Income tax return is a tool for the government. It helps to assess nation’s wealth and plan out schemes and services accordingly. Consequently, the government will have a better idea about the economics of the nation and impose tax rates accordingly. Sometimes, people avoid or delay this process and suffer late penalties.
What Does It Mean To File An Income Tax Return?
ITR is an official statement of a citizen’s earnings, tax liability, and claim of refund from the government. You are thereby submitting a personal record of all your financial activities to the government.
How to File Income Tax Return
With the wave of digital India, one can now file income tax return online. E-filing is easy and fast; hence, for the busy everyday life, it is perfect.
One can upload the XML income tax return document on the official website. There is another option where one can prepare and submit the ITR form-1 by e-filing login on the official website. Both the processes are valid and can be chosen as per convenience.
When Is ITR Filed?
Each assessment year, July 31 is the last date for income tax payment and also to file tax returns.
However, sometimes, an extension can be provided on the due date by the I-T department. For instance, the last date of income tax return 2016-17 (assessment year) was extended till August 5. Refer to a news report on this here.
Paying income taxes is one-half of the responsibility of the taxpayer. The other half is to declare all your income sources and file the return for that year.
Documents Required For Filing Return
- For general details, the taxpayer will need to have PAN card and bank account details
- For declaring the salary and income sources, income tax form-16 and payslips are required
- For reporting capital gains, stock trading statement, mutual fund statements, property sold and its registrations, etc
- Interest income from tax saving bonds, corporate bonds, etc.
With income tax login, the 26as form can be viewed.
Late Filing Laws and Rules Taxpayers Should Know
First of all, failing to file the ITR every year can attract investigation from the I-T department.
If a taxpayer should file the tax return after the due date, it is called as belated return u/s 13(4). Belated income tax return can be filed within two years from the end of the particular financial year. Provided that the taxes have been paid, a penalty of Rs.5000 per year is applied by default.
If the liable tax has not been paid, an interest of 1% per month is the interest on the amount due. Extreme cases may attract prosecution and penalization. Although all these things can be easily avoided, they do happen.
This link opens an article about the penalty for late filing of income tax return AY 2015-16 or any other year.
Help Yourself and Be Clear With the I-T Department
Apart from the penalties mentioned above, there are other reasons to be on time with tax payment and ITR.
You will lose your refund privileges. And deductions under section 80, like the health insurance premium deduction, will not be applied. Filing wrong details will also have drastic consequences.
Income Tax calculators are available online which can ease the job and must be used when in doubt. Also, there are many agencies which handle ITR for its customers. Hiring a CA can help if you have little knowledge in this area.
Help the Government to Better Manage the Economy By Filing Returns Regularly
Only 3% of people file tax returns, because of this, the government cannot estimate the wealth and thus leads to mismanagement. Taxpayers can help the government gain the precious information which can be used for the betterment of the people.
Although paying income tax is more important, filing the income tax return is crucial as well. It might seem tedious but is necessary. Mark the date July 31 and never forget to file your return.