About Income Tax

An income tax is a direct tax that government impose on income generated by businesses and individuals. It is a progressive taxation system in which the amount of tax is determined by the way of slabs and other provisions due to which the tax payable is as per the earning levels and capacity of individuals and businesses. The Indian Direct taxation system is governed by the provisions of Income Tax Act, 1961.Taxpayers must file an income tax return annually to determine their tax obligations. Income Tax Return (ITR) filing is the process of providing a declaration in the form of a Statement about the Income and Expenditure of the taxpayer to the Income Tax Department. This declaration is used to determine the tax liability of the taxpayer and payment thereof.
Filling of Income Tax Return.It is advisable for everyone to file their Income Tax Return to Department, since the non-compliance of any of the provisions of Income Tax Act and non-disclosure of the Incomes, assets and other relevant facts leads to various complications, fancy penalties and may also cause punishments like imprisonments. Hence it is advisable to be on a safer side by filling ITR and disclosing facts in order to save time, costs and avoiding other complications.It is mandatory for the following persons to file their Income Tax Return with the Income tax department.1)   Every person who has a total income that exceeds the exemption limit ( The Current exemption limit is Rs. 2,50,000/-) is liable to furnish Income Tax Return within the due date.2)   Any private company or public company whether domestic or foreign company located in India or doing business in India.3)   Any firm including LLP (Limited Liability Partnership) or Unlimited Liability Partnership.4)   Every HUF (Hindu Undivided Family), AOP (Association of Persons) and BOI (Body of Individuals) – if the total income of these bodies or entities exceeds the prescribed exception limit, is liable to furnish Income Tax Return within the due date.5)   Any resident who has an asset located outside of India (might include financial interest in some entity as well) OR any resident who retains signing authority for an account based outside India – for all these cases Tax return needs to be filed mandatorily in the prescribed form irrespective of the amount of tax liability on those incomes.
Note: In certain situations individuals or entities are not under compulsory requirement to file the return. In such cases their tax filings are considered as Voluntary returns, which are seen as valid tax returns.
Filling of Return in case of Losses.It is an incomplete statement that the filling of ITR is required only in case of Profits and Income arising due to the various sources. If any loss was incurred in the previous financial year then filing of Income Tax Return tax is required by the taxpayer. The advantage of filing the loss returns is that it allows one to carry the loss forward which reduces the tax liability for the future years. Hence, it is highly advisable to file the return for loss to avail the benefits arising out of such. In case of an Individual Tax payer, if any loss was incurred in the previous financial year then filing a tax return is not mandatory.Tax return for loss is compulsory for companies and firms and the provisions are as follows:1)   If the loss arises under the head “Profits and Gains of Business and Profession” or under the head ‘Capital Gains’. Tax return filing is mandatory in case the firm wants to carry forward this loss and offset with the future income. Availability of this option is only possible if the tax return indicating the loss is filed within the due date.2)   In case the loss arises under the head “House or residential Property”, the loss could be carried forward even though the tax return is filed after the due date.3)   In case the loss is to be offset against some income in other category for the same year, it is permitted to offset even though return is filed after the due date.4)   Loss of the earlier years could be carried forward if the return of losses for those years were filed with due dates and those losses were assessed.5)   If the loss is filed for return under Section 142(1), except for the loss under “House property”, other losses could not be carried forward. However, the unabsorbed depreciation could be carried forward for such cases.

 Late Income Tax Return

As per the provisions the taxpayer have to furnish the tax return before the due date as specified under the Section 139(1), or within the allowable time by a notice that is issued under the section 142(1), otherwise the prescribed penalty is levied. But the flexibility is provided for filling of ITR after the due date, the taxpayer may still file the belated return for any prior years any time until the expiry of one year that started from the end of the applicable year of assessment or before conclusion of the assessment, whichever happens earlier. However, the taxpayer might be charged with a penalty of ₹5,000, under Section 271F of IT Act 1961, in case the return is submitted after the pertinent assessment year.

Revised Return

In case the Income Tax Return was filed within due date but later the assesse has appropriate reasons to believe that that there was some mistake or omission in the filing of the return, to correct these mistakes there is provision for revised return of Income Tax and the original return that was submitted be considered as withdrawn and the revised return will be validated. But the revised return cannot be filled in case a belated return is filled with the department and a late or belated return is beyond the scope of revision. But it is to be remembered that for any intentional mistakes or omissions and for any fraudulent filing, penalty will be imposed on the tax payer.

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Disclaimer: The above article is only for information purpose and is on based on the author’s interpretation of the relevant provision. The same should not be considered as professional advice.