here is a striking similarity between filing an income tax return and a wedding anniversary: forget about either and you are in a tight spot.
So what is filing a return all about?
Is it not sufficient that my employer deducts tax regularly and I make my contribution to the country's coffers?
No. But first, let us understand the basics of return filing before we delve into the consequences of not meeting deadlines.
What is an IT Return anyway?
An income tax return is just a self declaration made by an individual stating all the income he earns during a particular year. It also includes the losses you might have incurred. Sold some shares at a lower price than what you purchased?
The tax boys want all the dope.
So why do I have to file one?
Well, because the law says so.
Any individual earning income more than Rs 50,000 a year needs to file an income tax return. It also includes all salaried individuals whose employers have already deducted tax.
In case you do not fall in the above mentioned category, don't breathe with relief yet.
Remember, the taxman never leaves anything to chance. Worried he may have been laying down the Rs 50,000 benchmark, he also introduced the now famous One-By-Six scheme.
This scheme covers any individual who falls in any of the following six categories:
i. Owns of a motor vehicle (even a motorbike or scooter).
ii. Owns immovable property (land or a home).
iii. Foreign travel (made a trip abroad this year?)
iv. Has a cellular phone (that got you, didn't it?)
v. Holds a credit card (he does not mean an add-on credit card).
vi. Member of a club with an entrance fee over Rs 25,000.
Now that you are convinced that you have to file a return, take a look at the form you will need.
|
You
|
Form to be filled |
|
Total income includes income or loss under the head "Profits and Gains of Business or Profession" |
2 or 2D |
|
Total income does not include income or loss under the head "Profits and Gains of Business or Profession" |
2D or 3 |
|
Total income does not include income or loss under the head "Profits and Gains of Business or Profession", or "Capital Gains/Loss or Agricultural income" |
2D or 2E or 3 (naya Saral) |
|
Have to file a return because you fall under the OneBySix scheme |
2C |
When, please?
If you are a salaried individual, the date is July 31.
If you are under the One-By-Six scheme, it is October 31.
What if you forget the date?
Miss your anniversary and the damage is non-tangible.
Miss your return date and the damage is monetary.
The penalty for non-filing of return is Rs 5,000 and the interest for delay in filing of returns is 1% per month, from the deadline till you file the return.
This percentage will be levied on the net tax payable after advance tax and TDS (tax deducted at source).
Now that is lot of money that could be better utilised.
What if I don't earn anything this year?
Once you tie the knot, you are stuck for life.
It means, once an assessee, always an assessee.
Not having filed your returns is a big problem. These days, IT returns are used virtually by all agencies. Say you wish to go in for a home loan, car loan etc -- you are required to produce your IT acknowledgement for the last two-three years.
It is advisable to be up-to-date with your taxes.
On a final note, plan out your taxes. Get a consultant who will not only file your returns for you, but even guide you as to where you must invest to help reduce your tax burden.
Remember, it is something you end up doing for life.
Relax With Tax is a Mumbai-based personal tax & finance solutions provider.
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