10 Things You Need To Know About Tax Returns
Filing your income tax returns is an essential activity that you are required to perform as the financial year draws to a close. Filing taxes is extremely beneficial – not only does it make you a proud tax paying citizen, but you also receive returns on the taxes you pay.
However, before you set about filing your taxes, it is essential to familiarise yourself with taxes and tax returns.
Everything you need to know about taxes’ book. Get familiar with answers on ‘How to pay taxes’, some ‘Tax basics for beginners’ and ‘How do you know if you need to file your tax return or not’?
Filing your tax returns can often feel like a tedious process, but a good way to persist is to remember that your tax returns are the best way to demonstrate your financial credibility. You are required to submit copies of your tax returns on a number of occasions, including when you apply for a visa or buy a property or even while applying for a Credit Card or a Personal Loan.
How do you know if you need to file your tax return or not? A common question that arises in terms of paying taxes, the answer is simply yes, if you earn more than INR 2.5 lakh a year, you are required to file your returns.
Hold onto the proof of your investments carefully, since they are often the best way to get tax returns. They can also be used to claim refunds, if excess taxes are deducted. Excess taxes can get deducted if all necessary details haven’t been submitted by you to your employer in time. In case this happens, you can submit those details as part of your income tax returns.
It is necessary to remain completely transparent while filing your income tax returns. You must declare all sources of income without withholding any details. It is also essential to show any losses you may have made on short term capital gain tax, while investing in shares. If you file it, you avail the benefit of setting those losses off against other gains or even carrying the losses forward over a period of 8 years.
Digitisation of processes has made life a lot simpler for all of us. Even in terms of taxes, it is now much easier to file tax returns. Online filing and record maintenance make it possible for you to download your Form 16 from the Government’s Income Tax department website, along with the Tax Deducted at Source (TDS) certificate that bears the TAN of your employer. Once you have this, cross check the information to make sure it tallies with the tax deduction statement provided by your employer’s HR department.
In case your annual income is above INR 50 lakh, you are required to provide details of your investments, as well as property holdings, if any. You will need the original purchase documents for all these assets, for proof of valuation. You are also required to disclose receipt of any income from abroad.
Beginners must take note of the entire process, which includes verifying one’s details, versus just filing and uploading details of your tax returns on the Income Tax department website. Owing to digitisation, this is now as simple as linking your bank account details to your tax returns. Make sure your name mentioned on the tax returns matches that in your registered bank account.
Two things happen when you file your claims: Either there will be no refund, or there may be a refund claim. The IT department processes refunds up to INR 50,000 online, wherein, the amount is credited back to the bank account. In case of refunds of above INR 50,000, the IT department issues a cheque. It’s imperative to make sure your address is correctly updated in the department’s records.
Your Aadhaar Card needs to be linked to your PAN Card in order to file your income tax returns. There must be no discrepancy in your name in both these documents.
The last and most important thing to know about taxes is the need to file them on time. Any delays could result in you being unable to claim refunds, or in your losses not being set off against gains in the future.
Filing tax returns is one of the most important fiscal duties and it is important to have a system in place to ensure it is done right.
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