he most common, frantic question our young clients ask is: Do I have to file a return?
We answer in the affirmative.
The next question follows: When must I file it?
Here are four commonly asked questions about filing of the income tax returns.
1. My employer has deducted tax. Why must I file a return?
An income tax return is a declaration you make, stating the income you have earned 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 to know it all. And you better oblige.
Even if your employer has already deducted tax, you still need to file a return.
2. I don't earn much. Must I still file a return?
If you are earning above Rs 50,000 a year, you need to file an income tax return.
If you earn less, don't breathe with relief yet. Remember, the taxman never leaves anything to chance.
Because now, we have the famous One-By-Six scheme. If you answer yes to any of the below, you need to file a return (even if you earn less than Rs 50,000).
i. Own immovable property like a piece of land or a home.
ii. Own a motor vehicle. Two-wheelers are not included.
iii. Travelled abroad during the last financial year.
iv. Member of a club with an entrance fee over Rs 25,000.
v. Hold a credit card. Add-on cards are excluded.
vi. Own a cellular phone.
3. I was told I don't have to file returns at the immediate end of the financial year. When must I do so?
If you are a salaried individual, the date is July 31.
If you qualify for the One-By-Six scheme -- even though your salary is less than Rs 50,000 -- the deadline is October 31.
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 (1%) will be levied on the net tax payable after advance tax and Tax Deducted at Source.
That is a lot of money that could be better utilised.
4. Does everyone file their returns in the same form?
There are various heads of income:
i. Salary
ii. Income from house property
iii. Profits and gains from business or profession
iv. Capital gains
v. Income from other sources
Form 2 or 2D
If your total income includes income or loss under the head, Profits and gains from business or profession.
Form 2D or 3
If your total income does not include income or loss under the head, Profits and gains from business or profession.
Form 2D or 2E or 3 (Naya Saral)
If your total income does not include income or loss under the head Profits and gains from business or profession, or Capital gains/ loss or Agricultural income.
Form 2C
Have to file a return because you fall under the OneBySix scheme.
