Are you trying to find a simple way of understanding income taxes? Navigating income tax assessment in India might feel particularly challenging, especially with so many rules and regulations at place. As the top income tax consultant Gurgaon and GST consultant in Gurgaon, we are here to help you with a simple guide to help you know how to be ready for income tax assessment:
Income Tax Assessment is the detailed examination of paperwork submitted by taxpayers about their information regarding income tax returns. The taxpayer may go through different assessment methods to ensure they are following all rules and regulations of income tax returns and leaving no room for compliance issues. It always needs to be checked thoroughly before submission to the income tax department.
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This involves the submission of important documents issued by the income tax department after they have assessed your income tax return. It involves essential information such as tax payable, assessed income, refunds or due, deductions and so on. The taxpayer needs to keep this document as proof that they have completed their income tax assessment.
It is important to take note of your tax year or financial year when you are about to file your taxes. It starts from April 1 and ends on 31 March the year after. When you are planning your taxes, remember to assess it according to this 12-month set period.
When filing for your current assessment year for ITR, you would be required to file your return for the previous financial year. For this, you will be required to assess the previous year, as stated earlier. This means, if you are starting a job on 1 March 2024, then your tax year will close on 31 March 2024.
To understand how much tax would be deducted from your salary, you would be required to know all the details of your salary. Reach out to the HR department to learn about the details so that you can fill in accurate details during filing returns.
The rate of tax you pay is dependent on the income tax slab you fall under. If your income is below 2.5 lakh rupees in a year, then you are not eligible to pay taxes. Let us take a look at the table below:
You can reduce your tax liability by opting for provisions like PPF, Tax Saving Mutual Funds, Tax-Saving FD and so on. These are schemes given out by the government and fall under section 80C of the Income Tax Act (Section 80C to 80U). Salaried employees can also opt for a standard deduction of 40,000 rupees from their gross salary. This is as stated in budget 2018.
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Before filing your Income Tax Return, you need to keep essential documents ready with you. The documents you would be required to bring will vary according to your source of income. As the top income tax consultant Gurgaon, we have listed out the documents for you. They are:
There are different types of Income Tax Return Assessment depending on the mode of assessment the taxpayer opts for, and based on the situation of the taxpayer. Let us learn more about them:
In this assessment, the taxpayers themselves determine the amount of tax payable and fill out all necessary forms and details. The taxpayer determines that amount, tax deductions, and income sources and pays the tax according to what is stated under the Income Tax Act- Section 140A. If there is any amount which is found unpaid, then the taxpayer should pay it under the regular assessment. The taxpayer should reduce Advance Tax and the TDS from the amount which is to be paid within the taxes when filing their return of income.
The income tax department assigns an income tax office to assess the payable tax of the taxpayer. This assessment is to ensure that the payable tax mentioned by the taxpayer has no discrepancies and has no additional or reduced amount within what has been paid. If the taxpayer fails to respond within 30 days, then they are subjected to a scrutiny assessment, after which they would be required to answer the official notices sent by the income tax department. The taxpayer will be required to produce a book of accounts, to confirm whether they have filed the accurate amount within returns. The entire process is overlooked by the Income Tax Officer or Assessment Officer.
After filing an income tax return, an income tax office may be assigned for assessment under income tax act by the income tax department. They will be sent by the authorities when there is a case where the taxpayer has not fulfilled certain standards as set by the rules and regulations. Under Section 143, the Income Tax Office will be required to conduct a thorough examination of all documentation provided by the taxpayer and may be required to also give additional information. After this, if the taxpayer finds there is a mismatch of information, then they can take matters to higher authorities.
In this type of assessment, the information submitted by the taxpayer is double-checked by the income tax department. The return is processed online and all corrections are virtually implemented. The required adjustments are then made and need to be done according to what has been mentioned under Section 143.
If you are not compliant with the income tax assessment to file returns and are sent multiple notices by the income tax department, then it may lead to “Best Judgement Assessment” under Section 144, followed by “Income Escaping Assessment” under Section 147. Remember to read all details carefully to remain in compliance with all rules and regulations set by the income tax department.
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Income tax assessment may seem hectic when all the steps and required documentation are not clear to you. It is important to know all details to ensure compliance with rules and regulations. After this guide, hopefully you will now be able to stay prepared for your income tax assessment.
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