Tuesday, July 17, 2012

Income Tax Returns

Annual filing of Income Tax Returns

Annual filing of Income Tax Returns

"It was only for the good of his subjects that he collected taxes from them, just as the Sun draws moisture from the Earth to give it back a thousand fold."
- Kalidas in Raghuvansh eulogizing KING DALIP
Taxation in India has existed since ancient times. It was considered as a sacred duty in Vedic period. Taxation finds its references in many ancient books like 'Srimada Bhagavatam', 'Manu Smriti' and 'Arthasastra'.
In the modern times, income tax is an annual tax on income. The Indian Income Tax Act (External website that opens in a new window) (Section 4) provides that in respect of the total income of the previous year of every person, income tax shall be charged for the corresponding assessment.
Paying income tax is compulsory for all citizens whose gross total income - which includes income from salary, business, capital gains, property and other sources, before allowing for deductions - exceeds the basic exemption limit.




  What is Income Tax?



What is Income Tax?   Income tax is the direct tax paid to the Central Government by an individual or a company/firm within a given financial year (April-March). The Income Tax Department (External website that opens in a new window) is governed by the Central Board for Direct Taxes (External website that opens in a new window) (CBDT) and is part of the Department of Revenue (External website that opens in a new window) under the Ministry of Finance (External website that opens in a new window), Government of India.
The Income Tax Act (External website that opens in a new window), 1961 as amended by Finance Act 2012 (External website that opens in a new window), makes it obligatory upon any person to file a return if the person's total income or the total income of any other person in respect of which he is assessable - under this Act during the previous year - exceeded the maximum amount which is not chargeable to income-tax.




Who is to pay Income Tax?
The word income has a very broad and inclusive meaning. In case of a salaried person, all that is received from an employer in cash, kind or as a facility is considered as income. For a businessman, his net profits will constitute income. Income may also flow from investments in the form of Interest, Dividend, and Commission etc. Infact the Income Tax Act does not differentiate between legal and illegal income for the purpose of taxation. Under the Act, all incomes earned by people are classified into five different heads, such as: income from salary, income from house property, income from business or profession, income from capital gains and income from other sources.


  Tax Deduction at Source (TDS)



Tax Deduction at Source (TDS)   Tax Deduction at Source (TDS) is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted from a person at the time of making/crediting certain specific nature of payment to the other person and the deducted amount is remitted to the Government account. It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries.
Every person responsible for making payment of nature covered by TDS provisions of Income Tax Act shall be responsible to deduct tax. However, in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the turnover or professional receipt exceeds sum of Rs.40 lakh or Rs.10 lakh respectively (the limits are Rs.60 Lakh or Rs.15 Lakh respectively w.e.f. 01.07.2010) in previous year, he is required to deduct tax at source.




Income Tax Rates
Individuals, Hindu undivided families, AOPs, BOIs - The tax rates applicable to individuals are also applicable to a Hindu undivided family, an association of persons, body of individuals or an artificial juridical person. The rates applicable for the assessment years 2012-13 and 2013-14 are as follows:
Tax Liability to be computed for Assessment Year 2012 -2013 (Financial Year 2011-2012)
NB:- Individuals and HUF shall have to file ITR in only e-Return (External website that opens in a new window) format if the total income for AY 2012-13 is Rs.10 lakh and above.
Income (In Rs.) Tax Liability (In Rs.)
In case of individuals (other than women and individuals who are of the age of 60 years or more at any time during the financial year 2011-12)
Upto Rs.1,80,000 Nil
Between Rs.1,80,001 - Rs.5,00,000 10%
Between Rs.5,00,001 - Rs.8,00,000 20%
Above Rs.8,00,000 30%
In case of women (other than women who are of the age of 60 years or more at any time during the financial year 2011-12)
Upto Rs.1,90,000 Nil
Between Rs.1,90,001 - Rs.5,00,000 10%
Between Rs.5,00,001 - Rs.8,00,000 20%
Above Rs.8,00,000 30%
In case of individuals who are of the age between 60 and 80 years at any time during the financial year 2011-12
Upto Rs.2,50,000 Nil
Between Rs.2,50,001 - Rs.5,00,000 10%
Between Rs.5,00,001 - Rs.8,00,000 20%
Above Rs.8,00,000 30%
In case of individuals who are of the age of 80 years or more at any time during the financial year 2011-12
Upto Rs.5,00,000 Nil
Between Rs.5,00,001 - Rs.8,00,000 20%
Above Rs.8,00,000 30%
In all the above cases 3% of the Income-tax will be Education Cess.
More details on tax liability computation can be found here (External website that opens in a new window).

The tax liability to be computed for Assessment Year 2013 -2014 (Financial Year 2012-2013)
Income (In Rs.) Tax Liability (In Rs.)
In case of individuals (other than individuals who are of the age of 60 years or more at any time during the financial year 2012-13)
Upto Rs.2,00,000 Nil
Between Rs.2,00,001 - Rs.5,00,000 10%
Between Rs.5,00,001 - Rs.10,00,000 20%
Above Rs.10,00,000 30%
In case of individuals who are of the age between 60 and 80 years at any time during the financial year 2012-13
Upto Rs.2,50,000 Nil
Between Rs.2,50,001 - Rs.5,00,000 10%
Between Rs.5,00,001 - Rs.10,00,000 20%
Above Rs.10,00,000 30%
In case of individuals who are of the age of 80 years or more at any time during the financial year 2012-13
Upto Rs.5,00,000 Nil
Between Rs.5,00,001 - Rs.10,00,000 20%
Above Rs.10,00,000 30%
In all the above cases 3% of the Income-tax will be Education Cess


  Filing Income Tax Returns



Filing Income Tax Returns   As per Taxation Rules, it is mandatory for an earning individual/entity to file a return irrespective of the fact that tax has been deducted at source by his/her employer or not, and whether he/she is eligible for a refund or not.
The Central Board for Direct Taxes (External website that opens in a new window) (CBDT) has modified the Rule 12 of Income Tax Rules (352 KB) (PDF file that opens in a new window) vide Notification No S.O.626 (E) dated 28th March, 2012 to provide that individuals and HUF shall have to file Income Tax Return for Assessment Year 2012-13 (Financial Year 2011-12) and onwards in only e-Return or electronic return (External website that opens in a new window) format if the total income for assessment year 2012-13 is Rs.10 lakh and above.
Exemption: As per the notification (External website that opens in a new window) issued by the Ministry of Finance (External website that opens in a new window) dated 17/02/2012, any individual whose total income for the relevant assessment year does not exceed Rs. 5,00,000 is exempted from filing return (for details click here (External website that opens in a new window)).
Category Downloadable Form Instruction
Indian Individual Income tax Return SAHAJ (ITR-1) (102 MB) (PDF file that opens in a new window) SAHAJ Instructions (464 KB) (PDF file that opens in a new window)

Print Instructions (274 KB) (PDF file that opens in a new window)
For Individuals and HUFs not having income from Business or Profession ITR 2 (163 KB) (PDF file that opens in a new window) ITR 2 Instructions (146 KB) (PDF file that opens in a new window)
For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship ITR 3 (165 KB) (PDF file that opens in a new window) ITR 3 Instructions (145 KB) (PDF file that opens in a new window)
Sugam - Presumptive Business Income tax Return SUGAM (ITR-4S) (1.3 MB) (PDF file that opens in a new window) SUGAM Instructions (477 KB) (PDF file that opens in a new window)

Print Instructions (274 KB) (PDF file that opens in a new window)
For individuals and HUFs having income from a proprietary business or profession ITR 4 (276 KB) (PDF file that opens in a new window) ITR 4 Instructions (170 KB) (PDF file that opens in a new window)
For firms, AOPs and BOIs ITR 5 (615 KB) (PDF file that opens in a new window) ITR 5 Instructions (108 KB) (PDF file that opens in a new window)
For Companies other than companies claiming exemption under section 11 ITR 6 (683 KB) (PDF file that opens in a new window) ITR 6 Instructions (105 KB) (PDF file that opens in a new window)
For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) ITR 7 (106 KB) (PDF file that opens in a new window) ITR 7 Instructions (87 KB) (PDF file that opens in a new window)
Acknowledgement (471 KB) (PDF file that opens in a new window) for e-Return and non e-Return.
Download Challans (External website that opens in a new window)




E-filing of Income Tax Returns
The E-Filing - External website that opens in a new window facility was introduced by the Income Tax Department for the first time during assessment year 2006-07. At present, it is mandatory for companies and firms requiring statutory audit under Section 44AB to e-file their Income Tax Returns. Also, the e-filing benefit has been extended to all assesses.
For registration in e-filling portal please click here - External website that opens in a new window.


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