Wednesday, 1 March 2017

What all you need to know about Income Tax Return Filing!

Earning income appears fascinating to everyone. But when it comes to pay taxes on such earned income, everyone has to think twice. When do I need to pay taxes? How much tax I need to pay? What procedure needs to be followed while paying taxes? Which certain things need to consider while paying taxes? What are the benefits of filing Income Tax Return (ITR)? What happens if I file my returns late? Do I have to incur any penalty if I don’t file my return?

Quoting your income to Income Tax Department is mandatory if your earned income is above threshold limit of Rs.2,50,000 in case of an individual up to 60 years of age, Rs.3,00,000 in case of Senior Citizen, Rs.5,00,000 in case of Super-Senior Citizen. However, a rebate shall be allowed under section 87A up to a maximum of Rs.2,500 (earlier Rs.5,000) if such earned income is below Rs.5 lakhs. ITR filing is a medium to quote various incomes to IT Department. It is a document that needs to be filed mandatorily if your income exceeds above threshold limit.

Generally, due date of filing of ITR is 31st July of relevant assessment year (for e.g. due date for filing of ITR of financial year ended on 31.03.2017 shall be 31.07.2017) for persons who are not covered under Tax Audit provisions of Income Tax Act 1961. But in case you missed such due date then you shall have the option of filing of such ITR till 31st March of relevant assessment year with interest charged on delayed tax payment. For companies and persons covered under Tax Audit provisions, return shall be mandatorily filed on or before 30th September of relevant assessment year, failing which can attract heavy penalties.

Now a section 234F of Income Tax Act 1961 of late filing fee has been introduced by our Hon’ble Finance Minister, by virtue of which if a taxpayer fails to file income tax return on or before the due date, then a late filing fee of Rs. 5,000 (if such return shall get filed after 31.07.2018 and before 31.12.2018) and Rs. 10,000 (if such return shall get filed after 31.12.2018) shall be leviable/chargeable. However, for small taxpayers whose income is less than Rs.5 lakhs, fee shall be Rs.1000 on account of late filing of such income tax return. Such amended provisions shall be applicable from assessment year 2018-19 onwards (i.e. a taxpayer now has to compulsorily file Tax Return for year ending 31st March 2018, by 31st July 2018 – else penalty shall be imposed).

Benefits of filing of ITR

1.      Income Tax Department get records of your earned income.

2.    Sanctioning of bank loans for various purposes like term loans, business loans, CC limit, educational loans, home loans etc. requires ITR for its smooth processing.

3.      For obtainment of VISA for travelling abroad, one must have his/her ITR filed.

4.      Accidental claim in third party insurance

5.   To open bank accounts, to make investments, to purchase vehicle, for registration of immovable property purchased, for buying any type of insurance policies, one must file his/her ITR.

Some recent updates that you would not like to miss – (1st March 2017)

1.     Under GST, if GSTRs are filed after due date then it would attract late fee of Rs.100 per day for each return i.e. GSTR-1, 2, 3 etc. up to a maximum of Rs.5000.

2.     Under GST, Input Service Distribution (ISD) registration is for one office of the taxpayer which will be different from the normal registration. Hence, ISD is required to be registered separately other than the existing taxpayer registration.

3.      Under GST, supply of service includes transfer of right to use goods because transfer of title is not there in such supplies. Such transactions are specifically treated as supply of service.

4.      Merely because the moneys flow through the person, it cannot be automatically inferred that it is income in the hands of such person.

Have a great day ahead!

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