What is Income Tax Return: Meaning and Process of Filing?

What is Income Tax Return: Meaning and Process of Filing?

Taxes. Even the word itself can make many people feel fearful. But fear not! The fact that income tax returns have to be filed should not be a difficult process to comprehend. The goal of this blog is to make the reader understand what income tax returns are and then guide them through the entire Income tax return filing process.

What is an Income Tax Return (ITR) an overview?

An ITR can be thought of as a report card for the income that has been earned and the taxes paid on that income. It shows all your income from different activities in the financial year and computes the amount of tax you should have paid to the government. Filing your ITR makes you meet the legal requirements of the tax laws in order to avoid any imposed penalties.

It is mandatory for every person who is required to pay tax to file an ITR irrespective of the amount of tax paid.

As we already know, not all the people in India are required to file an ITR. Here's a simplified breakdown of who should consider tax filing in India:

• Salary earners: In other words, if your income is above the basic exemption limit or the amount that changes every financial year, you need to file an ITR.

   

• Business owners and freelancers: Even if you are self-employed or a freelancer, whether your earnings are high or low, you are required to file an ITR for your business.

   

• People with income from multiple sources: This refers to the amount of money that you make from other sources apart from your job, such as through investment, rental income, or any other form of income.

Different Types of ITR Forms:

The ITR forms are different depending on the category of the taxpayer as provided by the Income Tax Department. Here's a glimpse into the most common ones:

• ITR 1 : This is the simplest form, which is suitable for those paid through their salaries, interest from savings accounts, and house property.

   

• ITR 2 : Same as ITR 1, but for those who have income from capital gains: sale of investments or assets.

   

• ITR 3: This form is designed for those individuals and Hindu Undivided Families (HUFs) having income from business or profession.

There are other ITR forms also which are as follows: Depending on the tax situation of the assessee. One should seek advice from a tax expert or use a search engine to find out the form that is suitable for them.

The Process of Filing Your ITR:

Now that you understand the basics, let's break down the filing process:

• Gather your documents: These include the details of the PAN card, form 16 issued by the employer, bank statements, investment proofs, and any other relevant documents pertaining to income.

   

• Choose the appropriate ITR form: As discussed above, determine the form that suits your income status.

   

• Collect your income proofs: Maintain records of documents that would demonstrate your income from different sources.

   

• Calculate your taxable income: Subtract allowable deductions from your gross income to arrive at your tax income.

   

• Compute your tax liability: It is important to determine the amount of tax you are supposed to pay by using the tax rates that are relevant to your income slab.

   

• File your ITR online: The Income Tax Department also has an online filing system on its official website. If you are lost in the portal, you can always get assistance from a tax professional such as Mind Your Tax to help you through the process.

   

Important Points to Remember:

• Deadlines matter: It is important to note that failing to file their ITR on or before the due date could attract penalties. To claim the rebate, ensure you file your return before the due date, which is usually in July or September of that year.

   

• Accuracy is key: Ensure that all entries made in your ITR are accurate, because any mistakes may lead to tax demands or delays.

   

• Seek professional help: However, if you are in doubt, you may need to seek the guidance of a tax consultant. Mind Your Tax provides professional services for filing taxes so as to make the process less of a hassle.

If you are a first-time filer or simply someone who has not filed their income tax return for years, it doesn’t have to be a herculean task. So with this basic understanding and help of some of the resources such as Mind Your Tax, it becomes quite easy to go through the process. If you are looking to file an Income Tax return in Bangalore, Mind Your Tax is the perfect place to go.