Filing of Income Tax returns is a mandatory duty along with the payment of Income Tax to the Government of India. It is important to understand that Income Tax return is a document which is filed by you stating your Total Income in a Financial Year through various sources of income i.e Salary, business, house property, etc. It contains the details of tax paid and any refunds that have to be given by the government.
Financial Year is the year of your income, and Assessment Year is the year next to it in which the tax is due. Eg - Financial Year 2017-18, Assessment Year 2018-19. The deadline has been kept to furnish these details after four months from the end of the financial year so that taxpayers have sufficient time to collect the data for the whole year and report in time to the government.
Many people tend to believe that not declaring income or maybe understating income is worth because it is saving you a few bucks. This leads to tax evasion for example not declaring interest received on bank fixed deposits or accepting income in cash and not route it through the official system.
A very blurred perception among several individuals is that filing of returns is not important because eventually, the government’s main objective is to ensure that its tax kitty is getting the revenue due to it. This misconception needs to be cleared. Know that it is our constitutional duty to file tax returns when you are required to do so. Your job is not just ending at paying taxes; filing returns is equally important.
So when does it become essential to file returns?
It is very important to file returns when your income as a freelancer or a blogger is exceeding INR 2,50,000 annually. This would be your Total Taxable income post deductions, the details of which we would be discussing below.
Let’s get started with the step-by-step understanding of how will you be calculating your gross income, deductions, considering the tax slabs, forms, deadlines– keeping in mind your respective profession.
Forms for ITR filings
As a Freelancer/ Blogger, you can go ahead with Form ITR 4S while filing the tax returns. Your account book needs audit according to the ITR laws (Section 44AB) if your income is more than Rs 1 crore. In this case, you must file the ITR before 31st of September.
When your turnover is less than 1 crore no audit is required, and the last date for submission of ITR is July 31st. The best part is Freelancers can also use the Presumptive Taxation method, and escape the tedious task of account book-keeping!
When the earning is less than Rs 50 Lakhs during the given financial year (under the Section 44AD, and the section 44AE of the Income Tax Act) the ITR Form 4S should be used in such a case.
Now, what do you mean by Presumtive Taxation Scheme?
In this case, the income is calculated on the basis of assumption rather than factual basis. As per as the new section 44ADA, the records of the expenses need to be maintained. Any freelancer, filing presumptive income tax return must remain consistent for the next 5 years otherwise; one will not be able to obtain the benefits from the scheme.Bloggers, self-employed professionals and freelancers like you should definitely go for presumptive income tax as it is easy and has numerous benefits.
How are you saving time by ITR 4S Filing?
The introduction of section 44AD of the income tax act has come as a breath of relief for the taxpayers. It gives professionals like you the liberty from complex ITR form 4 and escapes long trails of scrutiny. It is saving your time in manifold ways:
- No need of getting your account books audited
- No need of filling in a longer form
- No need to maintain account books
- Just fall into the tax bracket and give the tax on the lump sum basis. The income tax department is not going to check the margin and expenses. It trusts you!
Not just these but another benefit of filing tax through Presumptive Tax Scheme is that there is a minimum rate of estimation of income. Hence the actual rate of profit needs not be calculated and the minimum of 8% can be used as profit rate. Thus total revenue will help to calculate presumptive profit. However, if you think that you earn much more than the 8% of total revenue, then you can easily increase the rate for yourself.
Will you be requiring any proffessional to go about this?
Online tax-return filing has drastically reduced the time taken for a refund of excess taxes. In the earlier days, one had to wait for years to receive tax refunds. Now, the good news is - the Income Tax Department now processes and send refunds in a short time of 7-10 days as its latest technology upgrade of electronic and Aadhaar-based ITR verification has begun on a successful note.
To claim a refund faster, you must ensure that you file your taxes before the deadline of 31st July. If you file taxes after the deadline, the refund can be extended by many months. In order to avoid such delays, hassle and confusion you can count on e-filing your ITR with the help of handpicked professionals from Wazzeer. We would not just be helping you out with quicker return-filing but also keep a track of all the glitches that might come with processing your timely refund.
Since figuring out plenty number of forms for ITR filing becomes a daunting task, let Wazzeer aid professionals like you, to go about this smoothly. Let’s Connect!