Tax filing and Related Concepts

Tax filing and Related Concepts

File your tax returns, understand all the requirements and the steps involved. Here are some detail related to ITR which you need to know.
Tax filing and Related Concepts
Once you calculate your income tax, the next step is to file your tax returns. For filing your returns, you should know the different ITR Forms and other forms which would be required. So, here’s a list of all the forms which are required at the time of filing your tax returns.

  • ITR – 1

You have to fill this form if your income is up to INR 50 lakhs, and the source of your income includes income from salary or pension, income from one house property and income from other sources.

  • ITR – 2

If your total income is more than INR 50 lakhs and your source of income is your salary or pension, income from one house property, income from other sources, capital gains, profits from a partnership firm, foreign income or agricultural income below INR 5000, you will have to use this form.

  • ITR – 3

This is required if your income includes income from business or profession or a presumptive business income from a business whose turnover is more than INR 2 crores apart from the income mentioned in ITR – 2. There is no particular limit on income for using this form.

  • ITR – 4

If you earn a presumptive business income under the provisions of Section 44 AD, 44 ADA and/or 44 AE, you are required to use this ITR.

  • ITR – 5

Self-proprietorship firms, Limited Liability Partnerships, Association of Persons and Body of Individuals are required to file their tax return using ITR – 5.

  • ITR – 6

Companies, which do not claim exemption under Section 11, are required to use this form for filing their tax returns.

  • ITR – 7

Persons or companies defined under Sections 139 (4A), 139 (4B), 139 (4C) and 139 (4D) are required to use this form for filing their returns.

Besides these ITRs, there are other forms which are useful when filing returns. These forms include the following.

  • Form 26AS

Form 26AS shows the details of the tax you have already paid in a financial year either through advance tax or through self-assessment tax. Moreover, if someone has deducted TDS and paid tax on your behalf, the same would be reflected in this form. This form is essential at the time of filing your returns to understand the tax you have already paid.

  • Form 16

Form 16 is specifically meant for salaried individuals. The form contains a summary of the tax deducted by the employer from the employee’s salary, the tax benefits and allowances which the employee has availed, deductions under Section 80C which the employee has claimed from the employer, and the employee’s taxable income after adjusting tax-free allowances and Section 80 deductions. The form eases the tax-filing procedure, as it gives the details of the income and tax paid in one place.

  • Form 16A

Form 16A is similar to Form 16 in its content. The difference is the fact that this form is not given by the employer. This form is issued by a bank which deducts TDS or a company which deducts TDS on payment of freelancing services.

  • ITR – V

The full form of ITR – V is Income Tax Return – Verification. This is required after you have filed your tax return. ITR – V is a one-page document which you should fill and submit to the income tax department after you have filed your return.

  • Challan 280

This is basically a slip which is used for online payment of income tax.

Now that you are familiar with the various forms and ITRs, here are some important concepts which you would find when filing your tax. You should know these terms for complete clarity. The terms include the following.

  • TDS

TDS stands for Tax Deducted at Source, and it represents the tax which is deducted before you get the income. If you are salaried, your employer deducts TDS and credits the remaining salary. You can get TDS deducted from your bank account’s interest or from any income. The normal rate of deduction is 10%. If you fall in a higher tax bracket, you have to pay the remaining tax liability yourself. Use TDS calculator here.

  • Advance tax

Tax paid in instalments every quarter is called an advance tax. Advance tax is paid by self-employed individuals, as they assess their taxability every quarter and pay a specified portion of the tax. This reduces the financial burden felt at the end of the financial year when a full tax payment is done at once. There are specified dates and rates of paying advance tax. The first deadline is June 15, and the rate of advance tax is 15%. The second one is September 15 with a rate of 45% advance tax. The third deadline is December 15, and the rate is 75% advance tax. The last deadline is March 15 where 100% advance tax is payable. Use advance tax calculator here.

  • Self-assessment tax

If you pay tax after the deadline has expired, you are said to be paying a self-assessment tax.

  • Assessment and Financial Year (AY and FY)

A financial year is said to start from April 1 and ends on March 31 the next year. The income you earn in one financial year is then assessed for calculating your income tax. Income tax assessment is done in the next financial year for the previous financial year. The next financial year when the assessment is done is called Assessment Year, and the year whose income assessment is being done is called Financial Year. Thus, for the financial year 2016-17, the Assessment Year is 2017-18.

  • Income tax refunds

If you have paid an additional tax via TDS or advance tax, you are eligible to get a tax refund after you file your income tax. Through this refund, the additional tax paid is refunded back to you.

So, now you must be familiar with the income tax forms and some common terms. Know these terms and forms to file your taxes correctly.