Some Basics required to be known before filing Income tax
The general principle of filing income tax returns is that whosoever has an annual income beyond a certain exemption limit has to file his or her income tax return. Apart from the general principles the other criterion for filing income tax returns relates to its filing by all such persons who fulfill any one of the specified economic indicators. If a person is owning or in occupation of a house; has ownership of a motor car; incurred travel expenditure for a trip outside India; is a holder of a credit card; has made electricity payments in excess of INR50,000/- in a year and is a member of a club with an entrance fee more than INR25,000/- then s/he would be required to file his/her return.
Consequently, filing of income tax has become mandatory for corporate houses, irrespective of whether income or loss or have not done any business. The incidence of tax rests on the person and the person is taken to be the assessee. There is always a confusion regarding the term Assessment Year as given in Section 2(9). This is also known as the Financial Year. It begins on 01 April and ends on 31 March every year. The Financial Year preceding the Assessment Year is the Previous Year. So for the Assessment Year 2013 -14, the Previous Year will be 2012-13. As an example: if a new business is set up on 1 Nov 2013. The first previous year will consist of a period of five months beginning 01 Nov 2013. In future the previous year will consist of 12 months beginning 01 April and ending 31 March.
These days many people stay abroad for considerable period of time. Income tax is charged in the assessment year on the total income of the previous year. The following general rules must be kept in mind while determining the residential status of an assessee:
• Residential status may differ from year to year. In one year the assessee may be a resident and in another year s/he can be a non-resident.
• Residential status is always determined from the previous year. Residential status in the assessment year is immaterial for tax purposes.
• Different residential status for different sources of income is not permissible.
The stay in India need not be continuous and the burden of proving residential status is with the assessee. Delay penalties for late filing are calculated as a percentage of the shortfall of tax. When tax has been deducted at source, or advance tax has been paid, no penalty is generally levied but not exempted.
When assessing Officer (AO) considers a return as defective, the defect is indicated and an opportunity is given to rectify within 15 days from the date of intimation or a period as may be deemed necessary and allowed by AO officer on request from the assessee. Though no documents are required to be submitted at the time of filing but the necessary documents that would be required are bank statements, TDS certificate, form 16, form 26AS and the documents of proof for the savings made including loans and premium paid towards insurances made.