Is it difficult to file an income tax return in India?

Is it difficult to file an income tax return in India?

What is the purpose of an income tax return? or ITR, as it is most often called.

When a person is required to submit a tax return to the United States Internal Revenue Service, this is known as an income tax return. It conceals information about a person’s earnings and the taxes that must be paid during the year.

The most important thing to remember is that the information reported in an ITR should and always refer to a certain financial year, which begins on April 1st and ends on March 31st of the following year.

As you may be aware, there are five different sources of income:
  • A salary is a source of revenue.
  • The income and gains generated by a firm or profession.
  • The revenue generated by residential property.
  • Profits from capital gains are referred to as capital gains income.
  • Dividends, interest on deposits, royalty revenue, and other sources of income are used to supplement the income.

The Income Tax Department requires each individual to file a different ITR based on their various sources of income. According to the Income Tax Department of India, there are seven different types of ITR forms: ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7, which are used depending on the nature and amount of the taxpayer’s income. In India, most people use an income tax calculator to figure out how much they’ll have to pay and which ITR they’ll have to file, so here’s a quick overview.

ITR Forms: What Are They and How Do They Work?

ITR – 1: When an individual has a total income of up to 50 lakhs from a wage, one house property, another source other than lotteries, and agricultural income of up to 5000, they must file this form.

ITR-2: Individuals and HUFs who are not entitled to file the ITR 1 form and have income and earnings from a profession or business must complete the ITR 2.

ITR-3: Individuals with income from a business or profession file Form ITR-3.

ITR-4: When an individual, HUF, or firm has a total income of up to 50 lakhs and income from a business or profession computed under sections 44AD, 44ADA, or 44AE, they must file an ITR-4.

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Is it Really That Difficult to File an ITR?

If you’re wondering if completing an income tax return is a difficult task, you’re not alone. It isn’t truly the case. In certain circumstances, filing an ITR isn’t even essential, and the task comes in when you need to know whether or not you should file an ITR.

There are some circumstances in which an ITR should be filed.

a) When a person possesses a beneficial ownership interest in an asset located outside of India.

b) When an individual has signatory power over an account that is not in India.

c) If you are a beneficiary of an asset that is not located in India.

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d) When an individual makes a bank deposit of greater than Rs. 1 crore.

e) When a foreign travel expense of more than Rs. 2 lakhs is incurred.

f) When a household’s electricity consumption exceeds Rs. 1 lakh.

What Is the Process for Filing an ITR?

Here are a few steps to help you file your ITR online using the internet.

#1. Firstly, visit the Income-tax official website.

#2. Create an account on the portal and log in using your ID.

#3. Select ‘Taxpayer’ from the drop-down menu and input your PAN.

#4. Following the validation, you will be required to provide personal information such as your name, address, and phone number.

#5: Provide your email address and phone number.

#6. After you’ve completed all of this, click on the ‘proceed’ button.

7 ways in which taxpayers can reduce their tax liability

#7. You must then verify your information using an OTP issued to your registered phone number.

#8. Enter the one-time password (OTP) that was supplied to you.

#9. Once the OTP has been successfully entered, a window will popup allowing you to review the information provided.

#10. Finally, you’ll be able to create a password and log in.

#11. After that, click register, and you’ll get an acknowledgement message and a file to return by selecting the return option.

Is It Necessary to File an ITR?

Filing tax returns is a yearly auction that every responsible citizen of the country is expected to do. It is the only way for the government to know how much money citizens spend and gives a forum for them to request refunds and other forms of assistance on a regular basis. Here’s why it’s critical for you to file income tax returns:

  •  Filing tax returns demonstrate that you are accountable.
  • In some circumstances, it is required.
  • Your loan and credit card companies will most likely want to see this information.
  • It’s also required if you want to file a claim for compensation for prior losses.
  • It will also come in handy and be beneficial in the event of updated returns.
Conclusion

If you thought filing income tax returns was a difficult task, you can now rest assured that it is not. All you need to know is whether it is required of you, which ITR you should file, and what role the returns will play in your financial situation.

Roc Annual Compliances

Roc Annual Compliances

All about ROC Annual Return & Forms MGT-7, MGT-8 and AOC-4
Annual Return

Annual returns must be filed with the Ministry of Corporate Affairs (MCA) / Registrar of Companies (ROC) by every company incorporated under the Companies Act 1956 / 2013. Every registered company, whether or not it does business, is required to file these annual reports.

Every company registered under the Companies Act, whether it is a small, one-person business, a private limited company, or a public limited company, is required to file Annual Returns with the Registrar of Companies once a year to keep themselves informed about the company’s operations and management. The essential information about the company, its shareholders, directors, and so on as of the last day of the financial year, March 31st, is contained in the Annual Return.

Section 92 of the Companies Act, 2013 and Rule 11 of the Companies (Management and Administration) Rules, 2014 govern annual returns. Compliance with the Companies Act 1956 / 2013 is required for companies registered in India.

The corporation must comply with the Annual Return compliance requirement regardless of its entire turnover or capital size. On a day-by-day basis, late or non-filing of the ROC Annual Return attracts high interest, penalties, and a late charge.

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Annual Return – Overview
Annual Return (Form MGT-7)

Annual Return under the Companies Act is a yearly Return containing the general particulars of the company at the end of the financial year, such as details of its registered office, business activities, particulars of its holding, subsidiary companies, shares, debentures and other securities and shareholding pattern, members and debenture-holders, promoters, directors, key managerial personnel, and changes therein, members and debenture-holders, promoters, directors, key managerial personnel, meetings of members, and compliances, disclosures etc.

What is the purpose of the MGT-7 e-Form?

Every corporation must prepare an MGT-7 form giving the details as of the end of the fiscal year. These specifics include the following:-

  • The registered office, primary business activities, and information about the company’s holding, subsidiary, and affiliate firms;
  • The company’s shares, debentures, other securities, and shareholding pattern;
  • The company’s indebtedness;
    Members and debenture holders, as well as any changes that have occurred since the preceding financial year’s end;
  • The promoters, directors, and key managerial people, as well as any changes to them since the previous financial year’s end;
  • Meetings of members or a class of members, the Board of Directors, and its different committees, as well as attendance information;
  • Penalty or punishment imposed on the company, its directors or officers, including details of compounding of offences and appeals made against such penalty or punishment;
  • Remuneration of directors and key managerial personnel;
  • Penalty or punishment imposed on the company, its directors or officers, including details of compounding of offences and appeals made against such penalty or punishment;
  • The matters relevant to certification of compliances and disclosures as may be necessary;
  • Its Shareholding Pattern; and
  • Any other matters as may be required in the form.
  • What are the required attachments to submit this form?
  • This e-form can be completed by uploading scanned copies of documents to the attachments section. This is the last section of the form.
  • List of shareholders, debenture holders, approval
  • letter for AGM extension, copy of MGT-8, and
  • optional attachment(s), if any, are all mandatory attachments.
MGT – 7A: An Abbreviated Annual Return

By revising the requirements of the Companies (Management and Administration) Rules, 2014, the Central Government has prescribed a shortened form of annual return for “and Small Company,” which will take effect on March 5, 2021. This form is for OPC and small enterprises’ Annual Returns for the fiscal years 2020-21 and onwards.

One Person Company (OPC): According to Section 2(62) of the Companies Act, 2013, a “One Person Company” is a corporation with only one member.

Small Company: A Public Company is not regarded a ‘Small Company’ under Section 2(85) of the Companies Act 2013.

A corporation that is not a public company is deemed a ‘Small Company’ if it meets both of the following criteria:

(a) The company’s paid-up share capital does not exceed Rs. 2 crores or such greater amount as may be prescribed, but not more than Rs. 10 crores;

(b) Turnover for the immediately preceding financial year, as determined by the P&L Account, does not exceed Rs. 20 crores or such greater amount as may be prescribed, but not more than Rs. 100 crores.

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Form MGT-8: Certificate from a Practicing Company Secretary

According to the Companies Act 2013, Section 92(2) read with Rule 11(2) of the Companies (Management and Administration) Rules, 2014, Form MGT-8 is a certification granted on a company’s annual report by a practising company secretary. A listed business or a firm with a paid-up share capital of 10 crore rupees or a turnover of 50 crore rupees or more must attach MGT 8, which must be validated by a Company Secretary in Practice (PCS) and given in stipulated Form No. MGT-8. If MGT 8 is released after October 1, 2020, a practising Company Secretary must generate a UDIN (PCS).

Timeline for Filing a Company’s Annual Return

1. Annual Return (MGT-7A) Due Date: Although the OPC is not required to convene an annual meeting, the due date for filing Form MGT 7A is 60 days after the end of the financial year. From FY 2020-21 onwards, One Person Companies (OPCs) and Small Businesses must file an annual return in Form MGT-7A.

2. Except for One Person Companies (OPCs) and Small Businesses, Form MGT-7A is required for all Annual Returns. Within 60 days of the conclusion of the AGM, the same must be lodged with the Registrar of Companies (including event date).

ANNUAL RETURN FILING PROCEDURE IN GENERAL

1. Prepare the Annual General Meeting Notice, Agenda, Notes to the Agenda, and other materials (AGM)

2. Organize a Board of Directors meeting and pass the required resolutions.
3. Appoint an auditor to do due diligence on the financial statements and prepare them in accordance with Schedule III of the Companies Act, 2013.

Extended due dates of Income Tax Return and Tax Audit

4. According to the Companies Act of 2013, the Board Report, Annual Return, and other essential documents should be prepared by the Director of the company.

5. Another Board Meeting should be held to approve the company’s draught financial statements, Board Report, and Annual Return, which must all be prepared and reviewed by the company’s directors.

6. Organize an annual general meeting (AGM). Only until the company’s financial statements are accepted by the shareholders at the Annual General Meeting are they considered final.

7. Gather all relevant documentation for filing annual returns.

7 ways in which taxpayers can reduce their tax liability

7 ways in which taxpayers can reduce their tax liability

Nobody enjoys paying taxes in this world. There is no way to avoid paying taxes if you have taxable income. However, effective planning from the start of the fiscal year might help you lower your tax liability.

Income tax rules in India have exempted certain expenses and investments from taxation, or if you make certain investments or incur certain expenses, you may be entitled to tax deductions and exemptions. As a result, such investments and expenses can help you minimise your tax liability.

Income tax rules in India have exempted certain expenses and investments from taxation, or if you make certain investments or incur certain expenses, you may be entitled to tax deductions and exemptions.

Here are seven strategies for lowering your tax bill:
1. Premium payments for life insurance, pension plans, and provident funds

Individuals can deduct up to Rs 1.50 lakh in payments for life insurance premiums, provident fund, PPF, investment in ELSS schemes, tuition fees paid for up to two children, National Savings Certificate, home loan principal repayment, and so on under Section 80C of the Income Tax Act 1961.

Section 80CCC allows you to deduct premiums paid for annuity and pension plans offered by insurance firms. Similarly, deductions can be claimed on investments made in the Central Government’s pension system under Section 80 CCD (1).

However, the total deduction for all three components combined cannot exceed Rs 1.50 lakh.

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2. Contribution to the National Pension System (NPS)

An extra deduction of up to Rs 50,000 can be claimed on NPS contributions made by employees under Section 80 CCD (1B). This is in addition to the investment made according to Section 80CCD (1).

A deduction for an employer’s NPS contribution can be claimed under Section 80 CCD2. However, the size of the tax benefit will be determined by the type of employer.

-The deduction limit is 10% of the basic wage plus dearness allowance if the employer is a PSU, state government, or any other private sector enterprise (DA).

If your employer is the federal government, you can deduct up to 14% of your basic salary plus DA.

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3. Rental property income

An individual can claim a tax deduction of up to Rs 2 lakh on interest payments on a house loan or home improvement loan on a self-occupied property under Section 24(b). However, payments made toward the principal of a house loan can be claimed under Section 80C up to a maximum of Rs 1.50 lakh.

You cannot, however, claim this tax benefit if you have chosen the new tax regime.

4. Premium payment for health insurance

A deduction can be claimed under Section 80 D for premiums paid for health insurance for self and dependent family members, as well as for preventative health check-ups. However, there are certain limitations:

Section 80D allows a deduction of Rs 25,000 for self/spouse, dependent children, or patents. This deduction might be up to Rs 50,000 if the claimant or any family members are senior people. Only a Rs 5000 deduction is allowed under Section 80D for preventive health examinations.

Medical expenses incurred by a senior citizen can also be deducted up to Rs 50,000 under Section 80D.

5. Expenses for the care and treatment of a dependent who is impaired

Expenses for the maintenance or medical care of a disabled dependent can be deducted up to Rs 75,000. However, if you have a severe disability (80% or more), you may be eligible for a reduction of up to Rs 1.25 lakh.

6. Medical treatment reimbursement

A deduction of up to Rs 40,000 can be claimed under Section 80 DD (1B) for medical expenditures incurred by self and dependent family members for specified diseases. If one of the family members is a senior citizen, the deduction limit would be increased to Rs 1 lakh.

7. The amount of interest paid on a student loan

An individual can deduct interest paid on an education loan taken for the higher education of a dependent child or spouse under Section 80E. It’s worth noting that there’s no maximum limit to this deduction.