Rs. 5,000 is applicable if the return is filed after the due date.
A penalty of Rs. 10,000 is applicable if the return is filed after 31 December 2020 but by 31 March 2021.
The penalty is limited to Rs 1,000 for those with income up to Rs 5 lakhs. These provisions are covered under a new Section 234F.
How to File an Income Tax Return?
Filing an income tax return could seem to be complicated and difficult. However, once you understand all your income sources and deductions, it becomes easy for you to file your returns.
Income tax returns can be filed offline or online. You can hire a professional who will file a return on your behalf for a nominal fee. The income tax return form is called ‘Sahaj’. It can be downloaded from the website of the income tax department or collected from the nearest branch of the IT department.
The Sahaj form is available online and can be easily filled online by creating an account on the Income Tax e-filing website. You can download the software from the government portal onto your computer, fill up your return and upload it to the website. You can also fill up the details on the website and submit it there. Once you complete your return process, the ITR-V Form is generated. This form has to be verified within 120 days of your return filing. The verification can be done physically or online.
How to Download Income Tax Return Form?
Income tax return forms can be found on the official website of the Income Tax Department. To download forms, follow these steps:
Visit the Income Tax Department website
On the homepage, click on the ‘Form/Downloads’ option.
select the ‘Income Tax Returns’ option from the drop-down menu.
After being redirected to the ‘Income Tax Return’ webpage, download the form that is applicable as per your source of income and assessment year.
The income tax return has to be filed to the income tax department by a salaried or self-employed individual, Hindu Undivided Family (HUF), companies or firms. The process of filing the ITR is referred to as income tax filing. A taxpayer can file the ITR online on the e-portal of the income tax department.