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6 Frequently Asked Questions on Income Tax Returns

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Filing income tax returns is your federal duty if you earn an income in a financial year. After the financial year ends on 31st March, the income tax department gives you some time to prepare and file your returns. You are required to file your returns within the due date, failing which you might suffer a penalty.

 

The formalities of filing income tax returns in India are a bit technical. As such, there are many questions that taxpayers have when filing their returns. Here is a look at six of the most common questions that plague taxpayers about income tax returns and their right answers -

 

1. Do I need to file an income tax return even if my taxable income is below the threshold limit?

A question that plagues many taxpayers whose incomes fall within the taxable limit. Do you think they need to file online income tax returns even in such cases?

 

The answer:
 

The answer is, ‘Yes, you do’. If your total aggregate income is up to ₹2.5 Lakh, you don’t have to file a return. However, if your income exceeds ₹2.5 Lakh, return filing becomes mandatory. Even if, after deductions and rebates, your taxable income is reduced to an amount below ₹2.5 Lakh, you will have to e-file an income tax return stating your income, its sources, the available deductions, and rebate. Though you will not have to pay tax, return filing is mandatory.

 

Pro tip: If TDS has been deducted from your income, which falls below the taxable limit, you can claim an income tax refund when you file your returns.

 

2. Which income tax form should I use for filing income tax?

This confuses many taxpayers as there are different types of income tax return forms, and each ITR has its specific use.

 

The answer:

The right ITR depends on your income, its sources, and the type of taxpayer you are. Take a look -

 

Type of ITR

When to use?

ITR-1 (Sahaj)

  • You are a resident individual.
  • Your aggregate income is below ₹50 Lakh.
  • Your sources of income include salary or pension, one house property, or other sources.

ITR-2

  • If your income which exceeds ₹50 Lakh from the sources mentioned in ITR-1.
  • And If you have income from capital gains.
  • Or If you have income from more than one house property.
  • Or If you have a foreign income or a foreign asset.
  • Or If you are a director of a company.
  • Or If you hold unlisted equity shares.

ITR-3

  • If your income includes those eligible under ITR-2.
  • And If you have a business or a profession.
  • Or If you are a partner in a firm.
  • Or If you have a presumptive income lower than ₹50 Lakh.

ITR-4 (Sugam)

  • If you have a presumptive income exceeding ₹50 Lakh from sources eligible under ITR-

ITR-5

  • To be used by Partnership firms, AOPs, BOIs, and LLPs.

ITR-6

  • Company that does not claim exemptions available under Section 11.

ITR-7

  • A person or a company as specified under Sections 139 (4A), (4B), (4C), and (4D) of the Income Tax Act, 1961.

 

Pro tip: Assess your aggregate income and the sources of such income, and then  choose the right ITR.

 

3. Which avenues allow deduction under Section 80C?

Section 80C allows you deductions up to ₹1.5 Lakh for various types of investments and expenses.

 

The answer:
 

The list of eligible deductions commonly available under Section 80C is as follows -

  • Investments made towards the following -
    • Life insurance policies
    • ELSS schemes
    • PPF
    • EPF
    • Sukanya Samriddhi Yojana
    • 5-year bank or post office deposit
    • Senior Citizen Saving Scheme
    • NSC or KVP
  • Expenses incurred on the following -
    • Principal repayment of home loan.
    • Stamp duty and registration charges on a property.
    • Tuition expenses paid for up to 2 children.

Pro tip: Section 80CCC also allows a deduction for insurance premiums paid towards pension plans. However, the overall deduction limit is ₹1.5 Lakh, which also includes Section 80C deductions.

 

 

 

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 4. Do tax returns get rejected?

The tax verification form might get rejected. Though it is uncommon, it might happen in certain cases.

 

The answer:
 

The ITR-V might be rejected by the IT department if you did not sign it, its quality is bad, or if you filed it late. If the form is rejected, you can print another ITR-V, sign it and send it to the CPC. This facility is available within 120 days of filing the online income tax return. Moreover, the correct form should be sent before the period of 120 days lapses.

There is a process to e-verify the income tax return through various modes such as Aadhar OTP, prevalidating bank account, generating EVC through other online accounts such as Demat account etc.  

 

Pro tip: You get an SMS and also an email if your ITR-V is rejected. Keep an eye out for it so that you can rectify the form and resend it to complete the tax filing process.

 

5. Why do I have to pay tax even when TDS was deducted from my income?

TDS is deducted by entities paying you for professional services. This deduction is made on your behalf before you file your returns.

 

The answer:
 

TDS on your salary is deducted by the employer assuming your tax bracket and on your salary income. If you have other sources of income or if your tax bracket changes, you will have to pay additional tax on your income. In the case of other incomes, TDS is usually deducted at rates as applicable and prescribed by the income tax act. However, if your tax bracket is 20% or 30%, you need to pay the additional tax.

 

Pro tip: Even though TDS is deducted, calculate your tax liability. Pay the additional tax if there is a difference. Alternatively, if a higher TDS has been deducted, you can claim a refund.

 

6. How can I ensure the successful filing of my income tax return?

Filing the return is not enough. You need to ensure that it has been successfully filed.

 

The answer:
 

After a successful filing, the IT department issues an automated acknowledgment. To check the income tax return status, look for this acknowledgment on your registered email. If you receive the mail, your return has been filed. If not, you need to check the income tax portal for any missing steps to be done such as e-verification of return or submitting the saved draft.

 

Pro tip: Avoid filing returns on the due date. Since the servers of the IT department experience heavy traffic, your filing might not be successful.

 

Get answers to your return filing queries and file your online income tax return within the due date to avoid penalties. Also, use the available deductions to save taxes. You can invest in TATA AIA Life Insurance plans for tax benefits and lower your tax outgo considerably.

 

So, be a dutiful Indian citizen. Plan your taxes and file your returns every year without fail.

 

L&C/Advt/2021/May/0633

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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