An individual or corporation who is a resident of India and receives a regular income from one or more sources is required to pay taxes to the government.
According to the new income tax slab, filing ITR is mandatory for some and optional for others; however, filing it is required regardless of which group one falls into.
What is an ITR?
It is used by taxpayers to disclose their assets and income to the Indian Income Tax Department on the ITR form (Indian Revenue Authorities). Taxpayers’ legal and economic information may be accessed using this database.
The ITR is basically a taxpayer’s self-declaration of their income, assets, and taxes paid. While it is usually completed electronically, elderly people can do it manually as well.
Subject to particular exemption restrictions, any person, real or fictitious, natural or artificial, incorporated or otherwise, is obliged to submit an ITR.
According to the statute, a taxpayer may be a person, an artificial judicial person, a body of people (BOI), an undivided Hindu family (HUFs), an association of persons (AOP), a corporation, trust, firm, or a society.
Attachments such as proof of investment, tax deducted at source (TDS) certifications, and the like are not needed for electronic or manual filing of ITR forms since they are not necessary ITR forms.
It is, however, advisable to save all the papers and provide them to the tax authorities when necessary, especially in cases such as assessment, investigation, and so on.
Is it a must for everyone to file an income tax return?
Individuals and businesses in India are obliged to submit income tax returns on all forms of funds that surpass the Rs. 2.5 Lakhs level, as mandated by the Indian Income Tax Act of 1961 (ITA).
Over and above this income threshold, the income tax department calculates an individual’s tax burden using the appropriate new income tax slab rates. However, regardless of income, filing income tax forms is a desirable practice.
Starting with the 2020-21 fiscal year, seniors over 75 who rely only on a pension will not be required to file an income tax return. After submitting his tax returns by completing the ITR form online, a person will be alerted whether he paid too much tax during the fiscal year.
The Benefits of Filing Income Tax Returns
Most Indian people tend to take filing income tax returns for granted, which bodes poorly for tax collection. Submitting tax returns is a yearly obligation for all citizens.
Given below is the list of the benefits of filing your taxes ahead of schedule:
1. A symbol of accountability
While the government requires those earning more than a specific annual income level to file returns, it also sends a signal that you, as a responsible member of the country, would not skip paying taxes before the stipulated date to avoid penalties.
2. Adjustment of claims
Past losses sustained by a person or company in a given fiscal year are ineligible for tax relief in future fiscal years. As a consequence, it is vital to complete your tax returns on time so that any losses may be utilized to offset your tax liability for the year.
3. Revisions to returns
Taxpayers who submit an initial return for a certain fiscal year have the option of filing an amended return if required in the future. This is a crucial point to remember for voluntary taxpayers since failing to submit income tax returns may result in an Rs. 5,000 penalty
4. Credit application proof
Your ITRs may be used as financial evidence by credit organizations and financial institutions when evaluating your loan or credit card application.
New Income Tax Slabs for Fiscal Years 2021-22
Individuals in India pay income tax using a new tax bracket system. A new income tax slab structure implies that different tax rates are imposed for distinct income categories. This kind of taxation enables the government to implement progressive and fair taxation schemes.
Taxpayers under this new system have the OPTION of:
- To pay income tax at lower rates under the New Tax system in return for sacrificing certain permitted new income tax slab exemptions and deductions.
- To keep paying taxes at the present rates.
- The assessee may gain refunds and exemptions by staying in the former system and paying tax at the current higher rate.
Those who are under 60, those over 60, and those 80 and older will all be subject to the new tax system’s similar tax rates, so keep that in mind while making your calculations. As a consequence, under the New Tax structure, there will be no expanded basic exemption limit advantage available to senior and super old citizens.
Individuals with a net taxable income of less than or equal to Rs 5 lakh would be eligible for a tax refund under Section 87A, resulting in a tax burden of zero under both the new and old/existing tax regimes.
The baseline exemption limit for NRIs, regardless of age, is Rs 2.5 Lakh.
An extra 4% Health and Education cess will be added to the new income tax slab in all cases. (This is an increase from 3% in the fiscal year 2018-19).
There will be a surcharge in all of the above-mentioned categories depending on the tax rates stated below:
- If your entire income exceeds Rs.50 lakh, you will be taxed at a rate of 10%.
- If your entire income exceeds Rs.1 crore, you will be taxed at a rate of 15%.
- If your entire income exceeds Rs.2 crore, you will be taxed at a rate of 25%.
- If your entire income exceeds Rs.5 crore, you will be taxed at a rate of 37%.
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Wrapping It Up
Income tax returns are a critical requirement for all Indian citizens and must be done meticulously and on time. Because income tax return filing is now done online, filing and recording your ITR without having to fill out a lot of paperwork is considerably simpler.
To avoid penalties, be sure to gather all required documents and file your income tax return on time each fiscal year.