Points to Noted before Filing of Income Tax Return (ITR)
What are the 7 things you need to know while filing ITR ie. Income Tax Return? Every year around July 31, taxpayers run pillar to post to file their returns. Confusion remains, as they get caught in the complex web of laws which were actually put in place to make things easier. Through this article, we are trying to make things a little easier for you by putting together few important things you should know before filing your Income Tax Return (ITR).
7 THINGS YOU NEED TO KNOW BEFORE FILING INCOME TAX RETURN (ITR)
1. Difference Between Assessment Year & Financial Year
- FY (Financial Year) : The Financial Year is the year in which the income is earned by the taxpayer. That means if we look at the income earned by the taxpayer in the year 2018-19, it shall be the relevant FY. It starts from the 1st April of the year and ends on the 31st March of the next calendar year.
- AY (Assessment Year) : The Assessment year is the year in which the income earned by the taxpayer in FY is evaluated/ assessed and taxed. Thus, for the relevant FY 2017-18, the AY shall be 2018-19.
- Example : For FY 2015-16 the AY will be 2016-17, likewise For FY 2016-17 the AY will be 2017-18 and so on and so forth.
- Note : Every FY and AY starts on the 1st April and ends on the 31st March, consisting of 12 months.
2.ITR Filing & Its WAYS
- An Income Tax Return (ITR) is a taxation form/ format that is used to file the earned income details and the calculation of tax, with the Income Tax Department. Filing of an ITR means the filing of the Income Tax returns online with the Income Tax department. The filing and submission of the respective ITRs with the department is done online i.e. electronically these days on the Income Tax departments site (government site), the URL for which is https://www.incometaxindiaefiling.gov.in/home
- Basically, there are two ways to file ITR:
- Online (filing it through the internet also known as the e-filing of ITR) or
- Offline (by visiting the office physically and submitting the ITR)
- There is a predefined format, in which the income figures are put for the calculation of the tax liability. The ITRs are required to be filed, every year, by any person whose earned income exceeds the threshold limit/ basic exemption limit that has been provided under the Income Tax Act, during the given FY. These earnings may be classified by way of income earned from salary, income earned from any business/ profession or from any other source.
3. Due dates
- Following are the due dates for filing of the income tax return for the FY 2018-19 (AY 2019-20), mainly for Individuals and Business. That means for any income earned between 01.04.2018 to 31.03.2019, the due dates for tax filing are mentioned in below table.
- Note: Along with the filing of income tax returns within the specified due dates, paying advance tax on time is also important.
- Therefore, the due dates can be arranged as follows in sequence for the payment of the tax during the AY 2019-20 (tax payments due dates starting from the 1st April 2019 till 31st March 2020).
4. MANDATORY ITR (INCOME TAX RETURN) FILING
In India as per the Income Tax Act, it is mandatory to file the applicable income tax return (ITR) in following cases:
- For Individuals : If GTI (Gross Total Income) exceeding the basic exemption limit
- For Company/ Firms : Always mandatory, whether the assessee has earned income or has incurred loss during the relevant FY.
- For income tax refund : If individual wants a tax refund (even though he/she is below exemption limit)
- For carry forward of loss under the head of income.
- For Resident Individuals for reporting of assets outside India, if signing authority of foreign account.
- For Assessees receiving income from property held under trust for charitable or religious purposes [section 139(4A)]
- Following Assessees exceeding the basic exemption limit as follows: Political party, research association, news agency, educational or medical institution, mutual fund, securitisation trust, trade union, venture capital company, not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust
- *Note: The basic exemption limit for the above mentioned assessees/ taxpayer is same limit as mentioned above for the individuals.
- For the want of loan or visa (it is necessary to have the copies of ITR filed)
5. MANDATORY E-FILING OF ITR
- Income tax department has mostly bought all returns online, to mandate the e-filing in near future and make the income tax filings paper less soon. For the purpose of e-filing, the assessee has to visit the income tax e-filing site and has to login for filing of the return.
- Following are the cases of mandatory e-filing of ITR
- For seeking income tax refund
- For assesses whose taxable income is more than basic exemption limit.
- Mandatory e-filing of Forms ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7
- Both Manual & E-filing is allowed in following case:
- Super senior citizens (individuals aged more than 80 years) and
- Individuals/ HUF (income does not exceed Rs. 5,00,000) not claiming any refund of income tax in the form.
6. PENALTIES FOR NON-FILING OF ITR
New section has been inserted and increased penalty has been levied for non-filing of ITR. W.e.f. 01.04.2018 i.e. from the FY 2017-18 the old penalty of Rs. 5,000 as levied under section 271F has been abolished and the new section has been inserted which is section 234F which provides for the new penalty terms as under:
7. NECESSARY DOCUMENTS FOR ITR FILING
- Following is the list of documents given, which must be kept ready for filing of ITR for the relevant FY. However, it is not the exhaustive list, the documents required also depend upon the case to case basis:
- PAN card
- Aadhaar card
- Bank Account details and documents related to interest income (such as TDS certificate issued by banks, interest income on FDs and passbook for saving account interest income)
- Form 16 (for salaried persons, issued by the employer)
- Form 16 A – TDS certificate from Bank and other companies
- Investments details (for claiming deductions under section 80C)
- Challan of advance tax payment (if any)
- Documents of sale or purchase of investments/ assets