For some, filing Income Tax Return before deadline may sound like just another protocol that needs to be followed but for some it has developed to be a scary hoax that ruins their economical symbiosis and moreover creates a lot of complications. However, if any earning individual earns above the specified income threshold then it is mandatory for him/her to file income tax. However, filing income tax is not only important due to the legal needs but it also has an impact on one’s vital future accounts such as investments or loan applications. Therefore, income tax filing is necessary even if your employer deducts TDS from your salary.
Why must one file a return?
- According to law, one must file income tax if he/she earns above the basic exemption limit.
- Anyone who wants to carry forward a loss or claim an income tax refund needs to file ITR.
- ITR must be filed if long-term capital gains from equities have been earned.
- Filing ITR facilitates speedy loan processing, property registration, and visa application.
- Non-filing of ITR can draw a late filing fee up to INR 10,000 as per current budget announcement.
Any person who has a resident status of India and qualifies with the above conditions is required to file an annual return every year. Other than the above-mentioned conditions, one needs to file income tax return if he/she holds an asset or a signing authority in any foreign country. Therefore, if anyone receives income from any property held under trust for religious or charitable purposes then, he/she needs to file ITR.
Income tax return forms
The government of India has undoubtedly changed its course in the recent times to simplify the income tax filing process so that more citizens can file their taxes through simple measures. Tax filing has ascended to a digital platform pacing up than its physical format. This year, the income tax department has introduced simplified ITR forms to cut short the tedious tax filing process into a quicker one. The new version of simplified Form ITR1, ITR2, ITR3, ITR4, and ITR5 are available now from the official website.
Changes in ITR-1 Sahaj Forms to Simplify the E-filing ITR Process includes the elimination of the asset and liability section as an individual with an annual income under INR 50 lakhs cannot use it. ITR 2, ITR 2A and ITR 3 have been collaborated into a single form i.e. ITR 2 form. ITR 2 and ITR 4S Sugam forms are now renumbered into ITR 3 and ITR 4(Sugam) forms respectively. The total number of ITR forms has been reduced to 7 from 9 to make the process simpler for both the taxpayer and IT department.
Other changes introduced in the recent budget includes quoting the Aadhaar number on a mandatory basis. Individuals who still have not received their Aadhar number can quote their enrolment ID for this year only. Also, this year, taxpayers will need to mention all the cash transactions above 2 lakhs, post commencing of demonetisation.
There are many benefits associated with income tax return filing other than the fact that it is a mandatory duty of a citizen for every earning individual. A regular filing for income tax results to a better financial score that eventually leads to credibility of an individual through different paradigms such as applying for a loan or a credit card application or if one is applying for a visa to fly abroad. Filing regular income tax returns creates a credible tax history which reflects one’s persona of being a responsible citizen.
Non-filing of ITR and its consequences
Non-filing of income tax by the deadline will attract a penalty up to INR 10,000. According to new rules announced in the budget 2017, the penalty rules have bene further tightened so that taxpayers regards ITR filing more seriously.
IT department is going digitally advanced day by day and so as the IT rules. With digitalization of the taxation process, it is getting harder to escape tax liabilities as catching tax evaders is easier with the evolution towards digitization. Many sources are now linked with your identification number and IT department will be able to track myriad transactions with using that information. In the case of any discrepancy, one will receive a show cause notice.
So, it is advisable that you must file ITR not only to avoid the negative consequences but also to be a contributor to a transparent and advanced economy. Tax filing by the deadline can even get you an award certificate from the IT department. This is a new strategy introduced to encourage more people to file taxes. Depending on the amount of tax paid within the specified deadline, one can get a platinum, gold or a silver certificate from the IT department.