Who Should file ITR?

Every individual must file the return of income if his total income (including income of any other person in respect of which he is assessable) without giving effect to the deductions under section 80C to section 80U, exceeds the maximum amount which is not chargeable to tax, i.e., exceeds the exemption limit of Rs. 2,50,000 for an individual; Rs. 3,00,000 in case of senior citizen and Rs. 5,00,000 in case of super senior citizen.

Why Filing of a tax return in India is important?

Income Tax Department obligates certain eligible persons to file their income tax return once in a year. Filing of Income Tax Return will legalize the earnings and investments credited in the bank account or any other mode of receipt and it is mandatory to disclose the same to avoid legal proceedings from the income tax department which may lead to heavy penalties and prosecution. Also, by filing your Income Tax Return you can get an income tax refund if you have paid excessive taxes to the government. Benefits of filing Income Tax Returns are as follows:

• Refund: Any amount paid in excess or deducted excessively in the form of Advance Tax/ TDS shall be claimed as a refund based on the TDS returns filed by the person deducting TDS.
• Applying for Visa: For travelling abroad, foreign consulates of many countries ask you to furnish last 3 years’ income tax returns or current year’s income tax return. Absence of any return can reduce the chances of you getting a visa specially under the visitor, investor, and work permit category.
• Eligibility in Loan Application: Income Tax Returns of the last three years is one of the basic documents required for loans in addition to the project report or projected financial statements. This helps banks in judging your pay back capacity.
• Funding requirement from investors: Raising funds from Venture Capitalists requires you to have income tax returns filed till date ready. Many investors study your business scalability, profitability, and other cost parameters from your business income tax return.

• Obtaining Government Tender: Sometimes, furnishing the income tax return is a must to apply for government tenders especially when tender of high value is being awarded.

• Credit Card Application: Filing of income tax return helps to apply for credit card with high overdraft limit.

How to save income tax payment?

Submitting insurance forms, medical expenditure bills, rent receipts and children tuition fees receipt can reduce your tax burden to some extent. But if you plan for tax saving properly you can save even more and most importantly this will help you to reduce your unnecessary financial stress.

Many of us still think that taxes are difficult to avoid, and hence they don’t plan for it or don’t bother to save on it. However, several investments can help you to wipe it out or reduce it like Contribution to NPS, Interest on Home Loan, Sukanya Samriddhi Yojana, ELSS (Equity Linked Savings Scheme), Unit Linked Insurance Plan, Contribution to any Provident Fund setup by the Central Government, Contribution by an employee to superannuation fund, Subscription to National Savings Certificate, Subscription to Notified Bonds issued by NABARD, Tax saving Fixed Deposit, etc.

Are you bothered about payment of tax on sale of any immovable property/ capital asset?

You can plan for certain investment schemes to avoid or minimize the payment of taxes against the sale of any immovable property or any other capital assets and the list of such investment schemes are given below:

• Reinvestment in a maximum of two residential house property against the capital gain from the sale of Long Term Residential House Property.
• Reinvestment in one residential house property against the capital gain from the sale of any other Long Term Capital Asset other than Residential House Property.
• Reinvestment in Urban or Rural Agricultural Land against capital gain from the transfer of Urban Agricultural Land
• Reinvestment into Rural Electrification Corporation bonds or NHAI bonds
• Reinvestment into Specified Units issued before 01.04.2019 by Central Government.

Due Date for filing ITR

The last day for filing Income tax returns for FY 2020-21 is 31st December 2021 for most of the individual taxpayers. Last date for income tax return filing for taxpayers whose accounts needs to be audited is 15th February 2022. These dates were extended due to the ongoing pandemic situation. Filing of return beyond the deadline can attract a penalty up to Rs.10,000.

Circumstances where the due date is missed or made a mistake while filing Income Tax Return

Missed the due date

Belated return can be filed 3 months prior to the end of relevant Assessment Year (AY 2021-22) i.e., for Financial Year 2020-21, due date of filing the belated return would be till 31st December 2021 but with the payment of late fees u/s 234F (Maximum of upto Rs.10,000). However, the date of filing revised return & belated return has been extended till 31st March 2022 for Financial Year 2020-21.

Revised return

You can revise your already filed ITR in case of any mistakes in the ITR three months prior to the relevant Assessment Year i.e. For Financial Year 2020-21, the date for filing revised return would be 31st December 2021 (No late fees for revised return). However, the same is extended till 31st March 2022 for FY 2020-21.