Filing income tax returns or ITR can be an irritant for many who do not have the proper knowledge of rules governing income tax in India. Adding misery to that, many of these rules change or frequently update with the presentation of the annual union budget.
However, with the introduction of the e-filing system, filing income tax return is no longer a tedious process. You don’t have to be a tax wizard to file your returns successfully. A little awareness on your part is all that is needed to sail through the complete process of filing your tax returns.
Check this post to know the basic income tax rules and why you should consider e-Filing your income tax return.
Basic Terms Related to Income Tax
Following are some basic terms that you need to understand before delving deeper into rules of income tax return and e-filing:
● Financial year and assessment year
A financial year (FY) starts from April 1 and ends on March 31. The assessment year (AY) is the year following the financial year.
For example, all income earned between the period April 2020 to March 2021 falls under the FY 2020-21 and the AY 2021-22. Hence, filing ITR for FY2020-21 and AY2021-22 is the same.
The total earnings of any individual or firm from any sources in a financial is considered as income from that financial year. This may include income from salary, rent, selling of property, dividends from shares, bank interests, pensions, profits from businesses, or any other legitimate source.
● Income tax
Income tax is one of the primary sources of revenue for the government. Every person in India whose taxable income exceeds the tax-exemption limit requires paying income tax and filing income tax returns. However, individuals whose collective income from all sources in a financial year does not exceed the tax-exemption limit must not pay income tax.
● Income tax slabs
Depending upon their income in a financial year, taxpayers are categorized under different tax slabs with varying income