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Feb 24 2020

Income Tax for beginners – The Hindu, filing of income tax.

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Income Tax for beginners

Income Tax for beginners

Filing of income tax

Filing income tax returns is crucial for your financial growth. PHOTO: S. SIVA SARAVANAN

Filing of income tax

As the deadline to file tax returns looms large, here is a quick guide to ease the process.

The deadline for filing your Income Tax Returns this year is August 31, which is less than a month away. Now, for a lot of people, filing tax returns is an exercise that is about as pleasant as multiple root canals, and with good reason — the system isn’t friendly to anyone who doesn’t possess an intermediate knowledge of tax, and even having a Chartered Accountant file your returns isn’t entirely hassle-free. In order to be more organised and better equipped, an understanding of the process is necessary.

Should you file returns?

People with employers who deduct tax for them are fine with not filing their returns — at least until they decide to travel to a first world country whose visa regulations, apart from requiring one to furnish details about everything, from medical history to underwear size, also requires three years of filed tax returns.

There are also other reasons, including job and loan applications, but for me, the most important reason is that there is a chance that the tax, which is lying to your credit with the department is more than what you’re actually liable to pay and hence, you’re eligible for a refund. It is when you file your returns that you get your refund, and there really is no greater joy than receiving money from the Revenue.

It is important that you make the effort to get your returns done on time because the department only has two deadlines: one regular deadline that is four months from the end of the year, and one ‘delayed’ deadline (which attracts interest) that is 24 months from the end of the year. Once you miss both, it becomes impossible to file your returns for that year.

Financial Year and Assessment Year

Income Tax Returns are always labelled according to Assessment Years; therefore, a return for AY 2015-16, is for the income you have earned during FY 2014-15.

TDS, Advance Tax, and Self Assessment Tax

Advance Tax, on the other hand, is a scheme where you pay the bulk of the taxes you owe during the financial year itself, instead of waiting till when your return is due. It came into existence to ensure a steady income for the government, and taxpayers who don’t scrupulously adhere to it face additional interest. It’s a cruel world.

If both TDS and Advance Tax don’t cover your tax liability, you will have to pay Self Assessment Tax, which is calculated at the time of filing your return.

Filing Your Return

In conclusion, yes, filing your income tax return is not the most pleasant task, and it is tempting to shelve it until an actual need arises. However, filing your returns is vital to your financial growth and it also stands as proof that you’re a citizen who isn’t just aware of the law, but also abides by it.



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