Many people are under the belief that since tax is deducted from their salary they need not file returns. This assumption is wrong. Deduction of tax (TDS) and filing of Income-tax returns are two different things.
What is TDS?
TDS means Tax deducted at source. There are certain transactions like salary, interest on term deposits, dividends etc on which tax is deducted by the person while making the payment to any other person. Click here to learn in detail.
What is Income-tax return?
Every person who earns income in India (whether resident or non-resident) is required to pay taxes on income so earned. The Income-tax return contains details of the income earned, deductions availed, taxes paid and taxes to be claimed as a refund.
Should I file a return even if I get my salary after the deduction of tax (TDS)?
Yes. TDS is deducted from the pay component, but a person may also earn money from other sources, such as interest from savings accounts, interest from term deposits, and income from real estate, among others. These could cause income to rise, which would raise taxes. Therefore, one should file a return to disclose all of their income and pay any taxes due. Additionally, in order to claim an income tax refund, a return must be filed. Furthermore, if a taxpayer's total income exceeds the exemption limit of Rs. 2,50,000, as per the Income-tax Act, they must file an income tax return.
What are the consequences of non-filing of an Income-tax return?
If you don't file your return on time, your Assessing Officer may impose a penalty of Rs.5,000/- on you.
2. Non-compliance notice:
Recently, Income-tax Department has increased the drive to catch non-filer or non-taxpayers. If you have a high-value transaction in a financial year that is linked with your PAN/Name, you most probably know about it. And if they find that your Income-tax return has not been filed for that financial year, they send you a show-cause notice for not filing the return. In other words, it's called a Non-compliance notice.
3. Levy of interest:
In case there is tax due, you will have to pay tax with an additional 1% interest on the due amount per month calculated from the due date of filing. Furthermore, interest u/s 234A, 234B or 234C may be applicable.
4. You miss getting any refund:
If you have a refund to be claimed, the Income-tax Department may delay or not issue a refund order of your tax.
Deduction of tax is the responsibility of the payer, but the filing of an Income-tax return is the responsibility of the receiver. Do not waste any moment and file your Income-tax return today.
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