Tax

7 Important Tax Returns

Income Tax was introduced by Sir James Wilson on 24th July 1860 when India was a British colony. It was then imposed only on royalty, richer class and British officers. Today the system is much more regulated and has various guidelines. Income tax returns are to be filed after every financial year for the income earned in such financial period. Financial year or previous year in India is the twelve month period starting from April 1 to 31st March of next year. Period following this previous year is the time when income tax return needs to be filed before the due date defined by the Income Tax Department. There is fixed format of Income Tax Return notified by the Income Tax department for this purpose. Even if a tax payer has paid all taxes or has no refund, the return needs to filed by due date every year. There are five income heads under which an individual’s income is classified:

  • Income from Salary
  • Profit and gains of business and Profession
  • Income from House Property
  • Capital gains
  • Income from other sources

Many tax payers question the logic of filing returns as they assert that the tax is paid. But this exercise is mandatory by law and serves the following purposes:

  • An Income Tax Return consolidates all incomes and losses of a financial year in one form giving you a clear visibility in your financial situation.
  • Consolidation enables correct computation of tax because the tax is levied on total income and when income from all sources is brought at one place the tax bracket might go up. For example your employer has levied a TDS at the rate of 20% but when your income from deposits, rent and other sources is added, 30% might be applicable. In the same way certain loss of property, capital loss, loss from business etc may bring down the tax liability thus enabling you to claim refund of tax already deducted and paid.
  • As mentioned earlier filing return is compulsory and required by law. A failure to do so can result in significant penalties and in some cases, court proceedings too.

Different types of Income Tax returns

Now that we have discussed basics of Income Tax returns, let us familiarize you with different types of Return forms that are applicable to different class of tax payers.

  • ITR 1 (SAHAJ): It is applicable to individuals and Hindu Undivided Families (HUF) that do not have income from business or profession.
  • ITR 2: This form is applicable to those individuals and HUFs that are partners in firms and not carrying out any business or profession under any proprietorship.
  • ITR 3: This form can be used where tax payer pays presumptive tax. Now presumptive tax is a scheme whereby eligible businesses and professionals can compute income on certain presumptive basis at a minimum prescribed rate. The advantage of this scheme for tax payers is that they do not have to then get their accounts audited as the tax is paid on the presumptive income.
  • ITR-4S (SUGAM): Those individuals and HUFs who have income from proprietary business or profession need to file their return using ITR-4S.
  • ITR 4: This form is applicable for firms, Association of Persons and Body of Individuals.
  • ITR 5: This form is to be used by Companies other than companies claiming exemption under section 11.
  • ITR 6: Persons including companies required to furnish return under section 139 (4A), 139 (4B), 139 (4C) and 139 (4D) are required to file their returns in ITR 6.
  • ITR 7: This form is the acknowledgement for e-return as well non e-return.

Due Dates for Filing Returns

Due Dates of Different Income Tax Returns are enumerated as below:

  • 31st July’2017: All those assessees who do not have to get their books of accounts audited under Income tax law or any other law in force are to file their return by 31st July’2017.
  • 30th September’2017: A company, a person who is required to get the books of accounts audited under income tax Act or any other law in force or a working partner of a firm whose accounts are required to be audited under this or any other law in force.

If the tax liability of a tax payer is more than Rs 10,000 in a financial year then advance tax should be paid by following due dates notified by the Act:

  • 15th June: First Quarter
  • 15th September: Second Quarter
  • 15th December: Third Quarter
  • 31st March: Last Quarter.

This way the total tax is to be paid covering 15%, 45%, 75% and 100% tax over four installments.

At Letzbank you can file your returns through the most trusted and reliable tax filing platform Clear Tax. Clear tax presents the best and most convenient way of filing tax returns. It is super simple to use and comes absolutely free! They also guide you in saving taxes by investing. Just enter your total income and Clear tax will show you various areas like HRA, Children’s school fees, PF and similar avenues that can help you save considerable tax under each head. They also have tie ups with India’s best performing funds where you can invest and save taxes. It is your one stop shop for tax return, payment and tax savings. So visit letzbank today and get your finances in order!