INCOME TAX RETURN FOR FINANCIAL YEAR 2020-2021(A.Y 2021-22)

itr filling

 

Tax liability

According to Article 265 of the Constitution of India, Tax shall be levied or collected only by the authority of law. Tax is one of the major sources of Income of Government.

 

Income Tax Return

ITR stands for Income Tax Return. As the name suggests, Income Tax is a tax levied by government on person’s total taxable Income.

Income Tax Return is a type of Form which every taxable person has to file to give information about the total Income earned during a financial year and  to inform whether the person has paid required Tax thereon or not to the Department of Income Tax. In case a person pays excess tax then he can claim Income Tax Refund under the IT Act, 1961.

Income Tax is governed by Income Tax Act, 1961. As per the Income Tax Act, every person shall be liable to pay Income Tax at a prescribed Income Tax Rate if his/her total income is more than the prescribed income. Income Tax Rates are prescribed by the Ministry of Finance each year in the Finance Act.

 

Taxpayers

Following persons are required to file Income Tax Return mandatorily if their total taxable income exceeds the prescribed threshold limit in a financial year-

  • Individuals
  • Hindu Undivided Families (HUF’s)
  • Firms
  • Limited Liability Partnership
  • Association of Persons
  • Body of Individuals
  • Companies
  • Local authorities
  • Any other Juridical Person

**Tax Liability depends upon the residential status of a person. Any person who is a resident of India is required to pay tax on his total global income.

 

Due-Dates for Filing ITR

Different due-dates are applicable on different category of taxpayers. Tax Returns have to be filed before due date otherwise tax payer has to pay a penalty.

PARTICULARS

DUE-DATE

Filing of ITR in Non- Audit cases

(Individuals/HUF/Partnership Firm)

31st July

Furnishing Audit Report

30th September

Filing of ITR in Audit Cases

31st October

 

Sources/ Heads of Income – Section 14 of the Income Tax Act, 1961

  1. Income from Salary
  2. Income from House Property
  3. Income from Capital Gain/Loss
  4. Income from Business & Profession
  5. Income from Other Sources
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Documents Required for ITR Filing

  1. Form 16 (A/B/C/D)
  2. Latest Bank Statement
  3. Form 26 AS
  4. Bank Account Details
  5. Deduction Certificate (if any)
  6. Login User ID & Password (Income Tax e-filing Portal)
  7. PAN
  8. Aadhar
  9. Interest Certificate (if any)
  10. Latest Financial Statement (In case of Company)
  11. Investment Detail (if any made u/s 80)
  12. Statement of Capital Gain or Loss

 

Types of ITR Forms

 

ITR Forms

 

Applicability

 

 

 

ITR-1

A Resident Individual having Income less than Rs 50 Lakh, From

·         Salary/Pension

·         One House Property

·         Other Sources

 

 

 

ITR-2

Any individual or a Hindu Undivided Family (HUF)

·         All Income from ITR 1, if it is more than Rs 50 Lakh or

·         All Income from ITR 1, having

·         More than one House Property

·         Capital Gains

·         Foreign Income / Holding Foreign Assets

·         Holding Equity Shares of Private Company

·         Holding Directorship in a Company

 

 

 

 

ITR-3

Any individual or a Hindu Undivided Family (HUF), having Income

·         All Income of ITR 2

·         Under the head “Business or Profession

·         Maintains Full Books of Accounts

 

 

 

 

ITR-4

Any individual (Being Resident), Hindu Undivided Family (HUF) or Firm

·         All Income of ITR 1

·         Income from Business / Profession Computed under Presumptive Taxation Scheme

 

 

 

 

ITR-5

·         Firms,

·         LLPs,

·         AOPs / BOIs,

·         Artificial Juridical Person Estate of deceased,

·         Estate of Insolvent,

·         Business Trust and Investment Fund

 

ITR-6

For Companies Other Than Companies Claiming Exemption Under Section 11 of the Income Tax Act, 1961

 

 

 

 

 

ITR-7

Persons / Companies required to furnish Return Under

·         Section 139(4A) or

·         Section 139(4B) or

·         Section 139(4C) or

·         Section 139(4D) or

·         Section 139(4E) or

·         Section 139(4F)

 

 

Is it Mandatory to file ITR?

According to the Income Tax Act, 1961, it is mandatory for every person to file Income Tax Return and to pay taxes at prescribed tax rates on the Income earned in a Financial Year if the income exceeds the prescribed limit.

 

Implications of not filing ITR

 

Every person who is legally required to file ITR and if he/she fails to file ITR shall be liable to pay penalties prescribed under the law for the time being in force.

Click here to read in detail about Penalties under IT Act, 1961

 

Benefits of Filing ITR

  1. Nation Building

As we know Tax is one of the major sources of income of government. Thus, the money collected and accumulated through tax receipts are used by the government for Healthcare, Infrastructure, Education, various nation welfare schemes or for other Nation Building activities.

  1. Avoid Penalties

Income Tax Act, 1961 imposes a penalty on taxpayers (who are mandatorily required to file ITR) for not filing Income Tax Return on or before due date. This penalty can extend up to Rs. 10,000.

  1. Deductions

A taxpayer who regularly files ITR can claim deductions on his overall tax liability if he fulfils the criteria of claiming deductions under the Income Tax Act.

  1. Easy to get Loan Approval

It is comparatively easy for persons filing ITR to get Bank Loans as Banks can rely on the person in terms of repayment of Loan or payment of interest rates.

  1. Acts as Income proof & Address Proof

Since Income and Address of the taxpayer are stated on the ITR, therefore it can be used as Income and Address Proof.

  1. Fast and Smooth VISA Processing

Many Embassies ask for the copy of ITR before issuing VISA. Thus, it is required to get quick VISA.

  1. Count Losses in subsequent year

In case a taxpayer has incurred losses and has filed ITR for that year then he can carry forward the amount of losses to subsequent years.

  1. Investments

When any person makes investments then it is reported to the Income Tax Department. Thus, if any person who is making heavy Investments files ITR then his heavy investments get substantiated and reported to the IT department.

  1. Become a Law Abiding Citizen

As filing Income Tax Return is a legal requirement thus any person who regularly files ITR helps not only in nation building but also in becoming a law abiding citizen.

 

Income Tax Slab

Income Tax is levied on the basis of Tax Slabs as prescribed by the Union Government in budget every year. Tax Slabs specifies different tax rates as per the ranges of income. Thus, Income Tax Rates increase as the Income increases. This is why, Indian Taxation system is considered as progressive and fair tax system.

 

Income Tax Slab Rates for Financial Year 2020-2021 (Annual Year 2021-2022)

Finance Act, 2020 inserted new Section 115BAC (effective from Financial 2021) in the Income Tax Act, 1961. This section deals with the new tax regime. Taxpayers have been given 2 options of Tax Slab. This section is applicable on Individuals and Hindu Undivided Family only. This section gives optional tax slab rates to eligible taxpayers.

 

TAX SLAB RATES AS PER SECTION 115BAC OF INCOME TAX ACT, 1961

Total Annual Income

Tax Rates

Up-to Rs.2.5 Lakh

Nil

Above Rs.2.5 Lakh to Rs. 5 Lakh

5%

Above 5 Lakh to Rs. 7.5 Lakh

10%

Above 7.5 Lakh to Rs.10 Lakh

15%

Above Rs. 10 Lakh to Rs. 12.5 Lakh

20%

Above Rs.12.5 Lakh to Rs. 15 Lakh

25%

Above Rs.15 Lakh

30%

 

Eligibility Criteria for New Tax Slab Rate

Only the Individuals and Hindu Undivided Family (HUF’s) have 2 options of slab rates for financial year 2020-21. It means either they can opt for existing tax slab rates along with the applicable tax deductions and exemptions or they can choose new tax rates under section 115BAC without any deductions and exemptions.

  1. The declared income of the taxpayer shall not include any business income.
  2. No carry forward of losses from previous assessment year shall be allowed.
  3. Taxpayer shall not be allowed to claim depreciation under section32(iia).
  4. No Exemption or deduction shall be allowed for allowances or perquisites.
  5. The taxable income shall be calculated without any deductions or exemptions specified under –
    • Chapter VI-A of the Income Tax Act, 1961 (excluding Section 80CCD or Section 80JJAA)
    • Section 24b
    • Clause (5) or (13A) or (14) or (17) or (32) of Section 10/10AA/16
    • Section 32(1)/ 32AD /33AB / 33BA
    • Section 35/35AD/35CCC
    • Clause (iia) of Section 57

 

TAX SLAB RATES AS PER EXISTING TAX REGIME

1. For Individuals, NRI & HUF

Age Group – below 60 Years

 TAXABLE INCOME

TAX RATES

Up-to 2.5 Lakhs

NIL

Above Rs. 2.5 Lakhs to Rs. 5 Lakhs

5%

Above Rs. 5 Lakhs to Rs. 10 Lakhs

20%

Above Rs. 10 Lakhs

30%

 

2. For Individuals between the age of 60 and 80 years

TAXABLE INCOME

TAX RATES

Up-to 3 Lakhs

NIL

Above Rs. 3 Lakhs to Rs. 5 Lakhs

5%

Above Rs. 5 Lakhs to Rs. 10 Lakhs

20%

Above Rs. 10 Lakhs

30%

 

3. For Individuals above the age of 80 years

TAXABLE INCOME

TAX RATES

Up-to 5 Lakhs

NIL

Above Rs. 5 Lakhs to Rs. 10 Lakhs

20%

Above Rs. 10 Lakhs

30%

 

 4. Income Tax Slab Rates for Domestic Companies

COMPANY TURNOVER

TAX RATES

Up-to Rs.400 Crore

25%

More Than Rs. 400 Crore

30%

Under Section 115BA

25%

Under Section 115BAA

22%

Under Section 115BAB

15%

 

  5. Income Tax Slab Rates for Foreign Companies

 

 

NATURE OF INCOME

TAX RATES

Royalty & fee for technical services

50%

Any other Income

40%


6. Income Tax Slab Rates for Co-operative Societies

INCOME

TAX RATES

Up-to Rs. 10,000

10%

Above Rs. 10,000 to Rs.20,000

20%

Above Rs. 20,000

30%

 

Click Here to File Your ITR Now
Knowledge Source:

Defaults and Penalties Under Income Tax Act, 1961

Significant Changes in Indian Taxation System Applicable From 1st April, 2021

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