financial services · Income Tax · income tax return

Grasping the Context of Income Tax Return Filing

Grasping the Context of Income Tax Return Filing
Every year, salaried individuals must collect Form 16 from the employers to file for tax deducted from salary. Self-employed individuals with income from sources other than salary must also file and finalize their yearly accounts. It is always advisable to be prepared while filing returns rather than waiting until the due date to begin the process.
As per Section 139(1) of the Income Tax Act, 1961 of India, return must be filed mandatorily by the following entities;
•    Any domestic, foreign, public or private company.
•    Firms inclusive of unlimited liability partnership firm and LLP.
•    Individuals whose total income in a financial year exceeds the general exemption limit.
When someone who falls below the exemption limit files for return it is known as voluntary return and this is also categorized as a valid return. In recent years, the government of India has simplified filing tax returns with e-filing policy. Simply put, e-filing is nothing but filing for return online. Under e-filing, taxpayers have the choice of either seeking the professional assistance of Chartered Accountants or filing through a government verified portal with the guide of tax experts.
Documents Required While Filing Tax Returns
Filing for Returns is a must for anyone who has a Gross Total Income that exceeds the exemption limit of Rs. 2.5 Lakhs within a financial year. The list of documents which are usually required during the filing of Income Tax Returns are as follows;

  • Form 16: Form 16 is required as it acts as a certificate to verify that tax has been deducted from your salary. It is also helpful in making you understand the income of your salary and the taxes which have been deducted on behalf of the government, by the employer.
  • Form 16A: You must collect Form 16A from those entities who have deducted tax during the time of payment. The entities authorized to make TDS include banks (if you have a fixed deposit account), companies, tenants to whom you (taxpayer) have rented out a property etc.
  • Summary of updated bank accounts operational under your name: This will give you an idea of all the income you earned within a financial year, including details on investments and expenses you have incurred. The Income Tax Department will be able to furnish a complete detail of all earnings from other sources which might be taxable.
  • Information of property you owned: If you have purchased any property within the financial year, you must produce details of the rent received (if applicable) and the receipts of payment for Municipal Tax. If the property was purchased on a loan, then you have to produce details of the loan taken and the interest paid on the loan.
  • Sale and purchase bill, documents, contract note for investments made, assets sold: As a taxpayer, you are required to produce any purchase documents related to sales made within the year. For larger transactions, before computing the taxable income, you must prepare a statement of the sale, documents which will verify investments made on the purchase, the loss and profit documentation etc.
  • Details of tax payments: If you have made any Advance Tax payment within the year then you must produce the details.

The different types of e-Filing procedure

  • Digital Signature Certificate (DSC): You can utilize the Digital Signature Certificate to e-file tax returns. Digital Signature Certificate is mandatory for certain segments of businesses, families, and individuals. This method guarantees a convenient and secure procedure, especially if you are carrying-out larger electronic monetary transactions.
  • If you are filing the returns without DSC, then you must generate an ITR-V form which has to be printed, signed and submitted to CPC, either by ordinary post or speed post, within 120 days after the date of e-filing.
  • You can also e-file for returns via e-Return Intermediary (ERI), which is a system that enables authorized intermediaries to e-file on your behalf.

Clarifying the Misconception Regarding Filing Returns
Many salaried individuals have this misconception that since taxes have already been deducted from salaries by the employer so there will be no requirement to file for returns. However, this is not the case. As a taxpayer, although tax has been deducted from your salary and you have zero liable dues, it is mandatory to file for Income Tax Returns.

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