TaxUdyogTax Returns

A tax is a compulsory contribution to the state revenue, which is levied by the government on an individual’s or an organisation’s income and business profits. This compulsory fee is also added to the cost of some services, goods and transactions. TaxUdyog is a platform where we will cater to all your needs of the taxes whether it’s GST return filing or Income tax and TDS return filing.

WHAT ARE THE TYPES OF TAXES IN INDIA?
There are two types of taxes in India

Direct Ttax
It contributes maximum to the government revenue. Direct tax mainly includes Income-tax (individual) or Corporate tax (organisational) which further includes a tax on – Salary, House Property, Capital gains, Business or Profession and other sources such as gambling and lottery winnings.

Indirect Tax
This one is imposed as an added fee on goods and services. Indirect tax includes – Excise, VAT (sales tax), Service tax and Custom Duty. From 1st July 2017, excise duty, sales tax and service tax have been replaced with GST (Goods & Services Tax).
GST Return Filing
Income Tax & TDS Return Filing
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What is Tax Return?

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A tax return is a form or a combination of forms with the tax department that reports income, important tax information and other pertinent expenses. Tax returns allow taxpayers to calculate their tax liability, enable them to schedule tax payments and/or ask for refunds for taxes that might be overpaid. Tax returns should be filed annually by an individual – salaried or business owner with reportable income – including wages, profits, interests, dividends and capital gains.

What is Income Tax Return (ITR) Filing?

The Income Tax Act, 1961, and Income Tax Rules, 1962, requires citizens of India to file their Income Tax returns annually at the end of every financial year. These returns are required to be filed before the specified due date. 

The return of Income Tax also known as ITR is a statement of taxable income, a computation as to how the taxable income is calculated and details of the taxes paid by the taxpayer during a specific financial year. Income Tax Return is the form in which an assessee has to file details and information about their income and tax to the Income Tax Department. Each Income Tax Return form is applicable to a particular segment of the assessees. The different forms are – ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7. The Income Tax Department of India only processes those forms that are filed by eligible assessees which is why it is highly imperative to know the required specific forms that are appropriate for each case. Income Tax Return Forms vary depending on the criteria of the source of income of the Assessee and the category of the Assessee.

Who Should File and Income Tax Return(ITR)?

Before filing an income tax return, one must know who should actually file for a tax return.

Filing an income tax return is compulsory for those citizens whose income is above the taxable limit. In order to save oneself from any eleventh-minute discrepancies, it is crucial for a taxpayer to calculate their relevant tax condition and initiate the tax return filing process accordingly.

If anyone fulfils even one of the below-given conditions, they are obligated to file an income tax return by the end of the financial year –

Any salaried individual, whose gross annual income (before any deductions) is more than 2.5 lacs. For senior citizens who are of age 60 years and above, it is 3 lacs. For super senior citizens who are 80 years and above in age, it is 5 lacs.

All the companies and firms are irrespective of whether they have had profits or losses during the financial year.

All those individuals who want to claim their income tax refund.

All those who want to carry forward a loss under a head of income.

Residents who have a financial interest (or an asset) in a unit located outside of India. (This is not applicable for NRIs and RNORs)

Resident individuals and signing authorities in a foreign account. (This is not applicable for NRIs and RNORs)

People who get their income from properties held under a trust for charitable work or religious purposes or any political party or research association, non-profit university or medical or educational institution, news agency, hospital, trade union, any authority, infrastructure debt fund, a body or trust.

Foreign companies benefitting from exchange and transaction in India.

NRIs, who have income that surpasses ₹2.5 lakh in the financial year, which is acquired or accumulated in India, are needed to record an income tax return in India.

Types of Income Tax Return (ITR) FORMS

ITR-1 SAHAJ

Who are eligible – the people who have earned their income (Resident Individual having total income up to ₹50 Lacs) through the following means – 

Salary or pension

Only one house property (excluding losses brought forward from preceding years)

Other sources include – FD interest, spousal pension etc. (Not included – legal gambling, horse races, lottery winnings, etc.)

Agricultural income up to ₹5,000.

Income from another person like spouse, minor child etc to be clubbed to his income is included in tax returns (this can be done only if their income too is limited to the specifications laid down above)

Who are not eligible – the people who have earned their income through the following means

  • More than one property
  • Winnings through racehorses, gambling, lottery, etc.
  • Non-tax exempted, short term as well as long term, capital gains
  • Exempted income exceeding ₹5,000
  • Business and professions
  • Loss under the head of other sources
  • Any person who claims relief under section 90 and/or section 91
  • Total income more than ₹50 Lacs
  • If any Resident Individual who has any income from any source outside India or has any asset outside India or has signing authority in any account located outside India
ITR-2 Form

This is an important Income Tax Return form that can be used both by Indian citizens and Non-residents.

Eligibility for using the form – this form is available for individuals as well as Hindu Undivided Families. Only the people earning an income through the below-mentioned list of means are eligible for filling and submitting the ITR-2 Form – 

  • Income through salary or pension
  • House property
  • Earning through short-term and long-term Capital Gains
  • Earning through other sources including legal gambling, lottery winning, racehorses, bets, etc.
  • Foreign income/Foreign assets
  • Agricultural income more than ₹5000 
  • Income from another person like spouse, minor child etc to be clubbed to his income is included in tax returns (this can be done only if their income too is limited to the specifications laid down above)

Non-eligibility for ITR-2 Form – 

If an income, of any individual or Hindu Undivided Family, is earned through a Business or Profession

People who are eligible for the ITR-1 SAHAJ Form

Any individual who is a partner in a partnership firm is not allowed to file ITR-2 Form

ITR-3 Form

This form is specifically for those individuals and Hindu Undivided Families who are registered as partners in Partnership firms. This form is not applicable for those who are proprietors of a firm, this form is mainly for businesses that include a partnership clause. This form is also applicable for professionals but that should also be in partnership.

Eligibility Criteria – for individuals and Hindu Undivided Families that are allowed to use ITR-3 Form – 

  • Should be a Partner in a firm
  • Income should be through ‘Profits or Gains from Business or Profession’
  • Gains income by means of interest, profit, salary, commission, remuneration as a partner in the firm

Non-eligible assesses – 

Individuals and Hindu Undivided Families who are not eligible to file the ITR-3 Form are those who have earned Income through a Business or Profession operated as a Proprietorship firm. People apart from being a partner in a firm, also have sources of income from a business or profession, including the speculation market, are also not eligible to file their Income Tax Returns through this form

ITR-4 Form (SUGAM)

Applicable to a resident or a Hindu Undivided Family or a Firm (excluding Limited Liability Partnership) declaring presumptive income from business or professions as stated under sections 44AD, 44ADA & 44AE of the Income Tax Act (excluding speculative business).

44AD – A resident Individual or Hindu Undivided Family or any Firm, other than Limited Liability Partnership, having a business (excluding agency and commission/brokerage business) turnover / gross receipt not exceeding ₹2 crores and declaring profit at the rate of 8% of total receipt (6% in case of digital receipt and receipt through account payee mode) without maintaining proper books of the account.

44ADA – A resident assessee engaged in medical, engineering, legal, accountancy, technical consultancy, interior decorator, architecture or other notified profession having gross receipt not exceeding ₹50 lakh and declaring 50% or more of gross receipt as income.

44AE – An assessee deriving income from the business of plying, hiring or leasing goods carriage (not more than 10 goods carriage at any time during the year including carriage taken on hire purchase, lease or instalments) and declaring presumptive income of ₹7,500/- per month or part of a month for each of the goods’ carriage/vehicle.

But this form – ITR-4 SUGAM can not be filed by 

  • A non-residential firm
  • Hindu Undivided Family which is not ordinarily resident
  • Residents being or having – 
  • Director of a company
  • Held on to any unlisted share in the last financial year
  • Total income exceeding ₹50 Lacs
  • More than one house property
  • Foreign income or asset or signing authority outside India
  • Carried forward loss under any head of income
  • Assessable for the whole or part of Income on which tax was deducted in hands of a person other than assessee.
ITR-5

Applicable to an individual being in a firm, Limited Liability Partnerships, Association of Persons, Body of Individuals, Artificial Juridical Person, cooperative society and local authority, excluding a person who is required to file the return of income under sections 139(4A) or 139(4B) or 139(4C) or 139(4D).

ITR-6

Applicable to any Company not claiming exemptions from income tax under section 11, or being Charitable Institutions, which are required to file in ITR-7.

ITR-7

Applicable to all individuals including companies who are required to demand return under sections 139 (4A) or 139 (4B) or 139 (4C) or 1 39(4D) or 139 (4E) or 139 (4F).

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How to file an Income Tax Return (ITR)?

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  • Steps for Filing Income Tax Return

There are two ways in which a user can file an ITR:

Offline – Download the applicable ITR, fill the form offline, save the generated XML file and then upload it.

Steps to generate XML File:

Step 1 – Visit the Income Tax e-Filing portal https://www.incometax.gov.in/iec/foportal/

Step 2 – Go to ‘Downloads > IT Return Preparation Software’ 

Step 3 – Extract the downloaded ZIP file > Open the Utility from the extracted folder.

Step 4 – Fill all the necessary fields, check all the tabs in the ITR form > calculate tax

Step 5 – Generate the XML file and save it

Upload the saved XML while submitting the return

Online – Visit the Income Tax e-Filing portal, fill in the relevant data directly online and submit it. Taxpayers can file and submit ITR-1 and ITR-2 directly online.

What Is TDS?

‘Tax Deducted at Source’ or ‘TDS’ literally means collecting tax at the source itself as the transaction takes place. This is a process by the Government in which the taxable amount gets deducted when the paid amount gets credited to the payee's account or at the time of payment whichever gets done first.

At the time of payment of salary or life insurance, the tax gets deducted at the time of payment. This tax is deposited by the deductor to the Income Tax (IT) department. With the help of TDS, some part of one’s tax is automatically paid to the Income Tax department. In this manner, TDS helps in reducing tax evasion.
TDS is deducted on commission payments, salaries, rent & interest payments, consultation & professional fees. The prescribed rate of deduction of TDS varies based on expenses recognized by the Income Tax Department. Over a range of 1-10% tax is deducted usually.
What is TDS Return?

The deductor, apart from depositing the tax, also has to file for a TDS return. TDS Return is a quarterly statement, that has to be submitted to the Income Tax department, by the deductors, compulsorily, on time.

Details that are required to file a TDS return are – 

  • PAN card details of both the deductor and the deductee
  • Amount of tax that has been paid to the Government
  • TDS Challan information
What is The Eligibility Criteria For TDS Return?

TDS returns can be recorded by employers or associations who benefit from a substantial Tax Collection and Deduction Account Number (TAN). Any individual making indicated payments referenced under the I-T Act are needed to deduct tax at source and needs to deposit inside the specified time for the following payments:

  • Payment of salary
  • Income through ‘Income on securities’
  • Income through winning bets, puzzles, lotteries, horse races etc
  • Insurance commission
TDS Return Filing

Filing for TDS returns is done quarterly – which means it takes place 4 times a year. For filing a TDS return, different forms are used, according to the purpose of deduction.

TDS Returns Form 

TDS on salary – Form 24Q

TDS where deductee is non-resident, Foreign company- Form 27Q

TDS on payment for the transfer of immovable property- Form 26QB

TDS in any other case- Form 26Q

These returns must be in organization with a signed confirmation in Form No. 27A. It is a form that controls the quarterly statements. This must be filed by deductors along with quarterly statements. It sums up the control aggregates of “amount paid” and “income tax deducted at source” which needs to verify and match with the total amount in the TDS return.

What is GST?

GST refers to Goods and Services Tax, which was launched on 1st July 2017. The Goods & Services Tax applies to all Indian manufacturers, traders and service providers (including freelancers). Excise duty, service tax and sales tax (VAT, luxury tax, entertainment tax etc.) were all absorbed into one Good & Services Tax (GST).
GST is levied on all 3 phases that a product goes through – raw materials, manufacturing and sale/service ultimately to the consumer.
What is GST Registration

Any business dealing with the supply of goods, with an annual turnover of ₹40 lacs or supply services with an annual turnover of ₹20 lacs would need to get a GST Registration along with a valid GST Number. Also, citizens with a turnover under 1.5 crore annually can choose a composition scheme to avoid the tedious GST formalities and pay GST at a fixed rate of turnover. All businesses that make interstate outward supplies of goods also have to register for a GST.

Input Tax Credit 

The input tax credit allows you to lessen the tax you have as of now paid on inputs and pay the excess sum at the hour of paying tax.

You pay taxes on the purchase of an item bought from a registered seller, and when you sell the item, you too collect the tax. With input credit, you can change the taxes paid at the hour of purchase with the amount of tax on sales (output tax) and pay the remaining liability of tax, for example, tax on purchase subtracted from tax on the sale.

GST Tax Rates  

Things that are viewed as essential necessities are exempted from the list which means they won’t be taxed.

Household necessities and life-saving medications and so on are charged at 5%.

Items like PCs and food delivery items are charged at 18%.

Hair oil, toothpaste and cleansers, capital merchandise, modern mediators and administrations are charged at 18%.

Extravagance things are charged at 28%.

Advantages of GST Registration

  • After the registration, the taxpayer will be legally recognised as a supplier of goods and services.
  • After getting registered, the taxpayer is legally authorised to collect tax from their customers and can easily pass on the credit of the taxes paid on goods and/ or services supplied to the purchasers.
  • Registered Tax Payer can claim an input tax credit of taxes paid and can utilize the same for payment of taxes due on supply of goods or services.
  • At the national level, GST Registration helps in allowing a seamless flow of Input Tax Credit from suppliers to recipients.
What is GST Return?

A GST Return is a document containing details of income that is required to be filed according to the law with the tax authorities. Under the GST law, a citizen needs to submit two returns on a month-to-month basis and one such return every year. All returns have to be filed online. Please note that there is no provision for revising the returns. All invoices for the previous tax period that went unreported must be included in the current month.

GSTIN – each taxpayer gets a 15-digit unique identification number known as GSTIN. Any person who has a GST number can vary their GSTIN number by logging in on the GST portal.

What is GST Return FIling?

A GST Return Filing is a return document that contains details of the income of the taxpayer. It has to be filed with the GST administrative authority. The document is used by tax authorities to calculate the tax liability of a GST taxpayer. A GST Return Filing form has to include the following details – 

  • Output GST – on sales
  • Sales
  • Input tax credit – GST paid on purchases
  • Purchases

GST compliant sales and purchase invoices are needed to be attached for filing GST return

What are the GST Penalties & Interests?
  1. Late filing – GST penalties for late filing are ₹100 for each day and ₹200 for each CGST and SGST. It can go up to a maximum of ₹75,000 along with payment of tax at 18% /annum.
  2. Not filing – In case, one fails to file any one of the GST, then one cannot file the subsequent forms without filing the pending one.
  3. For the 21 offences – With no intention of fraud or tax evasion, a penalty of 10% or a minimum of ₹10,000 and jail term for several years, depending on the tax amount.
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