What is Return on Income Tax?

The Income Tax Return is a form used by the Income Tax Department to file details about your income and taxes. A taxpayer’s tax obligation is measured based on his or her wages. If the return indicates that the excess tax was paid during the year, the taxpayer would be entitled to obtain an income tax refund from the Department of Income Tax.

The return must be filed every year by a person or company that earns some income during a financial year, as per the income tax laws. Income may be in wages, company earnings, household income or dividend income, capital gains, interest, or other sources.

Tax returns have to be filed before a defined date by an entity or corporation. If a taxpayer fails to comply with the deadline, he or she has to pay a fine.

Who can file Income Tax Returns?

According to the Income Tax Act, only persons or companies who fall under those income brackets have to pay income tax. Entities or companies required to file their ITRs in India forcibly are listed below:

  1. All persons up to the age of 59 whose total income exceeds Rs 2.5 lakh for a financial year. For senior citizens (aged 60-79), the cap rises to Rs. 3 lakh and the limit is Rs. 5 lakhs for super senior citizens (aged 80 and above). It is necessary to remember that before factoring in the deductions permitted under Sections 80C to 80U and other exemptions under Section 10, the income sum should be determined.
  2. All registered companies produce sales, irrespective of whether they have made any profit over the year.
  3. Many want to demand a refund on the deducted/income tax surplus tax they’ve paid.
  4. Individuals who have properties or companies with financial interests located outside India.
  5. International companies that benefit from transactions made in India benefit from the Treaty.
  6. NRIs who in a single financial year gain or accrue more than Rs. 2.5 lakh in India.

Income Tax Slab Rates FY 2020-21

Income Tax Slab Tax Rates
Rs 0.0 – 2.5 Lakhs NIL
Rs 2.5 – 3.0 Lakhs 5% (Tax rebate u/s 87A is available)
Rs 3.0 – 5.0 Lakhs 5% (Tax rebate u/s 87A is available)
Rs 5.0 – 7.5 Lakhs 10%
Rs 7.5 – 10.0 Lakhs 15%
Rs 10.0 – 12.5 lakhs 20%
Rs 12.5 – 15.0 Lakhs 25%
>Rs 15.0 Lakhs 30%

Before you start your e-filing process, it is necessary to have all the relevant documentation available.

Necessary documents to complete the ITR

  • Passbook for bank and post office savings account, PPF account passbook
  • Pay Slip
  • Aadhar Card, PAN card
  • Form-16- Your employer’s TDS certificate given to you to provide you with details of the salary paid and TDS deducted on it, if any,
  • Bank and Post Office Interest Certificates
  • Form-16A, if TDS is deducted beyond the stated limits in compliance with current tax laws on payments other than wages, like interest earned from fixed deposits, revolving deposits, etc.
  • Form-16B from the buyer, showing the TDS deducted from the amount paid to you if you have sold a house.
  • Form-16C from your tenant to provide you with the TDS data deducted from the rent you paid, if any.
  • Form 26AS – the annual consolidated tax statement. It has all of the tax details deposited against your PAN.
  • TDS that has been deducted from your boss
  • TDS withheld by banks
  • TDS deducted from payments made to you by all other organizations
  • Advance taxes paid by you
  • Self-assessment taxes that you pay
  • Tax-saving investment evidence
  • Evidence to claim deductions in compliance with Section 80D to 80UU (health insurance premium for self and family, interest on education loan)
  • Bank home loan statement

Income Tax Forms in India Limits and slab rate for tax.

A tax is a compulsory financial fee levied on a taxpayer who may finance government spending and various public expenses as an individual or legal entity. There are mainly two tax types: Direct Tax and Indirect Tax.

Direct Tax: This is a tax paid directly to the government by a citizen or some other entity based on his income. The same person shall share the responsibility for the tax payment and the cost of the tax. Income tax is an example of the government’s Direct Tax on all income forms, including wage income, company income, trading income, rental income, interest income, dividend, and lottery or betting income.

Indirect taxes: Indirect taxes are the type of taxes where there is a disparity between the person who deposits the tax with the government and the tax burden. These taxes are usually included in the prices of the goods or services given to individuals and are then imposed by the person receiving the same from their customers. One of the most common forms of indirect tax is GST.

For those able to forego 70 tax concessions and deductions under it, the Union Budget 2020 launched a new concessional income tax system with lowered tax rates and altered income tax slabs. This new tax structure has been optional and continues to co-exist with the old/existing one applicable to the taxpayer, consisting of three tax rates and different tax exemptions and deductions (HRA, LTA, etc.). New income tax slabs and rates have entered into force for FY 2020-21 from 1 April 2020.

In the existing/old and new concessional tax schemes, persons who have a net taxable income of over Rs 5 lakh in a financial year are eligible to benefit from a rebate of tax of Rs 12,500 under section 87A. This essentially means that, under both tax systems, individual taxpayers who have net taxable income of around Rs 5 lakh are eligible for zero tax.

Keep in mind that people who have opted for the new tax system will not be able to benefit from common tax cuts, such as deductions under section 80C for a maximum of Rs 1,5 lakh in one financial year by investing in specified instruments, section 80D for medical insurance, house rent allowance, travel allowance, etc.

On the other hand, in FY 2020-21, people who have opted for the current tax system will continue to pay income tax at the same rates as they did in FY 2019-20.

Due date and punishment

If the taxpayer misses the due date to file his return, a late return will be filed. It is possible to file a late return either by the end of the applicable assessment year or before the assessment is done, whichever is earlier. A late return will be filed for the current assessment year at any time before 31 March 2021 if the taxpayer fails to file the return on or before 31 August 2020.

One big difference between missing and missing the ITR filing deadline last year – January 10 – this year is that this time you will have to pay a penalty of Rs 10,000, unlike last year when the penalty for delayed ITR filing was just Rs 5000 within a few months after missing the deadline.

This penalty or late filing fee will be applicable only if the gross net income exceeds Rs 5 lakh’s amount in the monetary amount for which the ITR is filed. If your net cumulative revenue in the financial year does not surpass Rs 5 lakh, then the late filing fee will be Rs 1,000.

The standard time limit for a person to file ITRs (whose accounts are not expected to be audited) is July 31 each year. The late filing fee is Rs 5000 when you meet the deadline and file a pending return by the same year, December 31. The late filing fee will be Rs 10,000 if you file a late return after December 31 but before March 31 of the relevant assessment year. As the time from July to 31 December would have already expired if the new deadline of 10 January 2021 was missed, the higher penalty of Rs 10,000 would therefore automatically become applicable.


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