Income tax is levied on income earned by the assesse. It is tax on person who has declared his income from all sources, such person is liable to pay the tax directly to the Income Tax Department. The constitution of India has empowers the Central Government to levy tax on Income earned by person who exceeds the maximum exemption limit. As per Income Tax Act, the term income refers to a profits and gains of business or profession, salary, perquisites, any other amount received by employee from employer, allowances, any capital gains or winning lotteries, puzzles etc.
In India the Income tax return also denoted as ITR is to be filed online, no paper work is needed. ITR is to be filed every year for a financial year (viz. April to March). An income while filing the income tax return has to be brought under the 5 heads which are;
- Income from Salaries
- Income From capital gain
- Income from House Property
- Income from Business and Profession as Profits and Gains
- Income from other sources
When the person files an ITR, all information filled is verified by Income Tax Department and if the excessive amount has been paid is refunded into the bank account of the assesse, whereas in case of filing the ITR incorrect the person needs to file revise return within the Financial year. Income Tax Department of India has issued various forms for filing the income tax return, these forms ranges from ITR-1 to ITR-7
Filing Income Tax Return is Important:
- Being a responsible citizen of India every person whose income exceeds INR 2.5 Lakhs has to file income tax return. For the Companies, LLP’s, OPC, Partnership Firms it is mandatory to file Income Tax Return.
- Filing Income Tax Return gives a clear image of the total profits- gains, losses-expenses, assets, liabilities and taxable income to a person/firm it helps in knowing and understanding the financial capability and to map the growth.
- Filing ITR increases or say add up to the creditability of person or firm as ITR stands as proof of your income.
- If ITR is filed on time and regularly you can apply for Bank loans such as home loans, education loan, business loan etc. Banks sanction loans on bases of ITR filed.
- For VISA application ITR is considered as proof and mandatory document.
- Heavy penalties and Interest could be avoided on filing ITR before due date on time.