The process of presenting the Income Tax Department with a declaration concerning the taxpayer’s income and expenses is known as income tax return filing. This declaration is used to determine the taxpayer’s tax liability.
The current tax rate slab determines the tax liability. This tax bracket is set by the Internal Revenue Service.
Taxpayers whose income exceeds the authorized income limit must file an ITR. The Income Tax Act of 1961 governs this procedure.
The statement comprises information about the revenue earned throughout the Financial Year, which runs from April 1 to March 31.
Who Is Required to File a Tax Return?
Individuals who are both residents and ordinary residents in India must file an income tax return, even if their income does not exceed the maximum exemption level, for the following reasons:
- Holds any asset (including any financial interest in an entity) outside India as a beneficial owner or otherwise.
- Has signature authority in a bank account outside of India
- Is a beneficiary of a non-Indian asset (including any financial stake in an entity).
- Even if the income does not exceed the maximum exemption limit, an individual or HUF must file a return of income if he has deposited an amount (or an aggregate of amounts) in one or more current accounts with a banking company or co-operative bank.
- Even if his income does not exceed the maximum exemption level, an individual or HUF must file a report of income if he has spent more than 2 lakh rupees on travel to a foreign country, either for himself or for another person.
- Furthermore, even if the income does not exceed the maximum exemption level, an individual or HUF must file a return of income if he has spent more than 1 lakh rupees on energy usage.
ITR filing is required for all partnerships, sole proprietorships, corporations, and limited liability partnerships, regardless of their turnover, income, profit, or loss.
What are the advantages of submitting tax returns?
Filing an income tax return has a number of advantages. Here are a few examples:
- Financial Accounting Documentation
ITR filing documents serve as proof of financials. For obtaining a loan or a visa, proper financial evidence is required.
- To Avoid Receiving a Notice from the Internal Revenue Service
The Income Tax Department will send you a notification if you submit your ITR late or incorrectly.
- Losses are carried forward
Losses can be carried forward against residential property and depreciation with ITR filing.
- Refund of Income Tax
You can apply for an income tax refund while filing your tax return.
- Visa Processing in a Hurry
Embassies require the filing of a three-year income tax return to expedite visa processing.
How Do I Fill Out a Tax Return?
On the Income Tax Department’s website, a taxpayer can file his Income Tax Return online. It is, nevertheless, recommended that you seek professional assistance.
Getting professional advice can help you file the correct income tax return, get a proper refund, and avoid penalties for late or inaccurate filing.
When the Income Tax Return is filed, a 15-digit acknowledgment number is generated. After that, you must double-check your tax return. Net banking accounts can be used to file ITRs.
Documents Required for Tax Filing
When filing an ITR, the following information is required:
- PAN, Aadhaar card number, and a detailed description of the present residence would be required.
- The financial year’s bank account information will be required. It is a required disclosure for ITR filing.
- Other information including wages, fixed deposits, and savings bank accounts is also necessary.
- Details on the deduction sought under section 80.
- TDS return filing instructions and advance tax payments.
Suggested Read: Income Tax Notice