Basics of Income Tax in India - How to File Income Tax Return in India?

What is Tax in India?

It is fee charged by a government on a product, income, or activity. Constitutionally the said money is to be used for the development and administration of public at large.

What are the Types of taxes in India?

What is the difference between Direct and Indirect taxes?

Direct tax is paid to government directly by the person whereas burden of Indirect tax is shifted from one tax payer to another, i.e. Income Tax is paid by person directly to government. However, taxes like VAT, Service Tax are levied via sale of goods or services.

What is Income Tax?

Income Tax is a tax levied directly on the income of a person. A person may be an individual, a partnership firm, a company, body of individual or any association of person.

What is Income in terms of Income Tax Act, 1961?

Income is inflow of money. Income Tax Act, 1961 gives an inclusive definition of income to include the following among others profit, gains, dividend income, salary etc. Thus any amount received which may not be truly salary or profit may also be called as Income if it derives a colour of profit or any other form of income.

What are the different types of Income head?

To facilitate the mechanism of collecting taxes from relevant assesses, the Income Tax Act has bifurcated Income into following five heads (broadly) -

·         Income from salary

·         Income from House property

·         Income from Business & Profession

·         Income from Capital gain

·         Income from other sources

There is a mechanism to compute income under each of these heads, including mechanisms as to what shall be exempt and what shall be allowed as deduction in each of these heads.

What is 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 is communicated to the Income tax department after the end of the financial year. Different forms are prescribed for filing of returns for different Status and Nature of income.

Who are supposed to pay tax?

As per charging section - section 4 of Income Tax Act, 1961

Income tax is payable by the person on his Income which is earned during the previous year at the applicable on relevant assessment year.

What is Tax rate?

Annexed herewith is the tax Rate Chart.

Particulars	Individual/Hindu Undivided family	Partnership firm	Company
			Indian Company	Foreign Company
Basic Tax	As per slab rate	30%	30%	40%
Sucharge	10% (If Income is more than 1crs.)	10% (If Income is more than 1crs.)	5% (If Income is more than 1crs.) 10% (If Income is  more than 10crs.)	2% (If Income is more than 1crs.) 5% (If Income is more than 10crs.)
Education cess	3%	3%	3%	3%

ndividual & Hindu undivided family has to pay the tax as per tax slab rate

Applicable for Individual Resident whose age is less than 60 yr

Income	Tax Rate
If the Income less than Rs. 2,00,000	NIL
If the Income more than Rs.2,00,000 but less than Rs.5,00,000	10%
If the Income more than Rs. 5,00,000 but less than Rs.10,00,000	20%
If the Income more than Rs.10,00,000	30%

Applicable for Individual Resident whose age is more  than  60 yr but less than 80 yr

Income	Tax Rate
If the Income less than Rs.2,50,000	NIL
If the Income more than Rs.2,50,000 but less than Rs.5,00,000	10%
If the Income more than Rs. 5,00,000 but less than Rs. 10,00,000	20%
If the Income more than Rs. 10,00,000	30%

Applicable for Individual Resident whose age is more  than  80 yr

Income	Tax Rate
If the Income less than Rs. 5,00,000	NIL
If the Income more than Rs.5,00,000 but less than Rs. 10,00,000	20%
If the Income more than Rs.10,00,000	30%

What due date for filing the return?

Following are due dates of filing return        

Type Assessee	Due Date
A company	30-Sep
A person other than a company whose accounts are required to be audited under the Income Tax Act or any other law
A working partner of a firm whose accounts are required to be audited under the Income Tax Act or any other law
Any other taxpayer (i.e. Individual,etc)	31-Jul

Is there are any Consequences to file return after due date?

Yes, if the return is file after the due date it will be consider as belated return. As per Income tax act belated 

return cannot be revised. Also, in terms of section 234 there may be interest payable on the balance unpaid tax.

What are the Benefits of Income tax return?

Following benefit which can receive from filing Income tax return

•          It acts as a standard income proof in event of higher studies in abroad will help in getting visa.
•          Quick loan application process
•          Claim your refund.
•          Claiming of carry forward losses

What are the Consequences of non-filing of income tax?

                                                           

·         Default, leads to interest liabilities and in some cases penalty as well.

·         The default may be with respect to delayed filing, non-filing, incorrect income disclosure, etc.

·      The individual is exposed to notices from the tax office, dealing with which could be a harrowing experience.

·         An individual may lose out on an opportunity to revise the tax return if the return is not filed in time.

·       A loss under one head of income, which cannot be set off against another, he may carry forward such losses to the subsequent financial years for future set-off.

How is Income Tax Return Filed?

 Return can be filed online via the official website of the Income Tax.  

 https://incometaxindiaefiling.gov.in/

Detailed procedure of the same is annexed hereunder.

What are the different types Income tax return forms?

Based on the types of income earned by the individual or company, Income Tax Act has mandated different types of Income tax Return form

Particulars                                   Person                                     Type Income tax form

Income only from salary                            Individual                                                 ITR-1(SAHAJ)

Income from salary & other              Individual & Hindu Undivided                        ITR-2                               Incomes                                           Family

Income from partnership firm         Individual & Hindu Undivided                        ITR-3                                                                             Family

Income from Business &                   Individual & Hindu Undivided                        ITR-4            Profession                                                Family

Presumptive Income                                     Any Assessee                                       ITR-4S(SUGAM)

All source of Income                                 Partnership firm                                         ITR-5

All sources of Income                                     Company                                                 ITR-6 (claiming exemption U/s 11)

All sources of Income                                 Company                                                  ITR-7

How is the ITR filed?

Following are steps which has to be followed for filing Income tax return on line

        Step 1:-:- You have to get registered at https://incometaxindiaefiling.gov.in/ for filing return online.

          Step 2:-- Download the appropriate ITR  from https://incometaxindiaefiling.gov.in/  ("Download" Menu).

          Step 3:-:- Open the downloaded Return Preparation Software (excel utility)

          Step 4:-- After filling the mandatory details in sheet validate each sheet by clicking the                                               ‘validate’ tab.

        Step 5:- After validating ITR you can ascertain the tax payable by clicking ‘Calculate Tax’tab

           Step 6:- Generate XML file by clicking on ‘Generate’ tab. It will create new sheet which contains 
                           summary of tax & other related details.

           Step 7:- Upload the XML file generated at  https://incometaxindiaefiling.gov.in/ using the login created in                     step 1.

          Step 8:- After Logging in Click on " Upload Return Link" appearing on the left hand side of the                                              dashboard. Select the approporiate ITR Form and Assessment Year.Click on Browse to select                              the XML File saved. Select the same and submit it.

 

          Step 9:- On successful upload of the return ; you will be asked to download "ITR- V". This document 

                          needs to be sent to Income Tax office after signing.