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Know About Taxation in India

Governments levy taxes on their citizens in order to generate income for accomplishing different projects. These projects help to enhance the economy of a particular country and they also elevate their citizens’ standard of living. In India, the power of the government to charge tax is derived from the Constitution of India. This assigns the power to collect taxes to the Central and State governments. Let’s have a look at the definition of taxation, along with information related to it.

Taxation in India

Taxation Definition

Taxation is recognized as a means through which governments fund their expenditure by levying charges on citizens as well as corporate entities. It is found that Governments apply taxation to approve or reject certain economic decisions.

Alternatively, taxation is the system with the help of which a country’s government receives money from people and spends the same on certain areas like health, education, and defense, etc. for the betterment of the country.

What is Income Tax Return Filing?

Income tax return filing functions as proof that you have already paid your income tax. The income tax return filing comprises of details regarding your yearly income as well as the amount of tax that you have paid. Those Indian citizens who accrue taxable income need to file Income Tax Return (ITR), on a yearly basis. If you file ITR, it would assist you to get a refund in situations you pay a higher tax than the requirement.

What is e-file Income Tax?

The procedure of electronically filing the income tax returns is regarded as e-filing. A number of people insist on e-file income tax to save time and let the process be accomplished easily.

How to file Income Tax Return?

Before understanding the process to file the taxation, you need to have the following:

  • Bank account details
  • Aadhaar Card
  • PAN card
  • Income tax e-filing profile (profile on ITR e-filing portal)
  • Form 16 (issued by the employer)
  • Loan details if any
  • Investment details if any

Through the help of these details, you can easily file your Income tax return by simply logging into the portal and then filling in the corresponding details. It is known that the process of filing is easy and can be done in no time. Either you can manage to get professional help or you can file your returns on your own, simply by registering on the websites of income tax department (https://www.incometaxindia.gov.in/ ) or similar other websites. It is important to keep in mind that the due date to file tax returns is July 31st.

Who can file Taxation in India?

If an individual falls in any of the below-mentioned criteria, he/she is required to file taxation in India:

  • If your age is less than 60 years and your total yearly gross income is higher than Rs. 2,50,000.
  • If your age is higher than 60 years (senior citizen) and less than 80 years of age and your total yearly gross income surpasses Rs 3,00,000.
  • If your age exceeds 80 years (super senior citizen) and your total yearly gross income surpasses Rs 5,00,000.
  • If you own a firm or company, then whether you fetch profit or not, it is mandatory to file taxation.
  • If you are a resident of Indian and own property or financial interest outside India.
  • If you are a resident of Indian and work as a signing authority for a foreign account.
  • If you already sell equity shares in any firm or company of equity-based mutual funds or business trust for an amount exceeding Rs.2,50,000 and have availed tax-exempt based long-term type of capital gains.
  • If you belong to a foreign company and that company is availing treaty benefit on all or any of the transaction done in India.
  • If you are an NRI (Non-Resident Indian) but your total yearly gross income amassed in India surpasses Rs 2,50,000.
  • If you are keen to get any type of loan, then you must file taxation in India. It is known that the taxation filings are considered as legitimate income proofs and they are asked while availing any type of loan.

What happens in case of Non-filing of Income Tax?

Below things may happen in the case of non-filing of income tax:

  • Whenever you fail to file the income tax return within the prescribed due date, you need to pay for the interest at the rate of 1 percent each month or portion of the month till the date of filing the ITR.
  • If you are a taxpayer, you will be refrained to carry forward any loss below the head “capital gains” or “profits and gains of business or profession”.
  • If you file income tax beyond due date but at least before December 31, you need to pay Rs. 5,000 fees while in some other cases the fees needed to pay is Rs. 10,000. If the total income of taxpayers is less than Rs. 5,00,000, the fees billed will be limited to Rs. 1,000
  • If you fail to file an income tax return before the due date, it will outcome into a deferred receipt of the tax refund.

What is the use of Form 16?

Form 16 is used to let you know whether or not your firm or company has offered you certain tax allowance, similar to that mentioned in your offer letter. It is used to check the amount of tax levied during a year. Also, it is used to let you see EPF contributions.

It is found that the Form 16 has:

  • An outline of all the tax taken away by each quarter.
  • Every allowances and tax benefits that you received in the form of a salaried individual.
  • Section 80C deductions which you had  claimed with the help of your employer.
  • Your taxable income after considering Section 80C deductions and allowances.

Form 16 is regarded as a super important document for every salaried individual and if you have it, then it lets the process of e-filing the income tax return easy. There is simplicity in uploading your Form 16 as well as to e-file your income tax return. There is no need for income tax login.


In order to save yourself from the penalty and other severe consequences, you need to file your taxation regularly. The process to file it is not so difficult and can be done in less time.

Frequently Asked Questions

Q1. What is filling income tax return?
Ans. Filling income tax return is more or less a form that needs to be filled before the income tax department stating the total income from various source as well as the total amount of tax paid for the assessment year in the picture.

Q2. Is it necessary to file a tax return for income every single year?
Ans. ​​​​​​​As per the rules and regulations specified by the government, it is mandatory for all the employed individuals to file an income tax return if their income exceeds the amount of 250000 INR. The income below 250000 INR is exempted from paying annual income tax.

Q3. What would happen if one doesn’t file an income tax return?
Ans. ​​​​​​​If in case you don’t file an income tax return, you would be sent a notice from the department of income tax. All the business losses in that year will not be carried forward. You will also need to submit a penalty for not filing the return, and you would also need to pay an interest of 1% per month. It is at the all the times advisable to file the income tax return with the stipulated dates as specified by the department of income tax.

Q4. What is meant by exempt incomes?
Ans. ​​​​​​​Exempt incomes are the incomes for which you don’t have to pay income tax. They are not even included in the total income calculation for the payment of tax. You only have to pay for taxable incomes.

Q5. What are the benefits of filing income tax return online?
Ans. ​​​​​​e-Filing is one of the fastest and the simplest way of filling the income tax return. Once the details are entered, it gets processed automatically and the refunds accounting if any is issued faster. As per the new guidelines, it is mandatory to file income tax returns online if the income exceeds 500000 INR.

Q6. Why is Form 26AS required?
Ans. ​​Form 26AS has a significant role to be played for filling the income tax returns. It is a statement that is maintained by the department of income tax. It covers all the details of TDS, TCS, Self-assessment tax, 15G/H details and details of paid refund too.

Q7. What information does Form 16 specify?
Ans. ​​​​​​​Form 16 is a statement of the total amount of TDS deducted from the salary of an individual. You will be getting this statement from your employer. It contains all the details about the pay, allowances and deductions. The deduction specified are only the subject of proof of deduction that you have submitted to your employer. The actual deductions may differ from the deduction specified in form 16. It is given at the end of the financial year to all the employees.

Q8. What is the primary difference between a financial year and assessment year?
Ans. ​​​​​​The year for which you are filling the income tax returns is known as financial year. The assessment year will at all the times be the next year. If the fiscal year for which you are filing tax returns is 2018-2019, then the assessment year will be 2019-2020.

Q9. What is the process of e-verification of income tax when filling online?
Ans. ​​​​​​To e-verify the income tax returns, you need to follow the below mentioned steps:

  • Visit the e-filling website
  • Select the filled income tax return or form
  • Click on view return pending for e-verification
  • Then you need to select the assessment year for which you want e-verification.
  • Then you can choose the on-screen options to e-verify your return.

Q10. Is it mandatory to send ITR-V?
​​​​​​​Ans. ITR-V comes into the picture at the time when you are filling returns over the internet. It is required to send the printed copy of ITR-V to the CPC, Bangalore if you don’t go for e-verification of the filled income tax return.



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