When it comes to Income tax, Indians seem a lot confused. Not everyone is aware about all the aspects of Income tax and that leads to myths being built around the whole concept of income tax. In this blog post we will see what are the most common myths related to income tax and we will also check the facts.
What is income tax?
Firstly, it is important to understand what precisely is income tax. Income tax is a tax levied by the government on the income/profits that you make. This money, collected from the public, is utilized for public services only.
Now, let’s look at the most common myths surrounding Income tax.
I don’t make profits so I need not pay tax.
For personal income tax, one should check which slab of income he/she falls in as per the latest budget. If you do not fit into the minimum earning criteria you will have to file a nil return. This is to show that you are under the non-taxable category.
As for a new company, even if it doesn’t make profits in its first, it should file returns because the losses in the first year can be used to in future to lower the taxes.
My refund was delayed because of the professionals who filed my returns.
The professionals/Chartered accountants who file your returns do so carefully. They are trained professionals and will point out errors in your papers if any on time. However, if your paperwork isn’t proper or if there is change in your office address or bank issues etc. your refund gets delayed.
ITR has to be filed from one particular place only.
Everything is online these days. Right from school admissions to fee payments to tax filing. You can file your taxes sitting in your office or home or any other part of the world.
Filing taxes online isn’t safe.
E-filing is the safest and easiest way to file your returns. When you make a payment online you will find that your payment directly goes to the secured server of the IT department. If you want to follow a physical process, there are more chances of delay or loss of the documents.
If I have paid all my taxes and interests I am not liable for refunds so returns filing is not necessary.
TDS/TCS will be applicable only when self-assessment of your income is done. This is possible only upon filing returns. Filing returns is mandatory.
I haven’t paid tax till date. Will I be penalized?
If you haven’t paid tax till date you may want to start doing that now as a responsible citizen of the nation. The department will check your previous income records and may ask you to pay for the past years if you fall in the taxable slab.
I have mentioned only 1 bank account in my forms. Will the department know of my other accounts?
Yes. There is always a way of knowing and in this case it is under AIR scrutiny (CASS).
I don’t need income tax documents anywhere. I am safe if I don’t file returns
Actually, you do need income tax documents everywhere to get a visa or bank loan etc. And you aren’t safe if you don’t file the returns. You will have to show your income source or else it may lead to penalty or even prosecution.
With this we hope that we have resolved some myths pertaining to income tax filing. However, if the doubt persists please feel free to write to firstname.lastname@example.org