In India, every assessee, whether having taxable income or not, is required to file an income tax return for the income earned by him/her in the financial year.
Income tax is a direct tax paid to the government on an assessee’s income. Any person eligible to pay income tax can file Income Tax Returns when his total income from all sources exceeds the basic exemption limit. A Nil return can also be filed when the income of the assessee is within the exemption limit.
Who Needs To File Income Tax Return?
Under the Income Tax Act, every person who is deemed to be an assessee is liable to file the ITR every year. Within this definition, a person includes the following entities:
- An Individual
- A Hindu Undivided Family(HUF)
- A Company
- A Firm
- An Association of Persons (AOP) or a Body of Individuals (BOI), whether incorporated or not.
- A Local Authority
- Artificial judicial persons
Filing the Income Tax Return is very important as the ITR return acts as the proof of the person’s income can be used for various purposes such as applying for a loan.
Important Of Filing ITR Returns In India
The reasons to file income tax returns are as follows:
- Financial Record: Filing your income tax return every year enables the Income Tax department to keep a record of one’s financial transactions.
- Availing Loans: Income Tax Returns act as a record to be placed before banks at the time of taking loans and availing financial assistance.
- Refund: ITR includes details of one’s income and TDS deducted. Therefore, if tax deducted is more than the tax liability, refund is received from the IT department based on the information furnished in the ITR.
- Avoid Penalty: In case a person fails to file his/her ITR within the assessment year, he will be liable to pay the penalty along with interest under section 234A.
- Applying for VISA:Filing your ITR is mandatory in case of applying for a VISA for foreign travel.
Income tax is calculated on an individual’s salary, interest income from savings, income from mutual funds, the sale of property or business or professional income. There are certain deductions available under the Income Tax Act, that can be claimed when filing the ITR return.
The last date to file the Income Tax Return in India is July 31. After this date, the IT department starts sending notice to tax evaders for non-filing of their ITR.
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