The central government levies and collects income tax on earnings. The tax on earned income is due in the same fiscal year in which it was accrued in the form of advance tax. However, the Assessment Year provides notification and calculation of income and tax liability. Proprietor file ITR every year depending on the requirements, taxpayers have different forms and time limits for filing ITRs.
The majority of businesses lose money in their first few years. If an ITR is submitted, a business loss or capital loss can be carried forward for 8 years. This loss can also be offset against future earnings, lowering future taxable income. The taxpayer loses this benefit if an ITR is not filed.
The taxpayer's financial worth is determined by the ITR filed with the government. The ITR track demonstrates financial capability while also increasing a company's capital base. As a result, the previously filed ITR determines the track of revenue and financial worth. Investors and institutions await the filing of returns to determine the business's capacity.
For loan processing, the income tax return is beneficial. The higher the financial value, the easier it is to get a loan. The same is true for high-risk insurance. In this context, the ITR is an essential document for making judgments.
Income on which TDS has been deducted. The tax liability after allowed deductions may be less than the amount of TDS deducted. In such circumstances, the extra payment can only be claimed as a refund if the company files an ITR.
This form is used by Indian individuals and HUFs whose annual Income is less than 50 lakh from salary/pension, one house property, agriculture income less than Rs. 5000, and other source income.
This form is used by individuals and HUFs who are a director in the company, investment in the private limited company (i.e., a shareholder of the private limited company), whose annual income is more than 50 lakh, foreign income, capital gain income, two or more house property income and agriculture income more than Rs. 5000.
This form is used by individuals and HUFs who earn Income from business or professional work.
This form used by Individuals, HUFs, and Firms (other than LLP) with presumptive business income are eligible. For this, the return filer must have Income from business less than 2 crore and professional income less than 50 lakh. Sections 44AD, 44ADA, and 44AE are used to calculate this.
Here are some of the most common tax-filing mistakes to avoid.
Because all personal information will be kept in the Department's databank and may be validated, it's critical to enter your personal information correctly before filing your taxes. PAN, name, address, e-mail address, phone number, date of incorporation, bank account number, IFSC Code, and other information must be entered correctly. You may miss your refund claim or other critical alerts if you make any error in these details. So double-check everything before filing.
To reduce the compliance and tax-related burden of small taxpayers, the govt notify a scheme of Presumptive Taxation. Under this scheme, the small taxpayers are not required to maintain books of accounts, and their profits are presumed to be a specific percentage of the Total Sales / Receipts.
Resident individual, HUF, or partnership firm engaged in eligible business and who has not claimed deduction under section 10AA or Chapter VIA under "C– Deductions in respect of certain incomes."
Any business, other than business referred to in section 44AE, whose total turnover/ gross receipts in the P.Y. <= Rs. 200 lakhs
8% of total turnover/ sales/ gross receipts or a sum higher than the sum above claimed to have earned the assessee.
6% of total turnover/ gross receipts in respect of the amount of total turnover/ sales/ gross receipts received by A/c payee cheque/ bank draft/ ECS / prescribed electronic mode during the P.Y. or before the due date of filing of return u/s 139(1) in respect of that P.Y.
Non-applicability of section 44AD in respect of the following persons:
Resident individual, HUF, partnership firm ( except LLP) engaged in any profession specified u/s 4AA(1), namely, legal, medical, engineering, architecture or profession of accountancy or technical consultancy or interior decoration or notified profession (authorized representative, film artist, company secretary, profession of information technology)
Any profession specified under sec. 44AA(1), whose total gross receipts <= Rs. 50 lacs in the relevant P.Y.
50% of total gross earnings from such a profession, or a sum greater than the amount stated to have been earned by the taxpayer.
This form can only be used by a person who is a resident for income tax purposes. So a non-resident cannot use it even if his income is below 50 lakhs and has income taxable on a presumptive basis.
1. Old scheme
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2. New Scheme u/s 115 BAC
| Total Income (Rs.) | Tax rate |
|---|---|
| Up to Rs.2,50,000 | Nil |
| Rs.2,50,001– Rs.5,00,000 | 5% |
| Rs.5,00,001– Rs.7,50,001 | 10% |
| Rs.7,50,001–Rs.10,00,000 | 15% |
| Rs.10,00,001–Rs.12,50,000 | 20% |
| Rs.12,50,001–Rs.15,00,000 | 25% |
| Morethan 15,00,000 | 30% |
| Total Income (Rs.) | Surcharge |
|---|---|
| Up to Rs.50,00,000 | Nil |
| Rs.50,00,001– Rs.1,00,00,000 | 10% |
| Rs.1,00,00,001– Rs.2,00,00,000 | 15% |
| Rs.2,00,00,001– Rs.5,00,00,000 | 25% |
| More than Rs.5,00,00,000 | 37% |
• Marginal relief is available if the tax payable, including the surcharge, is more than the excess income over the limit.
Return file after 31.12.2021
