INCOME TAX FILING
INTRODUCTION
Income tax filing is the method of providing your income data and tax-related data to the government for a specific financial year. In India, income tax filing is governed by the Income Tax Act, 1961, and is required for persons, firms, and companies whose incomes are above the specified levels. With the improvement of technology, e-filing of income tax has facilitated the whole procedure to be easier, quicker, and more convenient to taxpayers.
IMPORTANCE OF INCOME TAX FILING
Income tax filing is necessary not just to remain legally in compliance but also for keeping a transparent accounting record. When individuals or companies do their income tax filing properly they can claim refund on paid excess tax, can carry forward losses, and can create a legitimate income proof. Filing income tax is also necessary while availing loans, credit cards, or visas.
WHO SHOULD DO INCOME TAX FILING?
Income tax filing is required for people with incomes over ₹2.5 lakhs for the old regime and ₹3 lakhs for the new regime. It is also required by self-employed professionals, freelancers, and business people. Even if you don’t have income to be taxed, voluntary filing of income tax can be useful for financial and legal reasons. Firms, partnership concerns, and LLPs have grown to be income tax-filing compulsories irrespective of profit or loss. Pensioners and senior citizens should file income tax returns if their incomes exceed the mentioned limits.
What is E-Filing?
E-filing, or electronic filing of income tax, is the process of filing income tax returns online from the official Income Tax Department website (www.incometax.gov.in). E-filing has rationalized income tax filing by cutting down on paperwork and enabling taxpayers to fill in their returns from home. The portal also offers pre-filled information, cutting down on time and the scope of errors during income tax filing.
There are a few methods to file income tax online, including:
Utilizing the Income Tax Department’s free online facility.
Using approved tax filing websites.
With the help of Chartered Accountant who can file your return electronically.
E-filing also provides real-time status tracking of your return, accelerated processing of refunds, and smooth verification using Aadhaar OTP, net banking, or Digital Signature Certificate (DSC).
ADVANTAGES OF INCOME TAX FILING
There are numerous benefits of income tax filing, such as:
– Filing of income tax prevents legal penalties and indicates that you are a respectable citizen.
– In case of excess tax deduction, income tax filing is required to claim refunds from the government.
– Proof of income through filed returns is crucial for availing home loans, car loans, and visas.
– Timely filing of returns helps you carry forward capital losses and offset them against subsequent gains.
– Non-filing or late filing may attract charges between ₹1,000 to ₹5,000. Proper income tax filing saves you from these impositions.
– One needs to file income tax returns for government job applications, contracts, and tenders.
CONCLUSION
Income tax filing is not just a legal obligation, it is a wise financial practice. Since the arrival of e-filing, the task has turned out to be handy, fast, and paperless. If you are a salaried person, self-employed, or a businessperson, income tax filing within time keeps you in compliance, saves you money, and reinforces your financial record. File your returns on time and obtain the long-term advantages of effective income tax filing.
