Are you filling ITR? Read this post before filling the ITR

The last date for filing ITR for the FY 2022-23 is 31st July. The deadline for filing your Income Tax Return (ITR) is approaching fast (Only 33 Days Left). It is crucial for every tax payer to file his/her ITR on time, as it ensures compliance with tax laws and offers numerous benefits such as claiming refunds, avoiding penalties, and establishing a clean financial record. With the clock ticking, it’s essential to prioritize your tax obligations and take prompt action to meet the deadline. In this article, we will emphasize the significance of filing your ITR within the given timeframe, provide practical tips to streamline the process, and highlight the potential consequences of missing the deadline.

Every responsible Indian citizen should file income tax to the government. With present technology, you can easily file your income tax online. This process is fast and accurate with no time constraints. However, Filing income tax return in India through the official website involves filing ITR forms. There is a different ITR form for individuals and ITR form for salaried people. This is a critical task because the income tax department has various forms titled from ITR 1 to ITR 7. Each form has a specific function and belongs to a particular category.

Who can’t file ITR -1?

As We know the last date for filing ITR for the FY 2022-23 is 31st July. But who can file Income Tax Return using ITR-1 and who cannot? It is very crucial for taxpayers to know about the same.

The Income Tax Department allows salaried individuals to file their ITR easily using Income Tax Return Form ITR-1. That’s because ITR-1 does not require much information to be filled in comparison to other ITR forms. That’s why it is also called Sahaj Form. However, not every salaried individual can file their tax return using ITR-1 form. If someone has made some major transactions in the financial year 2022-23 (AY 2023-24), then they may be ineligible to use ITR-1.

Who is eligible to file ITR-1 (SAHAJ) in FY 2022-23?

ITR-1 Sahaj form can be filed by such taxpayers who-

• Be an Indian resident.
• The total income in the financial year 2022-23 (AY 2023-24) should be less than Rs 50 lakh.
• Income source should be salary, pension or family pension.
• Having income from a house property.
• Agricultural income up to Rs.5,000.
• Earning from interest and dividend from bank/ post office.

When a taxpayer can’t file ITR-1 Sahaj Form for FY 2022-23?

When a person earns income from any of the sources mentioned below then that person cannot file ITR using ITR-1 form.

• Individuals with an annual income of more than Rs.50 lakh.
• RNOR and NARI
• People who have more than one house
• If having Income from horse race, lottery or legal gambling
• If you have short term or long term capital gains from the sale of shares, mutual funds, land.
• Earning more than Rs 5,000 through agriculture.
• People who are getting income from both business and job.
• If TDS has been deducted for withdrawing money from bank or post office in excess of the prescribed limit
• Individuals who have any asset in a foreign company.
• People who have invested in non listed stocks.
• Be a director of a company or have a bank account abroad.

Who Should File Income Tax Return?

It is mandatory to file an income tax return if your annual income is higher than Rs. 2.5 lakh per annum. For senior citizens who are more than 60 years old and less than 80 years old, the limit is Rs. 3 lakhs. For senior citizens who are more than 80 years old, the limit is Rs. 5 lakhs. An income tax return is the information stating the income and losses of an assessee as per the format stipulated by the income tax department.

It is crucial to determine whether you fall under the mandatory filing category or the voluntary filing category:

a) Mandatory filing: Individuals and businesses whose total income exceeds the threshold limit specified by the tax authorities must file ITR.

b) Voluntary filing: Even if your income falls below the threshold, voluntarily filing ITR can be advantageous, especially when claiming tax refunds or to maintain a financial record.

Understanding the ITR forms:

The Income Tax Department provides different ITR forms based on the type of taxpayer and their sources of income. The commonly used forms include ITR-1 (SAHAJ), ITR-2, ITR-3, and ITR-4. It is crucial to select the appropriate form that matches your income sources and tax profile. One should hire with consultant for filling income tax return.

Documents Required For Income Tax Return (ITR) Filing In India:

To file Income Tax Returns in India, there is a list of preparations you need to make so that you can make your ITR filing process hassle-free. Considering this, the Government of India gives taxpayers sufficient time to compile their documents, like the bank statements, salary/income details, previous year's tax statements, etc.

What are the important documents required for filing ITR?

Before initiating the ITR filing process, ensure that you have the following documents and information readily available:

a) PAN (Permanent Account Number)

b) Aadhaar card

c) Bank statements

d) Salary slips/Form 16 (for salaried individuals)

e) Form-16A/ Form-16B/ Form- 16C

f) Investment and expense proofs (such as medical bills, home loan certificates, etc.)

g) Details of income from other sources (rental income, dividend income, interest income, etc.)

h) Home Loan Statement

i) Capital Gains Details

j) Foreign Income

k) Previous year's tax statements e.tc.

Step-by-step ITR filing process:

a) Online Creation of account: Create an account on the Income Tax e-filing portal and register yourself as a taxpayer.

b) Selection of the appropriate ITR form: Choose the relevant ITR form based on your income sources and tax profile.

c) Fill in the details: Enter your personal information, income details, deductions, and tax liabilities in the respective sections of the form.

d) Verify and cross-check: Review the filled-in information to ensure accuracy and completeness.

e) Submit and file: After verifying the details, submit the form electronically and generate an acknowledgment.

f) Verification of ITR:  Verify the ITR via e -filling through AADHAR verification or dsc verification or one can choose to sign physically Download the acknowledgment (ITR) and sign it Send the signed copy to the Centralized Processing Centre (CPC) within the specified timeframe.

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Income tax return filing is a vital obligation that holds significance for both individuals and businesses. By understanding the essentials of ITR filing and following the step-by-step guide, you can fulfill your tax responsibilities efficiently. Remember, timely and accurate ITR filing not only keeps you compliant with the law but also helps you reap the benefits of tax refunds and financial record maintenance. Stay informed, be diligent, and make tax filing a hassle-free experience.

Benefits of Filing ITR (Income Tax Returns)

Indubitably, the practice of filing Income Tax Returns (ITR) proffers an array of multifaceted advantages that encompass not only the financial realm but also ensure compliance, transparency, and socio-economic stability. Elucidating the salient benefits of ITR filings in an erudite manner, one can expound upon the following points:

1. Legitimacy and Compliance: ITR filings serve as a testament to an individual or entity’s compliance with the prevailing tax laws and regulations. By diligently fulfilling this obligation, one demonstrates their commitment to legal and ethical practices, thereby fostering a sense of legitimacy in their financial affairs.
2. VISA Application: The likelihood that a visa application will be rejected or flagged as problematic decreases if ITR documentation is not submitted with the application. The tax return illustrates the person's civic responsibility. Several countries now demand ITR for visas due to rising security concerns. For instance, even if you had no income during those three years, you must submit the returns from the previous three years when applying for a Visa.
3. Maintenance of Record: The process of filing ITR necessitates the meticulous organization and preservation of financial records, including income, expenses, investments, and deductions. This conscientious practice aids in maintaining a comprehensive and systematic repository of financial data, facilitating future reference, audits, or legal requirements.
4. Assessment of Tax Liability: ITR filings enable individuals and entities to evaluate their tax liabilities accurately. By meticulously documenting their income and availing relevant deductions, taxpayers can ascertain their actual tax obligations, thereby avoiding potential discrepancies, penalties, or legal ramifications.
5. Claiming refund: Any individual can claim a tax refund from the IT Department by filing ITR. This is highly beneficial to salaried and self-employed persons falling in a high-income bracket.
6. Loss compensation: To calculate taxes, considerable losses incurred by an individual or a business, including speculative and non-speculative, short-term and long-term capital losses, and various other types of losses, cannot be shown for exemption in subsequent years, if income tax return is not filled. As a result, it is best to file returns regularly since you never know when you might need to request a reduction for prior losses.
7. Avoiding legal consequences: Non-compliance with ITR filing can lead to penalties, fines, or even legal consequences.
8. Creditworthiness and Financial Opportunities: ITR filings play a pivotal role in establishing an individual’s or entity’s financial credibility. Accurate and timely filings reflect fiscal responsibility and facilitate access to credit facilities, loans, mortgages, and other financial opportunities. Lenders and financial institutions often consider ITR filings as a reliable indicator of an applicant’s financial stability and repayment capacity.
9. Seamless processing of loans: When applying for a bank loan, the record of the previous three financial years’ Income Tax Return is considered. This is so because the assessee’s earnings and taxes paid provide a guarantee to the bank that the loan will be repaid.
10. Peace of Mind and Reduced Legal Risks: By conscientiously fulfilling their ITR filing obligations, individuals and entities can enjoy a sense of peace of mind. Compliance with tax laws mitigates the risk of legal disputes, penalties, or audits, fostering a secure and stable financial environment.
11. Responsibility towards the nation: ITR filings contribute to the overall development and progress of a nation. Tax revenues generated through ITR filings form a substantial portion of the government’s funds, enabling investment in infrastructure, public services, healthcare, education, and social welfare programs, thereby fostering socio-economic growth and well-being.

In conclusion, filing of Income Tax Returns stands as an imperative duty that not only ensures personal and organisational compliance but also a key ingredient in the social contract between citizens and the economy.