If you are an adult citizen of India earning an income, then it is your duty to pay income tax. Regular payment of taxes not only ensures that you are fulfilling your responsibilities as a citizen but also shows how financially responsible you are when applying for jobs, loans, and the like. The duration allotted to file the Income Tax Returns (ITR) usually starts after the end of the financial year. While there have been efforts to make the public aware of the intricacies of filing returns and the types of ITR forms available, a large number of people still get plagued with doubts and questions.
In this article, we look at 5 commonly asked questions on filing tax returns and answer them for your benefit.
- How many types of ITR forms are there and which one should I choose?
There are around seven types of ITR forms, classified according to the source of income of the taxpayer, their total income, and the category they fall under. The taxpayer categories include a private limited company, a Hindu Undivided Family, salaried individual, Trust, and so on. For a resident individual not earning more than Rs. 50 lakhs annually, and whose income comes from salary, house property, pension, and other sources, the ITR-1 (Sahaj) form is suitable. ITR-2 is for those who earn more than Rs. 50 lakhs a year from sources mentioned above,and also meet other criteria.
You can research the types of ITR forms to make sure you choose the right one.
- What should I do to ensure that my returns do not get rejected?
Your ITR can be rejected for a variety of reasons, the most common one being the submission of wrong information. Choosing the wrong ITR form could also lead to the department invalidating your returns. Before you submit your ITR, ensure to double-check the information provided. The signature should be as per the guidelines provided and the submissions should be made via permitted portals under the stipulated time. One should also remember that the financial year and the assessment year are different. If the financial year is 2021-2022, then the assessment year is 2022-2023.
- What could happen if I missed adding a source of income in the ITR form?
Individuals with multiple sources of income may mistakenly forget to add one of the sources in the ITR. If this occurs and is detected by the income tax department, you may be sent a notice. One way to avoid this is to plan your ITR filing. For instance, you can use an income tax calculator in which you can add the various sources of income to get an estimated amount.
- What is advance tax?Do I have to pay it?
Advance tax is paid by the taxpayer in advance for the income they earn in a financial year. The distinctive feature of advance tax is that it is paid when the income is earned. The taxpayer has to make an estimate of the income they will earn in that year and pay the tax at certain time intervals.
Those individuals whose tax liability for a particular year is estimated to be Rs.10,000 or more are liable to pay advance tax. Senior citizens above the age of 60 years who are not earning any income from a business or a profession are exempted from paying advance tax.
- Online or physical verification – which would be better for me?
Though what option may be better is dependent on what you are most comfortable with, the e-verification method is the most recommended. If you are going the traditional route, you will have to download the form, print it, and then send it via post to the Income Tax CPC, Bengaluru, after you have signed it. On the other hand, e-verification will barely take a few minutes.
Filing the ITR may seem like an intimidating experience, especially if you are a beginner. However, with the help of the right tools, such as the income tax calculator and advice from experts, you will be able to ace this process in no time. Good luck!