Towards the end of each financial year in India, taxpayers provide personal information consisting of their tax-filing status and dependent information in the form of an Income Tax return. Though this appears to be a quick task, there goes a significant preparation towards filing before the deadline. What must a taxpayer keep in mind to complete the ITR filing process?
The taxpayer must understand that income tax returns allow them to schedule their tax payments, calculate any tax liability, and request a refund for overpaid taxes. Taxes act as the main source of income for the Government. They are essential to maintain deficits and the optimum cash flow in an economy.
A taxpayer must also have easy access to documents like Aadhar Card, bank details, Form 16, Form 16A/16B/16C, Form 26AS, investment proofs, home loan statement, and statement on capital gains.
There are various tax rates with respect to income brackets which decide the final taxation amount for a taxpayer. According to the Income Tax Department of India, individuals who earn an income of INR 5 Lacs or less are exempted from paying the taxes. Some taxpayers misinterpret the idea that if their income is not taxable, they need not file an ITR. However, the rule states that an individual has to file his income tax return if the gross taxable income for general taxpayers is above INR 2.5 Lacs. For senior (60+) and very senior citizens (80+), the exemption limit is INR 3 Lacs and INR 5 Lacs, respectively.
Source: Economic Times
An ITR 1 or SAHAJ is to be filled by those with income from salary or pension, one house property, or from sources like interest, dividends, et al. This form can’t be filled by the taxpayers who are carrying forward losses, whose income exceeds INR 50 Lacs, who hold foreign assets, whose agricultural income exceeds INR 5000, who have taxable income gains, have income from business or profession, and earn from more than one house property.
Form ITR 2 is filled by those with income from salary or pension, one house property, capital gains, other sources, as a partner in a firm, foreign assets and agricultural income of over INR 5000. This form is not applicable to those who have income from business or profession.
In India, Income tax deductions are commonly viewed in harmony with Section 80C of the Income Tax Act, 1961. However, a variety of sections under the Income Tax Act provide taxpayers with deductions. The amount paid as medical insurance premium (medi-claim) is eligible for deduction under Section 80D. Under section 80DD, the deduction is available to a taxpayer for the expenditure with regards to caring for disabled persons who are dependent on him. If the taxpayer has taken an education loan from any financial institution for themselves, their spouse, children, or a student for whom the taxpayer is a legal guardian, they can claim deductions under section 80E for the interest paid on the loan amount. Under section 80EE, the deduction is available to an individual for the amount paid as interest on a home loan. The maximum deduction that can be claimed under this section is Rs 50,000 per annum. An individual can claim a deduction of Rs 1.5 lakhs in a year under Section 80C for investments in financial instruments like tax-saving fixed deposits, PPF and EPF.
What if your earnings today are not adequate tomorrow? In the current economy, inflation might result in a reduction in savings. Investments seem like a smart opportunity for a secure future. Bajaj Allianz ULIP plans, provide for effective investments that are tax-free - at every step of the way. ULIPs come with EEE (Exempt -Exempt-Exempt) status, which means that the initial investment, accumulation amount and maturity returns are all tax-free. On Finserv MARKETS, you can choose from customized ULIPs (Retirement, Investment or Child plans), as per your current financial needs and future goals.
The amount of late ITR filing fee depends on the amount of tax and the amount of duration exceeded. From last year onwards, the penalty for late filing of Income Tax return is up to a maximum of INR 10,000. The Government has provided relief to small taxpayers. If the gross annual income does not exceed INR 5 Lacs, the maximum penalty is INR 1,000.
Having understood the nuances of income tax return, you must ensure that the aforementioned preparation helps you in filing ITR smoothly and on-time. Additionally, send your ITR V for verification to the income tax department within 120 days of filing your returns.
"Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor-made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no-cost EMIs to 4 hours of product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App!"