Why You Must File ITR Before July 31?
The deadline for the most important job of the year is near. It’s just a week away. Yes, the last date to file your Income Tax Returns popularly known as ITR, is on July 31st 2017. If you have taxable income, you have to pay income tax to the Government. So do you have to pay taxes?
If you are an Indian citizen who is below 60 years, you have to pay income tax if your income exceeds INR 2.5 Lakhs a year. If you are between 60 to 80 years and your income exceeds INR 3 Lakhs a year, you got to pay income tax. If you are a super senior citizen more than 80 years of age and earn INR 5 Lakhs or more in a year, you have to pay your taxes.
Before filing ITR you need to understand what is a Financial Year. This is the year in which you have earned the income. This is a 12 month period which begins on 1st April and ends on 31st March. You also have the assessment year, which is the year in which tax is paid on the income earned.
Now it’s time to understand the income tax slabs and why you must file ITR before July 31st 2017. Want to know more on tax planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice / education to ensure that you are not mis-guided while buying any kind of financial products.
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Income On Which You Pay Tax
Yes, you receive a salary each month from your employer. But, is this your only income? You may be earning an income from several other sources. You have to pay tax on your total income.
Your Total Income is the sum total of all heads of income listed below:
Income from salaries:
The total salary you (employee) receive from your employer is categorized under this head. This is your salary, allowances, leave encashment or basically all the money you get as a result of your employment agreement.
Income from House Property:
Income tax is charged if a house is given on rent by you (owner). Sometimes, you (owner) may have to pay tax on ‘deemed rent’ in case the property is not let out.
Income from business or Profession:
You have to pay tax on the profits earned by your business or the profits you earn by providing professional services.
Income from capital gains:
Capital gains are the earnings you get from sale of capital assets like buildings, land, bonds, equities, debentures, property and jewelry. You have to pay taxes on these earnings from capital assets.
Income from other sources:
You have to pay tax on the income you earn from:
- Lottery/horse race winnings
- Income from dividends
- Gifts received
- Interest on government securities, debentures and bonds.
Income Tax Slab Rates for Assessment Year 2017–18 (Financial Year 2016–17)
Take a look at the income tax slabs before you file ITR:
Income tax slabs for males and females who are below 60 years of age:
Surcharge: 10% of income tax, where total income exceeds INR 50 Lakhs up to INR 1 crore.
Surcharge: 15% of income tax, where the total income exceeds INR 1 crore.
Cess: 3% on total of income tax + surcharge.
Income tax slabs for males and females who are between 60–80 years of age: (Senior Citizens)
Income tax slabs for males and females who are above 80 years: (Super Senior Citizens)
Why File ITR Before July 31st?
You must be thinking that as you have paid all your taxes, there should be no problem if you miss the tax return filing deadline of July 31st. Yes, you don’t have to pay any penalty, but you could still lose out on certain benefits.
1. You can’t carry forward losses
You cannot carry forward the losses you suffer on Income from business and profession including speculation business, capital gains and income from other sources, if you file belated returns. You will not be able to carry forward losses except loss from house property.
2. You would lose interest on refunds
Let’s say you have to claim a refund in your return of advance tax or TDS. You would lose some of the interest on such a refund, if you file belated returns. The interest on such a refund is normally computed from April 1 of the assessment year (the year immediately following the financial year for which the return is filed), till the date of grant of the refund.
In case of filing a belated return, interest is computed from the actual date of filing the return, till the date when refund is granted, meaning you lose interest that would have been paid for the period April 1st till date of filing the return.
3. You file delayed returns when tax dues remains unpaid
Let’s say you have unpaid taxes and you file returns after the due date of July 31st. This would result in a levy/charge of an interest penalty of 1% a month from the due date of filing the return, till the actual date of filing the return.
4. You cannot revise a belated return
If you file your ITR after the due date, you cannot file a revised return, if you discover a mistake in the return originally filed.
Yes, the deadline of July 31st is almost upon you. You know the income tax slabs. You can easily file income tax returns. Be Wise, Get Rich.