What is Income tax?
There are two types of taxes in India – direct tax and indirect tax. Direct tax is a tax that is calculated and paid directly on your Income e.g. tax on salary etc. Income tax is a direct tax. Indirect tax is a tax that is indirectly charged to you on purchase of goods or use of service e.g. Buying a mobile phone or eating in a fast food joint. The seller of the mobile phone or the fast food service provider charges you tax and then deposits the same to the Government account.
What is Form 16?
Form 16 is a TDS certificate that an employer issues to you when TDS is deducted by the employer. An employer is required to deduct tax at source (therefore the name TDS - Tax Deducted at Source) when the employer pays salary to the employee (you). The employer deducts this tax on behalf of the Government and after deducting deposits the tax to the Government. The employer is then required to give a certificate to the employee giving the details of tax deducted. This certificate is called the Form 16.
What is Income tax return?
An income tax (IT) return is an income tax form which you need to fill and submit it electroncially to the Income tax Department. In this form you need to give details of your income and taxes (taxes - that you may have paid or other people who may have deducted your tax). The income tax return forms are in various formats viz ITR-1, ITR-2 etc. Each form depicts a separate category of Income tax payers. You need not worry of your category as myITreturn handles it for you automatically. Remember, Income tax is a Direct tax and you need to only report Direct Income (salary, pension, interest etc) and taxes paid on that Income. The tax return formats are predefined formats by the Central Board of Direct Taxes (CBDT- which is also called the Income tax Department). The tax returns must be filed every year and must be filed by a specific date. If the return shows excess tax has been paid during a given year, you are eligible for a ‘income tax refund’, subject to the department’s interpretations and calculations.
Why should you File?
Many think that filing tax returns is optional and therefore dismiss it as unnecessary and burdensome. Filing tax returns is an annual event and is a moral and social duty of every responsible citizen.
What if I do not file?
In case you do not file, the Income tax Department will send you a notice asking you to file your return and may ask you to pay a penalty for not filing your income tax return. You will not be given your refund. If you are found to owe the government taxes, the interest on the base tax keeps adding up till you pay. If you are found to owe the government taxes money, then the interest keeps adding up till you pay. A penalty may also be levied. A new section 234F has been inserted in Income Tax Act, 1961 with effect from Assessment Year 2018-19 (Financial Year 2017-18). Under this section, fee (penalty) is levied if the Income-tax return is not filed within due date. Earlier penalty for delay in filing of return was levied at the discretion of Assessing Officer. But now, the same is payable before filing of Income-tax return.
