Compulsory Filing of Income Tax Return
Compulsory Filing of Income Tax Return: Every Individual other than company or a firm, if his 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, shall on or before the due date, furnish a return of Income.
What if Individual Income still does not exceed maximum amount chargeable to tax, does he/she exempt from filing return of Income, and answer is negative.
With 01/04/2020 following people who fall under this criteria have to file Income Tax Return:
- has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current accounts maintained with a banking company or a co-operative bank; or
- has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or
- has incurred expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity; or
Notification No. 37/2022, has notified additional condition which mandates to the compulsory filing of Income Tax Returns:
- Total sales/turnover/gross receipts in the business exceed Rs 60 lakh during the previous year
- Gross receipts in profession exceed Rs 10 lakh during the previous year
- Aggregate TDS/TCS during the year is Rs 25000 or more (In the case of senior citizens increased limit of Rs 50,000 shall be applicable)
- Deposits in saving bank accounts are Rs 50 lakh or more during the previous year.
With the above steps, there is no doubt that many people will have to file an Income Tax Return and will become part of formal economy. Such steps will ensure that many people who skip filing Income Tax Returns now will have to file Income Tax Returns.
Common Mistakes to Avoid While Filling Income Tax Return
Incorrect or Incomplete Information: Double-check all the information provided in the income tax return form, such as personal details, income details, deductions, and bank account details. Any errors or omissions can lead to complications and delays.
Failing to Report all Sources of Income: Ensure that you report all your sources of income, including salary, rental income, capital gains, interest, and dividends. Failure to disclose any income can attract penalties and legal consequences.
Neglecting to Claim Eligible Deductions and Tax Credits: Be aware of the deductions and tax credits you are entitled to claim. Carefully review the eligible expenses such as investments, medical expenses, and education expenses to maximize your tax benefits.
Inaccurate Calculation of Taxes: Double-check your calculations, especially when determining the taxable income and tax liability. Utilize tax calculators or seek professional assistance if needed.
Incorrectly Mentioning Bank Account Details: Provide accurate bank account details for any tax refunds or payments. Ensure that the bank account number, IFSC code, and other relevant information are correctly entered to avoid any issues with refunds or payments.
Not Keeping Proper Records: Maintain organized records of all your income, expenses, and supporting documents. This will help in case of any future audits or inquiries from the tax authorities.
Ignoring Filing Deadlines: Be aware of the income tax filing deadlines and ensure that you file your returns within the stipulated time. Late filing can result in penalties and interest charges.
Not E-Verifying the Tax Return: After filing the income tax return online, it is crucial to complete the e-verification process within the specified timeframe. Failing to do so may render your tax return invalid.
Overlooking Section 80G Donations: If you have made donations to eligible charitable organizations, ensure that you claim the deductions under Section 80G of the Income Tax Act. Keep the necessary receipts and documents as evidence of the donations made.
Disregarding Professional Assistance: If you are unsure about any aspect of filing your income tax return, it is advisable to seek assistance from a tax professional. They can provide guidance, ensure accuracy, and help you optimize your tax benefits.
By avoiding these common mistakes, you can ensure the accuracy, compliance, and timely filing of your income tax returns, minimizing the chances of penalties or legal issues.