Default Clause: July 2016

I’m taking the #TaxPledge to file IT returns with the easy Income Tax efiling option from H&R Block at BlogAdda.

https://youtu.be/s5dJVvimajA

There is less than a month left to file income tax returns (ITR) for last financial year FY 2015-16 (AY 2016-17) and many people are still confused if they should even file their ITR.

Who needs to file ITR Mandatorily?

If your total gross income in FY 2015-16 was more than the taxable limit, you need to file your income tax returns. The limit was as follows:

For people less than 60 Years of age – Rs 2.5 LakhsFor people between 60 to 80 years of age – Rs 3 LakhsFor people above 80 years of age – Rs 5 Lakhs

This income means income before availing any tax deductions from 80C to 80U.

You also need to file your ITR if you are resident have any asset or financial interest in an entity located outside of India.

Why you should file ITR?

Even if you are not in the above category that needs to mandatorily file their return, you should file your returns.

1. Claiming excess Tax Refunds:

There is no other way to claim excess tax refunds than filing ITR. Today TDS deduction has become mandatory across a lot of payments. The employer deducts TDS from salary, bank from FD interest rates, companies from payments to consultants, etc. Due to this you might have paid extra tax. The only way to get it back is file your ITR.

2. Carry forward losses:

Income tax laws allow you to carry forward and adjust some losses like stock market transactions (short term capital gains) against future income. For this you need to file your ITR showing these losses.

3. Loan processing:

If you are hunting for loans from financial institutions, they insist on 2 to 3 years of ITR. ITR is the most authentic proof of income of person and it helps banks understand your financials over the years.

4. Visa Processing:

If you are planning to apply for work or immigration visa, you must have your 2 to 3 years ITR ready. This is especially applicable for US, UK, Canada and other European countries.

The good thing is over the years ITR filing has become easier and more and more information on how to fill forms are available online. Even if you hire a tax preparer it won’t cost much especially in low income cases.

All in all the effort involved in filing tax returns far out weights the advantages and hence go for it!

Under Income Tax Law if your total income exceeds the basic exemption limit: You have to file the Income Tax Return within the prescribed time, i.e. by the due date.

I’m taking the #TaxPledge to file IT returns with the easy Income Tax efiling option from H&R Block at BlogAdda.

What happens if a person does not file the Income Tax Return by the due date?

https://youtu.be/s5dJVvimajA

You have to Pay Interest on Income Tax Due if you don’t file on time

If you do not file the Income Tax Return by the due date:

You are liable to pay interest at the rate of one percent for every month after the due date till the date of filing the return.

If No Tax is due: Interest is calculated on the amount of tax payable after adjustment of pre-paid taxes like advance tax, TDS etc. So, if there is no tax payable on the basis of the Income declared in the Tax Return, there is no liability for the payment of interest.

You don’t get the benefit of Carry Forward of Losses if you don’t file on time

Under income tax law, if you have sustained a Business loss or loss under the head “Capital Gains”, you can carry forward the loss ONLY if you file the Income Tax Return by the due date.

Therefore, if you have sustained a loss, you must file your Income Tax Return in time if you want to carry forward the loss for future adjustment with your Income.

Possibility of Penalty or Prosecution by the Income Tax Department

Say you could not file the Income Tax Return by the due date: To avoid any penalty by the Income Tax Department, you must file your Income Tax Return before the end of the relevant assessment year that is 31st March

Possibility of Penalty and Prosecution: If you do not file your Income Tax Return, the Income Tax Department may impose a penalty, even though the tax payable by you may be Zero.

Further, if a person has failed to file the Income Tax Return and the tax payable after adjustment of advance tax and TDS exceeds limit, he may be prosecuted for imprisonment also. However, this law is used in practice very rarely.

Other reasons for filing the returns of income within time

· If a refund is due after adjustment of prepaid taxes, it is necessary to file the Income Tax Return to get the refund from the Income Tax Department.

· Bank Loans: Further, the return is a declaration of your income and it will be extremely helpful when you are applying for a loan from bank. Before granting the loan, banks want to know your financial capacity and your income details as shown by you in income tax returns.

· Visas of foreign countries: Many countries want to know if you are financially sound before they issue you a visa and for this purpose they will rely on your income tax returns.

BENEFITS OF TAX FILING

Filing of tax returns ensures that the individual is compliant with the tax laws.

There are other benefits also. By staying within the time lines, the individual would be able to manage his financial affairs effectively. For instance: - The acknowledgment for filing the tax returns would come in handy in case a visa is required to be obtained; the document would serve as proof of the financial soundness of the individual.
- If a loan is required to be obtained from a financial institution, the tax returns would be required to prove the ability of the person to repay the loan
- Excess taxes paid by an individual either by way of tax deduction or advance/self-assessment tax can be refunded only by filing tax returns.

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Saturday, 16 July 2016

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