Filing income tax returns: FM Arun Jaitley has presented Budget 2016 and tinkered just a little with the income tax returns.
Filing income tax returns: FM Arun Jaitley has presented Budget 2016 and tinkered just a little with the income tax returns. With everyone interested in knowing what is going on, we look tangentially away at the most important aspect of tax – filing income tax returns. There is a common misconception among salaried people that filing tax returns is not mandatory as tax is compulsorily deducted from their salaries anyway. Most people are also not convinced about the reason why they should file income tax returns since they work hard to earn a living and a chunk of their salary goes towards filling tax obligations and it seems like a waste of time to keep a record of the same. But they are wrong. When an individual files his tax returns meticulously year after year, he creates a financial record with the Income Tax Department. This record is sought after when one is seeking credit such as home loans or vehicle loans and even when one is applying for a visa. Any large investment also requires the proof of one’s financial record and income tax returns bear testimony to the same.
As per the current tax laws prevailing in the country, any individual whose gross total income exceeds 2.5 lakhs must file income tax returns (ITR). Further from the assessment year 2013-14, the Income Tax Department has made it mandatory for all taxpayers who have an income of Rs 5 lakhs to e-file their returns and made online tax returns filing quite simple and easy to follow.
However, people, even those who are willing to file income tax returns, often suffer from the misconception that it is too complicated and thus shy away from it. However, it is not as complicated as it seems. Today therefore we will make an attempt to break down the components of filing ITR for making it easy for you.
1. What do you pay taxes on?
You pay taxes on not just your salary but also from other sources of income. Your total income comprises of income from your salary that includes things such as your salary, leave encashments, allowances, bonuses and any other income you receive on the job as a part of employee agreement. Besides the income that you earn from your salary the other things taken into account are income from gains you or the income you earn from sale of a capital asset, income from your property that you own.
Income tax is applicable irrespective of whether the property is owned or rented. There is also income from business that is applicable to the income that you earn as a result of an independent business you may be carrying. Lastly, there is the income from other sources that you earn. This takes into account the interest you earn from fixed deposits and even the interest you earn from the money that lies in your savings account, monetary gifts and family pension. All of these heads are added up as your gross income. The Income Tax Act allows deductions of Rs 1.5 lakhs under section 80C which you can use judiciously by investing in tax saving instruments. Your gross income minus the deductions you are allowed, thus becomes your taxable income.
2. How you can file taxes online
As we mentioned earlier, it is easy for an individual to file taxes online these days. For people who are proficient enough, they can directly go https://incometaxindiaefiling.gov.in and directly file their returns after registering with one’s user id. For those attempting it for the first time, there are many popular e-filing websites today that simplify the process for taxpayers by explaining jargon and breaking down steps for taxpayers.
Most of these websites offer free services for basic e-filing, but the point to be remembered is that this covers only the income from your salary. However, if you have income from other sources you will need a premium package where you can either have professionals analyse your returns before you file them, or you can you can opt for a higher plan where a chartered accountant will file the returns on your behalf. However, before you decide on which service provider you want to go with, do run a check whether it is indeed authorized to file returns by the income tax department.
3. Filing income tax returns offline
If you are not quite sure of the online process you can also go ahead and file your returns offline. In such a case, you will need to either visit and income tax office or download the relevant forms from www.incometaxindia.gov.in. All the relevant details must then be filled in and submitted to the Aaykar Sampark Kendra or the helpdesk of the income tax department. Along with the returns, the taxpayer is also required to fill up an acknowledgement form which is essentially a summary of the ITR. This is then stamped by the IT department and given back to the assesse. However, needless to say one needs to be completely sure of the details that go into offline ITR if this mode is being chosen, so that there is no scope of error.
In this day and age, when everybody is in a quest to save time and increase efficiency, online filing of IT returns makes greater sense and is hassle free as well. Not only is it convenient, once you register online, your details are recorded once and for all, so that you do not spend time keying in personal data and other generic information each time. If you think you do not have the expertise required to do this yourself, you can also opt for online e-filing websites and be rest assured that your returns are being filed in an efficient manner.