As the income tax return filing date has finally arrived, every tax-paying individual is busy preparing and filing their tax returns. While some file their returns themselves, others seek the help of tax professionals to correctly estimate and file their tax returns.
There are other individuals too who are new to the whole financial game and do not know how to file their returns. Which category do you fall in? Do you prepare your taxes yourself or are you clueless about the whole tax-filing concept?
What is tax return filing?
According to the Income Tax Act, 1961, every individual whose total annual income is above a certain level is required to pay an income tax on such income. The process of estimating the tax liability, preparing a tax return, and submitting the prepared return to the Income Tax Department is called tax filing.
Who files a tax return?
Any individual, Hindu Undivided Family (HUF), Company, Body of Persons, Association of Persons, etc. that has earned an income during the previous financial year would have to file a tax return.
What is the rate of tax payable?
India has a progressive system of taxation of income where the tax rate increases with the increase in income. There is an income tax slab which lists the various income levels and the applicable tax rate on such levels. This tax slab is subject to changes which might be done in any Union Budget. The tax slab applicable for the assessment year 2017-18 for individuals (aged below 60 years) and Hindu Undivided Families (HUFs) is as follows.
A surcharge of 10% of the income tax would be applicable if the income is between Rs 50 lakh and Rs 1 crore. The surcharge would increase to 15% of the income tax if the income is more than Rs 1 crore. Furthermore, a cess of 3% of the income tax and surcharge is also payable.
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How long should you keep the returns after filing it?
It is advised to keep your income tax return records for at least a period of at least 6 years after filing it. Why? Even after you have followed due process and filed your returns correctly, you must keep your records with you for the long term. This is because if the Income Tax Department raises a query or opens an investigation into your past returns, you will need your documents handy. The various documents which should be kept safe include Form 16 and Form 12B if you are a salaried employee, the ITR you have filed along with ITR-V, the copy of the challan which shows the tax paid, TDS certificates, your bank account statements, any intimation from the Income Tax Department, documents supporting the tax exemptions you have claimed, etc.
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Income tax filing has been made easy and simple with the introduction of the e-filing system. Under the e-filing system, you can file your returns online. This reduces unnecessary paperwork. Moreover, the Income Tax Department communicates with you online and you also get all the required documents as soft copies, which can be archived on your computer, online storage, or email where they are safe and accessible.
If you have already filed your Income Tax Returns, save a copy for future use. If you haven’t, make sure you archive your documents. You never know when you may need them again.
(The writer is CEO, BankBazaar.com)