A tax return is a form or forms filed with a taxing authority who reports income, expences and other related tax information. Tax returns allow taxpayers to calculate their tax liability, plan tax payments, or request refunds for the over payment of taxes.
In most countries, tax returns must be filed annually for an individual or business with reportable income such as wages, interest, dividends, capital gains or other profits. Income tax laws of India are drafted by the government.
The Government imposes a tax on taxable income of all persons who are individuals, Hindu undivided families, corporations, firms, LLP, persons’ association, individuals’ organization, local authority and any other artificial juridical person.
According to these laws, levying a tax on a person depends on his or her state of residence. Every person who qualifies to live in India must pay tax for their global income.
Each and every financial year, taxpayers must follow a few rules when filing their income tax returns.
What is Income Tax Return?
Income tax return is a form by which the assessee files information about his or her income and tax thereon to the Income tax department. There are various forms like ITR 1, ITR 2. When you file a late return, you aren’t allowed to make forward certain losses. The taxpayer’s tax liability is calculated based on his or her income.
According to the income tax laws, any return must be earned by an individual or business for a financial year. Income may be earned through salary, business profits, household property income or dividends, capital gains, interests or other sources.
Tax returns have to be filed by an individual or business prior to the due date. If he or she fails to pay the tax with the stipulated time, he or she must pay a penalty. In case the return is shown to have been paid in excess of a year, then the individual may receive a tax refund from the Income tax department.
Is it mandatory to file an income tax return?
The basic exemption limit for your income is set by the Government of India. According to the tax laws in India, filing your income tax returns is mandatory if your income exceeds the basic exemption limit. The income tax rate is pre-determined for taxpayers. If you delay in filing returns, you will have to accept late filing fees, and it may also prevent the possibility of obtaining a loan or a visa for travel purposes.
What do you mean by filing income tax returns?
We regularly perform our duty by filing income tax returns. Tax return filing is everyone’s duty. It is from the tax we pay that the government also implements various welfare schemes, and salaries for civil staffs.
Who should file an income tax returns?
- As per the Income Tax Act, income tax is only payable by individuals or businesses who fall within the specified income brackets.
- All individuals should pay the appropriate tax according to their age limit.
- All registered companies, whether they are profiting or not year round, have to pay taxes.
- NRIs who earn or accrue more than Rs 2.5 lakh in India in a financial year should pay tax returns.