Income Tax Return Filing for salaried individuals: Income Tax Return (ITR) filing is a must for salaried persons. ITR should ideally be filed even by those whose annual income below the taxable limit.
Here are five benefits to filing your tax returns.
1. You can get your capital gains or losses adjusted: If you are investing in the equity market and have been buying or selling shares, filing an income tax return may be beneficial for you. As long as your total income is below the exemption limit, there is no compulsion to file an ITR. But you can get your short term capital losses adjusted against capital gains. What’s more, this adjustment can be carried forward for eight years as and when you submit your ITR for the respective year.
2. You will need ITR to claim any tax refunds: Once tax is deducted, any tax refund is facilitated only when you submit your income tax return for that year. So any TDS on rent payments for NRIs, or TDS deduction by banks on your fixed deposits will be refunded only once you file your tax returns and claim the desired tax deduction. You will need to file for tax refunds online once you file your ITR for that year.
3. ITR is required when you are applying for loans: Since your ITR is not just a financial document but also indicates your annual earnings, banks and NBFCs seek copies of your ITR when you approach them for a loan. Filing your returns despite having no taxable income will increase your chances of getting a loan approved as compared to someone with the same earnings but no ITR filings.
4. ITR is needed to claim any tax deductions: The Rs 2.5 lakh exemption limit is on your gross income. So, if your income is higher than Rs. 2.5 lakh, and you are seeking various tax exemptions to bring your income below that level, you will need to file your income tax returns. Even when there is no tax liability, filing of your ITR is mandatory in order to seek any tax deduction under various sections of the I-T Act.
5. ITR is mandatory if you own foreign assets: As an Indian resident, if you own any foreign assets, you are required to file your income tax returns as per law. This includes having movable or non-movable foreign assets including a bank account overseas. Failure to disclose your foreign holdings can lead to a possible fine and is considered to be an economic offence.
While paying salary to you, the employer deducts some amount of salary as income tax (Tax Deducted at Source or TDS) and deposits this amount on your behalf to the Government. After the end of year, your employer gives the statement of your salary, any other income and tax savings to you in a standard form and this form is known as Form No. 16.
Income Tax Return or I-T Return or ITR is a form to be filled by a taxpayer giving information about her sources of income, amounts of income earned and taxes paid by her in a particular financial year. Form No. 16 is between you and your employer, whereas the I-T Return is to be submitted by you to the Government.
Yes. If you have missed on certain tax savings in Form 16 (happens often), it is possible that in Form 16, your tax is computed more than your true liability. TaxBuddy.com combs through all the available saving options and gives a lot of importance to reduce tax while filing ITR.
Your employer is responsible for deducting and depositing your tax. If you don’t share your PAN or share wrong PAN, then he may deduct tax at highest rate of 20% on your salary and pay to the Government.
You may inform your employer so as to enable him to determine the correct tax-deductible from your income. In case you don’t provide these details to your employer, you need to pay advance tax or self-assessment tax on such income.
The Form 16 is as per the standard format prescribed by Income tax rules. As per that format, it has two parts, Part A and Part B. The Part A contains the basic information about the employer and employee like his address and TAN and PAN and the gross amount of income given by him to employee. In Part B, the complete details about different income sources, amounts of income and claimed deductions and the taxes deducted thereon are mentioned. Part B is most important for filing I-T Return.
The salary package you receive may contain different components like allowances, contributions to different funds, medical benefits, commission on profits etc. The different components of salary income are separated under three sub-sections of section 17 of the Income tax Act. These 3 sub-sections are 17(1), 17(2) and 17(3). The 17(1) contains basic salary, DA, HRA, TA, LTA etc. The 17(2) contains valuation amounts of perquisites like rent free accommodation, ESOPs, motor car etc. The 17(3) comprises of salary profits like commissions, fees or bonus.
In simple language these mean ‘perks’ of employment. These are generally non-monetary components of your salary package. There are different perquisites like rent free accommodation, use of motor car, club memberships etc. These are valued in money terms for inclusion in taxable salary. Such valuation is carried out as per Income tax Rules.
An employee sometimes receives bonus or commission or remuneration for something that he has done during the course of employment. This is known as Profits in lieu of Salary. These are fully taxable.
As per Law and Rules every salaried taxpayer is entitled to tax benefit on salary income of ₹50,000/-.
The excess tax can be claimed as refund by filing your income tax return (ITR). After your return is processed and provided the tax department accepts your refund claim, the amount claimed as refund would l be credited back to your bank account through Electronic Clearance Service (ECS) transfer.
The tax credit will cover TDS, TCS and tax paid by the taxpayer in other forms like advance tax, self-assessment tax, etc. The I-T Department will generally allow a taxpayer to claim the credit of taxes as reflected in his Form 26AS.
ITR stands for Income Tax Return. It is a prescribed form through which the particulars of income earned by a person in a financial year and taxes paid on such income are communicated to the Income-tax Department. It also allows carry -forward of loss and claim refund from income tax department.Different forms of returns of income are prescribed for filing of returns for different Status and Nature of income.