Income Tax

Personal Tax

Tax on personal income is defined as the taxes levied on the net income (gross income minus allowable tax reliefs) and capital gains of individuals. This indicator relates to government as a whole (all government levels) and is measured in percentage both of GDP and of total taxation.

Penalty

Taxpayers who do not file their income tax return on time are subject to penalty and charged an interest on the late payment of income tax. Also, the penalty for late filing income tax return on time has been increased recently. The penalty for late filing income tax return is now as follows:

  • Late Filing between 1st August and 31st December – Rs.5000
  • Late Filing After 31st December – Rs.10,000
  • Penalty if taxable income is less than Rs.5 lakhs – Rs.1000

Income Tax Return Due Date

The due date for income tax return filing is 31st July of every year for individual taxpayers. The due date for income tax return filing for companies and taxpayer requiring tax audit is 30th September. Section 44AD of the Income Tax Act deals with tax audit under Income Tax Act.

 

 

Business

In case of a business, tax audit would be required if the total sales turnover or gross receipts in the business exceeds Rs.1 crore in any previous year.

Professional

In case of a profession or professional, tax audit would be required if gross receipts in the profession exceeds Rs.50 lakhs in any of the previous year.

Presumptive Taxation Scheme

If a person is enrolled under the presumptive taxation scheme under section 44AD and total sales or turnover is more than Rs. 2 crores, then tax audit would be required.

Tax Audit

Proprietorship

An audit would be required for a proprietorship firm if the total sales turnover is over Rs.1 crore during the financial year. In the case of a professional, audit would be required if total gross receipts is more than Rs.50 lakhs during the financial year under assessment.

 

Partnership Firm

Partnership firms carrying on business with a total sales of over Rs.1 crore are required to obtain tax audit. Similarly, partnership firms, carrying on a profession wherein gross receipts in profession exceed Rs.50 lakhs in the previous year are required to obtain tax audit. In addition, there are other conditions applicable which could make an audit mandatory for a partnership firm.

 

Tax Audit for LLP

LLP whose turnover exceeded Rs. 40 Lakh or whose contribution exceeded Rs. 25 Lakh are required to get their accounts audited by a practising Chartered Accountant. In addition, LLPs that entered into an international transaction with associated enterprises or undertook certain Specified Domestic Transactions are required to file Form 3CEB. Form 3CEB must be certified by a Chartered Accountant. LLPs required to file Form 3CEB have 30th November as the deadline for LLP tax filing.

 

Tax Audit for company

The accounts of a company must be audited each year by a Chartered Accountant, irrespective of turnover or profit/loss.

 

Tax return for company

Companies registered in India and operating a business for profit must file Form ITR 6. Hence, private limited companies, limited companies and one person companies would be required to file Form ITR6.

Tax Notice

The Income Tax Department sends the notices for various reasons like not filing the income tax returns, any defect while filing the returns, or other instances where the tax department is requiring any additional documents or information.

 

Nothing is frightening or alarming about the notice that is received. But the taxpayer has to first understand the notice, the nature of the notice, the requestor’s order in the notice, and take steps to comply.

 

Documents required to reply to an Income Tax Notice

The Documents are required to vary with the type of Income Tax notice that is served to the taxpayer. The basic documents needed to reply to an income tax notice would be:

  • The Income Tax Notice copy.
  • Proof of Income source such as (Part B ) of Form 16, Salary receipts, etc.
  • TDS certificates, Form 16 (Part A)
  • Investment Proof if they are applicable.

TDS Filing

Apart from depositing the tax the deductor also has to do TDS return filing. TDS return filing is a quarterly statement that is to be given to the Income Tax department. It is necessary to submit the TDS returns on time. TDS return filing can be done completely online. Once the TDS returns are submitted the details will come up on Form 26 AS. While filing the TDS returns the various details to be mentioned are:

  • PAN of the deductor and the deductee.
  • Amount of tax that is paid to the government
  • TDS challan information
  • Others, if any.

 

TDS return filing is done by organizations or employers who have availed a valid tax collection and deduction number (TAN). Any person who is making specified payments mentioned under the Income Tax Act is required to deduct the taxes at the sources and they are needed to deposit the tax within the stipulated time for making the following payments.

  • Salary Payment
  • Income on securities
  • Income by winning the lotteries, puzzles, and others.
  • Income from winning horse races
  • Insurance commissions.
  • Payment concerning the National saving scheme and many others.

Tax Filing

ITR 1 Filing Form

The Income Tax Department has categorized the taxpayers into the group to ease the tax compliances this categorization is done based on the income and the sources of the income. ITR 1 Return filing in India is for people with an income of up to Rs.50 lakh.

 

Documents required to file ITR 1 Sahaj Form

  • Form 16
  • Salary slips
  • Interest Certificates from the Post offices and Banks
  • Form 16A/16B/16C
  • Form 26AS
  • Tax saving investment proof
  • Deduction under the Section 80 D to 80 U
  • Home Loan statement from the NBFC or the Bank
  • Capital Gains.

 

ITR 2 Filing Form

ITR 2 Form is an Important form income tax return form that is used by the Indian Citizens as well as the NRIs to file the return with the Income-tax department of India. The taxpayers who are not eligible to file ITR 1 can file ITR 1 to file the income tax returns. ITR 2 can be filed by the individuals and Hindu Undivided Families who have their income for the financial year through salary, pension, more than one property, income from capital gains, income from foreign assets, business or income from a profession as a partner and other sources that include lottery, Racehorses, legal gambling.

Also, an individual who is not eligible to file using ITR 1 as the income is exceeding Rs.50 Lakh can file ITR 2 Form.

 

Documents required to file ITR 2

  • Copy of the previous year’s tax return
  • Bank Statement
  • TDS Certificate
  • Savings Certificate/ Deductions
  • Interest Statement that shows the interest that is paid throughout the year.
  • Balance sheet, P & I, Account Statement, and other Audit reports wherever they are applicable.

 

ITR 3 Filing Form

ITR 3 Form is applicable for the individuals and Hindu Undivided Families that earn profit and gains from business or profession.

 

If the individual or the Hindu undivided family is having an income as a partner of a partnership firm that is carrying out business then ITR-3 cannot be filed as in such cases the individual is required to file ITR-2.

Documents required to file ITR 3

  • Aadhaar card copy.
  • Form 16 issued by employer in case salary income is earned.
  • Month wise salary slip where form 16 is not been issued by the employer in case salary income is earned.
  • Rent receipts in case of rental income and rental agreement.
  • Bank statement for the financial year for interest on savings account.
  • Form 16A or Interest Statement issued by Banks for Fixed Deposit Interest Income.
  • In case of capital gains, tax profit and loss or capital gain statement issued by the Share broker.
  • Chapter VIA Investment details for claiming deduction as follows:
  • Receipt of children’s school tuition fees.
  • Life insurance premium receipt.
  • Stamp-duty and registration charges.
  • Principal repayment on your home loan.
  • Equity Linked Savings Scheme/Mutual funds investment.
  • Mediclaim payment receipt etc.
  • Profit and loss statement and Balancesheet for the previous year
  • Details of Chartered Accountant conducting Tax audit in case the person is covered under section 44AB.
  • Copies of books of accounts required to be maintained as per section 44AB i.e. Cash book, Journal book, Sales and Purchase register in case of business and Receipt book in case of profession.

 

ITR 4 Filing Form

Form ITR 4 is filed by the taxpayers who have opted for the Presumptive Taxation Scheme under Section 44D, 44DA, 44AE of the Income Tax Act,1961. But this is subject to the business turnover limit i.e in case if the turnover is exceeding Rs.2 crore then the taxpayer is required to file ITR 3 Form.

 

Documents required to file ITR 4

  • PAN Card number
  • aadhaar card number
  • Bank account details and IFSC code
  • Form 16, 16A, and 26AS
  • Self-assessment or Advance Tax payment challan.
  • Form 26AS
  • Form 16
  • Documents stating income from other sources
  • Details of tax-saving investments
  • Information of any additional deductions.

 

ITR 4 Filing Form

The taxpayers are supposed to file the Income Tax returns based on the income that is earned by them in the financial year and the kind of entity that it falls under. ITR 5 Form filing is to be done by the Association of Persons, Limited Liability Partnerships, Body of Individuals, Estates of the deceased, Artificial judicial person, business trust, estates of the insolvent, business trust, and investment fund.

 

Who is Eligible to file ITR 5 Form?

  • ITR 5 can be filed by the following people :A firm
  • A Limited Liability Partnership
  • Association of Persons
  • Body of Individuals
  • Artificial Judicial Persons that are referred to in Section 2 (31) (vii)
  • The local authority that is referred to in Section 160(1) (ii) or 160 (1) (iv)
  • Cooperative Society
  • Societies that are registered under Societies Registration Act, 1860 or under any state law trust ( except the trusts that are eligible for ITR 7 Form Filing)
  • Estate of the deceased person
  • Business trust referred to in Section 139 (4E)
  • Investment fund referred to in Section 139 (4F)

 

 

ITR 6 Filing Form

ITR 6 Form is to be furnished by the Companies to e-file the income tax returns if they are not claiming exemption under Section 11 of the Income Tax Act 1961. Under the Income-tax Rules, the Companies that can claim an exemption under section 11 are those that have income from the property that is held for the charitable or religious person.

 

Hence, ITR 6 is to be filed by the companies that do not claim an exemption under section 11.

 

Efiling audit reports

If in case the assessee is liable for the audit u/s 44AB and the accountant has audited the accounts, then the details of the audit report, the auditor along with the date of furnishing is to be sent to the department electronically.

 

Who is eligible to file ITR 6 Form?

  • ITR 6 Form is to be filed by every company irrespective of its structure registered under the Companies Act 2013 or the earlier Companies Act 1956. However, the companies whose source of income comes from the property that is held for religious or charitable purposes are not required to file ITR 6 Form.
  • If the sales, turnover, or gross receipts are more than Rs.1 crore in the preceding financial year the entity must get the accounts audited from a certified Chartered Accountant.

 

 

 

 

ITR 7 Filing Form

ITR 7 Form filing is done by the companies who service the income from the properties that are of charitable or religious purposes. Properties that are held under the trusts or legal obligation in parts or even wholly are included in the category.

 

ITR taxpayers can fill the ITR 7 Forms by providing the returns through a bard coded form, physical paperback forms, or the digital signature mode, or the submission of return verification through ITR Form V.

 

ITR 7 Form is a file when the person and the companies fall under section 139(4A) or Section 139 (4B) or Section 139 (4C) or Section 139(4D).