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All about Income Tax Returns

All about Income Tax Returns

The forms used to file income taxes with the Internal Revenue Service (IRS) are known as Income Tax Returns. Tax returns are set up in an excel worksheet format, where the income figures are used to calculate the tax liability of persons. Tax returns must be filed every year for an individual or business that received taxable income during the year, whether through regular income (wages), interest, dividends, capital gains, or other profits.

Income Tax Returns are prescribed form through which the particulars of income earned by a person in a financial year and taxes paid or payable on such income is communicated to the Income tax department after the end of the relevant Financial year.

Different forms are prescribed for filing of returns for different nature of income & status of the person

You must choose an IT return form according to your status and nature of income from the following:

ITR1This Return Form is to be used by an individual whose total income for the year includes:- 

(a) Income from Salary/ Pension; or 
(b) Income from One House Property (excluding cases where loss is brought forward from previous years); or
(c) Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)
This Return Form cannot be used by any resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India.ITR2This Return Form is to be used by an individual or Hindu Undivided Family whose total income for the assessment year includes:-

(a) Income from Salary / Pension; or 
(b) Income from House Property (including cases where loss is brought forward from previous years); or 
(c) Income from Capital Gains; or 
(c) Income from Other Sources (including Winning from Lottery and Income from Race Horses).

Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used where such income falls in any of the above categories.
This Return Form should not be used by an individual whose total income for the assessment year includes Income from Business or Profession.

ITR 3 For Individuals or Hindu Undivided Family being partners in firms and not carrying out business or profession under any proprietorship

ITR 4 For individuals & HUFs having income from a proprietary business or profession

ITR 4S Presumptive Business Income Tax Return

ITR 5 For firms, AOPs and BOIsITR6For Companies other than companies claiming exemption under section 11

ITR 7 For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)

ITR V Where the data of the Return of Income in Form ITR-1, ITR-2, ITR-3, ITR-4, ITR-4S, ITR-5 & ITR-6 transmitted electronically without digital signature

These Income Tax returns are to be filed before your Assessing officer. It can be sent by post or filed electronically. Nowadays returns are also being received at designated post offices.

The due dates for filing Income Tax Returns are as follows:

Companies & their Directors30th September
Other business entities, other than companies, if their accounts are auditable & their working partners30th September
In all other cases31st July

It may take the form of interest if the return is not filed before the end of the assessment year & If the return is not even filed after the end of the assessment year too, penalty may also be levied to you.

A return may be furnished at any time before the expiry of two years from the end of the financial year in which the income was earned. For example, in case of income earned during FY 2011-2012, the belated return can be filed before 31st March 2014.

Being sensitive to the changing economic climate, the new Income Tax return forms are annexure less. Hence no documents need to be attached with them. The Central Board of Direct Taxes have notified return forms for the assessment year 2008-09 and onwards, with a view to enabling tax-payers to file returns in the electronic mode, these returns (except ITR-7) have been made annexure-less. The instructions for filling up the return forms clearly stipulate that “No document (including TDS/TCS certificate, report of audit) should be attached to this form.

All Companies whether foreign or Indian, partnership firms and firms under audits are compulsorily required to file their Income Tax returns electronically, while for others it is still optional. For e-filing of your returns you have to log on to the Departmental website  and upload the information of income and taxes in the prescribed form. If you have digital signature the same can be appended and there would be no need to file a paper return. In case you do not have a digital signature you will be required to send the acknowledgement received on completion of uploading.

Filing of Income Tax return is your constitutional duty and earns for you the dignity of consciously contributing to the development of the nation. This apart, your IT returns validate your credit worthiness before financial institutions and make it possible for you to access many financial benefits such as bank credits etc. By not filing your return in spite of having taxable income, you will be laying yourself open to the penal and prosecution provisions under the Income-tax Act, 1961.

Another benefit of return filing is also that if you have sustained a loss in any financial year, which you prefer to carry forward to the next year for adjustment against next year’s positive income, you can make a claim of loss by filing your return before the due date.

The return once filed can be revised also, provided the original return has been filed before the due date and provided the department has not completed assessment. However it is expected that the mistake in the original return is of a genuine and bona fide nature. These returns can be revised any number of times before the expiry of one year from the end of the assessment year or before assessment by the department is completed; whichever is earlier.

You must keep a copy of your return filed with you, Since legal proceedings under the income tax act can be initiated up to six years prior to the current financial year, you must maintain such documents at least for this period. And I personally suggest you should keep it forever. It will be beneficial for you.

The amounts paid as advance tax and withheld in the form of TDS or collected in the form of TCS will take the character of your tax due only on completion of self-assessment of your income. This self-assessment is intimated to the department by way of filing of return. Only then does the government acquire rights over the prepaid taxes as its own revenue. Filing of return is critical for this process and hence, has been made mandatory. Failure will attract levy of penalty

All about Income Tax Returns

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