Income tax is a type of tax charged by the government. It is the tax that is charged by the government on the income earned by the people, companies, and corporations. It is one of the biggest sources of revenue for the government. These taxes are used by the government to fund various public expenses which includes infrastructure development, education, healthcare, and defense. On the basis of income earned by an individual, companies or corporation in a specific period of time income tax is calculated. Specific period of time is usually a year. The rate of tax is directly dependent on the income level of an individual. In India the income tax rates range from 5% to 30% of the taxable income.
Types of Taxes
There are various types of taxes mentioned below:
1)Self-Assessment:
Individuals, companies, and corporations have to file their income tax returns and have to pay the tax by the specified deadline.
2)Tax Deduction at Source (TDS):
Companies or corporations cut a portion of an employee’s income and have to pay it to the government as income tax.
3)Advance Tax:
Individuals and corporations are required to pay a portion of their income tax in advance in installments. Advance Tax is used to avoid a higher tax charges at the year’s end. Collection of income tax in India is done by the Income Tax Department. The department provides various services to help taxpayers file their returns. It helps them to pay their taxes.
ITR stands for Income Tax Return. ITR is a document that all taxpayers in India are required to file with the Income Tax Department annually. The file is used to report their income and tax liability for a given financial year. Major key points related to ITR are:
ITR contains the details of the income earned in a financial year from April 1 to March 31. It also contains information related to the taxes given to the government by the country. Under Section 139 of The Income Tax Act, 1961 it is mandatory to file an ITR.
Type of ITR Forms
There are different ITR forms which is based on the type of income and nature of employment:
-ITR 1 (Sahaj) is for people who have income from salaries, one-house property, other sources, etc. And also for those who have agricultural income up to ₹5,000.
-ITR 2 is for people and HUFs who don’t have income from profits and gains of business or profession.
-ITR 3 is for people and HUFs who have income from profits and gains of business or profession.
-ITR 4 (Sugam) is for income from business and profession.
How to file ITR
Taxpayers can file ITR by many ways like either offline by submitting the physical form or online through e-filing on the Income Tax Department’s website. You can also fill it through verified third-party websites. Advantages like faster processing and easier computation while filing the ITR are provided by e-filling. Ability of Refund status online is also provided by the e-filling.
So in summary, ITR is the mandatory annual tax filing document. ITR helps to every individual’s income and tax liability to the Income Tax Department.
Major areas in which taxes are used are:
-Infrastructure Development
-Education
-Healthcare
-Defense
-Social Welfare programs
These were some of the areas where income tax is utilized in India.
Last date to file an ITR:
The last date to file an Income Tax Return (ITR) for the Financial Year 2023-24 and Assessment Year 2024-25 is July 31, 2024. The Taxpayers who will be filing their return after this due date will have to pay interest under Section 234A. They have to pay a penalty too under Section 234F. In case, if you miss filing before the due date then you can still file a late return before December 31, 2024.
The Income Tax Return (ITR) e-filing for year 2023-24 (AY 2024-25) had started from April 1, 2024. The last date to file ITR for individuals is July 31, 2024. Businesses that requires audit for them last date to file an ITR is October 31, 2024.
Penalties in ITR are:
There are penalties for filing Income Tax Returns (ITR) late in India.
The penalties are:
-Late Filing Fee under Section 234F:
If you file your ITR between the due date (July 31) and December 31 then you are charged by a late filing fee of Rs. 5,000 if your total income exceeds Rs. 5 lakhs.
For people with total income up to Rs. 5 lakhs then their late filing fee is
Rs. 1,000
If you file your ITR after December 31 then the late filing fee increases to Rs. 10,000.
-Interest under Section 234A:
If you have any tax fault then you would be charged interest at 1% per month from the due date until the date of filing the ITR.
-Prosecution:
Non-filing of ITR after many reminders can also may result in the Income Tax Department initiating prosecution procedures which can sometimes leads to imprisonment.
-Penalty for Underreporting or Misreporting of Income under the Section of
270A:
There would be a 50% penalty that can be charged for underreporting of income.
There would be a 200% penalty for misreporting of income.
-Inability to Claim Certain Deductions and Exemptions:
After the due date filing ITR may result in the loss of some tax deductions which can lead
to a higher tax charges.
-Delayed Refund:
Filing ITR after the due date delays the refund.
You have to file your ITR on time to avoid these penalties and interest charges. The last date for filing ITR for 2023-24 is July 31. You can file a late return by December 31, 2024.
