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FAQ’s on Tax Return Filing and Why it is Important
Compiled by: Tax Prompt Tax Research Team

1. Who should file income tax return?
Every individual (resident or non-resident) has to file the return of his income tax if his/her total income before allowing deduction under Chapter VI-A (gross total income) exceeds the exemption limit.

Even if you have been residing or working outside India, you must file income tax return if you have any income which is deemed to accrue in India.

The exemption limit on gross total income is:

» Women (below the age of 65 years): Rs. 1,80,000
» Senior citizen (65 years of age or above): Rs. 2,25,000
» Any other individual (below the age of 65 years): Rs. 1,50,000

For example, a non-senior male having annual income above Rs. 1.5 lakh should file return, even if he can claim the entire Rs. 1.5 lakh in deductions.

Person who has achieved 65 years of age on or before 31st March, 2009 is considered as senior citizen.

2. Why should I file an income tax return? / Does everyone need to file income tax return?
You need to file an income tax return if your annual income exceeds the exemption limit.

3. Is Income Tax return filing mandatory if I have a PAN number?
A PAN Card is mandatory to file an Income Tax Return. Nowadays for several transactions you are required to quote your PAN. However, if your income is below the basic exemption limit, you do not need to file an Income Tax Return simply because you have a PAN.

4. What are the consequences if I do not pay income-tax?
If you fail to pay income tax due, you will be charged interest @ 1% per month from 1st April following the financial year, until you pay your tax.

5. Due date of filing income tax return
» Due date for salaried individuals to file their return is 31st July 2009.
» All losses are allowed to be carried forward to next year only if the return is filed within due date, except when there is loss under the head house property.
» Interest at the rate of 1% per month is charged on the amount of tax due from the due date of filing return.
» If you file your return after assessment year, then penalty of Rs. 5,000 can be imposed.

6. Will I be put to any disadvantage by filing my return?
No. On the contrary by not filing your return in spite of having taxable income, you will be laying yourself open to the penal and prosecution provisions under the Income-tax Act.

7. What are the benefits of filing my return of income?
Filing of return is your constitutional duty and earns for you the dignity. This apart, your IT returns validate your credit worthiness before financial institutions and make it possible for you to access many financial benefits such as bank credits etc.

8. If I fail to furnish my return within the due date of filing, will I be fined or penalized?
Yes. This may take the form of interest if the return is not filed before the end of the assessment year. If the return is not filed even after the end of the assessment year, penalty may also be levied.

9. If I have paid excess tax how and when will it be refunded?
The excess tax can be claimed as refund by filing your income tax return. It will be refunded by issue of cheque or by crediting to your bank account. The department has been making efforts to settle refund claims within four months from the month of filing return.

10. Am I required to keep a copy of the return filed as proof and for how long?
Yes. Since legal proceedings under the income tax act can be initiated up to six years prior to the current financial year, you must maintain such documents at least for this period.

11. There are various deductions that have not been reflected in the Form 16 issued by my employer. Can I claim them in my return?

12. Why is return filing mandatory even though all my taxes and interests have been paid and there is no refund due to me?
Amounts paid as advance tax and withheld in the form of TDS or collected in the form of TCS will take the character of your tax due only on completion of self-assessment of your income. This self-assessment is intimated to the department by way of filing of return. Only then does the government acquire rights over the prepaid taxes as its own revenue. Filing of return is critical for this process and, hence, has been made mandatory. Failure will attract levy of penalty.

13. Common mistakes people make while filing tax returns:-

  • The most common notion among salaried employees is that since tax has already been deducted from their salary, there is no need to file their income tax returns. This is not at all true or legal. Even though tax has been deducted and there is no further liability to pay tax, an employee has to compulsorily file his / her income tax return. Form No. 16 received from employer is not their income tax return.
  • Employees do not include the interest that they receive on their savings bank account. The entire interest earned on your savings bank account is taxable.
  • Omission of income received by a minor child. A minor child is not required to file a separate return of income. However, this income has to be included in the hands of either of the parents, although it might be a small amount of bank interest.

14. Permanent Account Number (PAN)
Permanent Account Number (PAN) is a ten- digit alphanumeric number, issued in the form of a laminated card, by the Income Tax department. Key points to remember about PAN are:

» It is mandatory to have PAN number in order to file your income tax return.
» Having PAN number does not necessarily require you to file return. You are required to file return only if your gross total income is above the exemption limit.
» PAN number is required to be quoted if you make transactions like:
  • sale/purchase of immovable property valued at Rs. 5 lakh or above
  • sale/purchase of car for any amount
  • time deposit exceeding Rs. 50,000
  • sale/purchase of security (such as shares, mutual funds) exceeding Rs. 1 lakh
  • application for phone connection
  • payment in cash for bank draft or pay order exceeding Rs. 50,000 in a day

» Incorrectly quoting a PAN will make you liable for penalty of Rs. 10,000.
» PAN is your personal identity, don't disclose it unless required. Keep a laminated photocopy of PAN card for use & keep the original PAN card at a secure place.

Disclaimer: Tax Prompt has taken all reasonable steps to ensure that the information contained herein has been obtained from reliable sources and that this publication is accurate and authoritative in all respects. However, this publication is not intended to give legal, tax, accounting or other professional advice. No reader should act on the basis of any information contained in this publication without considering and, if necessary, taking appropriate advice upon their own particular circumstances. If such advice or other expert assistance is required, the services of a competent professional person should be sought.

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