Income Tax Return filing in India- A brief Overview
Income Tax Return filing in India
Every assessee in India are required to prepare and file their Income Tax return for the income
earned in the financial year on or before the due date prescribed under the
Act.
Income tax return filing is an annual
affair and is major source of revenue for the government as all the assessee has
to make final computation of their tax liability and pay the same to the
government before or at the time of their Income Tax Return filing if already
they have not made full payment of tax by way of advance tax or TDS.
Normally, for
an individual and HUF assessee, the due date for filing the tax return is 31st
July every year. Also, the due dates for company assesses are 30th
October. However, for those company’s on which transfer pricing provisions are
applicable, the due date is 30th November. However, at the time of
COVID pandemic or some other unforeseen circumstances, CBDT may also extend the
due date of tax return filing. For instance, during FY 2020-21, the due dates
of ITR Filing have been
extended many a times.
Computation
of Tax liability
For individual tax payers, there are 2 types of regimes for
computation of tax liability i.e. old regime and new regime.
Old
or Existing Tax Regime for tax computation
As per existing regime, tax liability is computed as under:
1.
For up to Rs.250,000: Tax rates are nil.
2.
For Rs.250,000- Rs.500,000: 5%
3.
For Rs.500,000- Rs.1,000,000: Rs.12,500+20%
4.
For Above Rs.1,000,000: Rs.1,12,500+30%
New Tax Regime for tax computation
The new tax regime is introduced under Section 115BAC of the
Income Tax Act, 1961. The tax rate under different income slabs will be
applicable for the Assessment Year 2021-22. This regime is for all the
taxpayers including the Resident Indians as well as the Non-Resident Indians
that are below 60 years in last financial year.
1.
For up to Rs.2,50,000: Tax rates are nil.
2.
For Rs.2,50,001- Rs.5,00,000: 5%
3.
For Rs.5,00,001- Rs.7,50,000: Rs.12,500+10%
4.
For Rs.7,50,001- Rs.10,00,000: Rs.37,500+15%
5.
For Rs.10,00,000- Rs.12,50,000: Rs.75,000+20%
6.
For 12,50,001- Rs.15,00,000: Rs.1,25,000+25%
7.
For Above Rs.15,00,000: Rs 1,87,500 + 30%
Points
to be kept in mind:
While ITR Filing, any individual or taxpayer must be
aware about the following points worth remembering-
1.
Under Section 115BAC of the Income Tax Act, 1961 the
individuals or Hindu Undivided Families (HUFs) can opt for a lower taxation
rate from either the existing taxation regime or the newly introduced taxation
slab.
2.
Also, if a taxpayer opts for a concession rate given in the
new tax regime, then they will not be allowed to be exempted from the following
benefits given under the existing tax slab as per the Income Tax Act, 1961 such
as-
a.
Section 10(13A): Exemption on House
Rent Allowance (HRA). For most of the salaried persons the HRA is part of the
salary structure. But unlike the basic salary, HRA is not fully taxable as the
said Act. This section allows certain part of HRA to be exempted from tax under
certain conditions.
b.
Section 80C: It allows the
taxpayers to reduce the taxable income by making deductions of up to Rs.1.5
Lakh per year from the total income by making investments that save taxes or
incurring expenses that are eligible under the section.
c.
Section 80D: This section
allows the HUFs or individuals to claim a deduction from the total income on
account of any premium paid for a medical insurance in a particular financial
year. It includes plans for critical illness as well as any health top-up
plans.
d.
Section 80TTB: It allows any
senior citizen or resident to claim a deduction on accrued interest on any
savings account and fixed deposits.
Accordingly, a tax payer needs to decide very carefully whether they want to pay tax under old regime or under new regime. On basis of such decisions, proper tax payable may be computed and finally, income tax return may be filed.
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