Importance of Return Filing/ Tax returns

There is a perception among several individuals that having paid taxes via TDS, filing of returns is not important because after all, the government’s main objective is to ensure that its tax kitty is getting the revenue due to it. This is a misconception and it is essential to know that it is our legal obligation to file tax returns when you are required to do so. So your job does not end at paying taxes, filing returns is equally important. This brings you to the question – When does it become essential to file returns? Yes, it is true that Individuals and HUFs are required to file their income tax return/ return of income only if their income before allowing deductions and exemptions exceeds the exemption limit as follows:-

    • Individuals have taxable income exceeding Rs.160,000 p.a.
    • Senior Citizens have taxable income exceeding Rs.240,000 p.a.
    • Women have taxable income exceeding Rs.190,000 p.a.

But we are of the strong opinion that even if where an assessee is not required to compulsorily file their return of income aka income tax returns, should file their return of income and also maintain their Income Tax file (Statements of assets and liabilities or Balance Sheet) as the same will help you in lots of ways like:

  • Taxes may be deducted at source (TDS) from rent, interest, commission or any other income. Filing of return of income is obligatory to claim such refunds.
  • God forbid, if scrutiny/survey/search proceedings is carried out, it becomes much more difficult to prove the sources of asset creation if the return of income is not filed within the due date.

Tax Evasion

Income tax authorities allow you to self assess your income and accordingly pay taxes. Many people tend to believe that his/her income tax return is a drop in the ocean for the income tax authorities and hence not declaring income or understating income may well be worth because it saves you a few bucks. Deliberately hiding your income from the income tax authorities, to reduce your tax liability, amounts to tax evasion. Some examples of tax evasion include, not declaring interest received on bank fixed deposits or accepting income in cash and not route it through the official system. Documents to be kept handy for filing returns: In order to calculate your tax liability and file accurate returns, it is essential that you keep all the documents from which data is required handy. The documents required include

  • Form 16: This document contains information on your salary and tax deducted by your employer. You need to obtain it from your employer
  • Form 16 A: This you need to obtain from the parties who have deducted tax while making payments to you during the year. This includes banks/ companies with whom you have a fixed deposit, parties to whom you have given loan among others.
  • Copy of bank statements: This will give an idea of all the income earned and expenditure incurred. This will ensure that you have not missed out on any details which should be part of your income tax return.
  • Proof for all the deductions claimed under Chapter VIA: This will help you in claiming deductions in the return filed i.e. PPF, NSC, Mutual funds, insurance among others.
  • Documents concerning investment in property: If you have bought any property during the year, you will need details. In case the property has been purchased on loan, all the loan documents along with a copy of the certificate of the payments made is needed.
  • Documents on purchase and sale of investments/assets: Keep a track of all your investments in shares, debentures or any other instrument. Record the purchase date and sale date so that you can assess the profit/loss for the purpose of filing returns.
  • The tax payer is not required to submit any documents at the time of filing returns. However, it is essential that all the above mentioned documents/information should be preserved at least for a couple of years as they may be useful to substantiate the return filed if it is picked up for scrutiny.

Thus, to summarise, it is of paramount importance to file regular income tax returns/ Tax returns disclosing all the financial transactions. Further, it also advisable to maintain proper statement of assets and liabilities (Balance Sheet) year on year, as it helps over a longer period of time. The IT department these days has many means to collect various information about various specified financial transactions of the assessees and it is advisable to disclose everything and relax, rather than worrying unnecessarily. Tax Returns for Financial Year 2010 -11 (March 2011) has started.  Just mail us Form16/ Salary Certificate and details of other income, at . We would take it from there to file your return of income. provides complete online taxation solutions for individuals ( Tax Returns + Tax Support + Tax Planning ) – please see this – Services Offered. Providing Complete Online Tax Solutions for Individuals, Not Just Returns .

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