What is Income Tax Return?
Income Tax Return or ITR is a form that every taxpayer needs to file. This form contains information regarding the income he earned in a particular year and the amount of tax that will be applicable on that amount. The income tax department has introduced 7 such forms till date, they are ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7. An individual may choose the ITR form based on the category that he falls in. The form varies on various aspects such the source of the income, the amount earned and the category the taxpayer is a part of. It is also very important the form is filed before the specified due date.
Why you should file Income Tax Return?
A taxpayer needs to file ITR if he falls under any of the following mentioned conditions:
1. If the gross annual income of the taxpayer is more than:
If the taxpayer is below 60 years
Rs. 2.5 Lakh
If the taxpayer is above 60 years but below 80 years
Rs. 3.0 Lakh
If the taxpayer is above 80 years
Rs. 5.0 Lakh
2. If the taxpayer has more than one source of income.
3. If the taxpayer wants to claim Income Tax refund from the Income Tax Department.
4. If the taxpayer has invested in a foreign asset or he has earned from it.
5. If the taxpayer wants to apply for a loan or a visa.
6. If the taxpayer is a company or a firm. The profit or loss incurred by them is of no relevance.
Due date to file Income Tax Return
Since the country is really affected by the COVID – 19 pandemic, the government has provided various relief measures to ease the tension on the common people. In lieu of the same the due date to file ITR form has also been extended thus giving more time to the taxpayers. The due date for the assessment year 2020-21 is now November 30, 2020. Schedule DI has also been incorporated in the ITR forms in order to claim deductions for the investment made during the extended time of 3 months i.e., from April 1, 2020, to July 31, 2020.
Apart from the extension in the due date, the Central Board of Direct Taxes (CBDT) has also provided some relaxations with the eligibility criteria for ITR 1 and ITR 4 form filling for the assessment year 2020-21.
What is a Tax Audit?
Just like various other audits that are carried out under different laws, the Income tax also mandates an audit known as the tax audit. Tax audit is a simple procedure of examining or reviewing the accounts of the taxpayers’ business or the profession from more of an income tax point of view. This process makes the income computation for the purpose of filing refund a lot easier.
What are the Objectives of Tax Audit?
The following objectives were set to achieve while introducing tax audit:
1. The first and foremost is to make sure that the books of accounts are maintained correctly and are regularly certified by a tax auditor.
2. Secondly, the tax auditor can report any discrepancies that he had noticed after following the prescribed method while auditing the books.
3. Lastly to the tax auditor has to report the collected information regarding any tax reductions or any provision of the income tax law that needs to be complied with, etc.
What does an Audit report consist of?
The report prepared by the tax auditor will be provided in the prescribed form. He may either choose form 3CA or 3CB as the condition may require. The criteria for choosing the form is as per the following:
1. The tax auditor will choose for form 3 CAif the taxpayer was already supposed to get his books of account audited under any other law.
2. The tax auditor will choose form 3 CB if the taxpayer was not supposed to get his books of account audited.
The Due date for furnishing audit report
Usually, the due date for filing the audit report is November 30 of the following year for the taxpayers who have entered any international transaction. For the taxpayers who haven’t entered any international transactions, the date for them is September 30. Although an extension has been granted to the taxpayers for the Assessment year 2020-21 and the due date is December 31, 2020.