The Income Tax Return (ITR) is the form used in India to file information about a taxpayer’s income and tax payables to the Income Tax Department. In cases in which the return shows that excess tax has been paid during a year, then the individual will be eligible to receive an income tax refund. According to the law in India, it is mandatory to file the Income Tax Return if income is more than the basic exemption limit. A delay in filing causes late filing fees but also limits the chances of getting loans or visas.

The Income Tax Act has set that income tax has to be paid according to the following categories of individuals or businesses: 

• All individuals 

1. Up to the age of 59, whose total income for a financial year exceeds INR 250.000. 

2. Senior citizens (aged 60-79), the limit increases to INR 300,000.

3. Super Senior citizens (aged 80 and above) the limit is INR 500,000. 

• All registered companies that generate income, regardless of whether they have made any profit or not throughout the year.

• Those who wish to claim a refund on the excess tax deducted/income tax they have paid.

• Individuals who have assets or financial interest entities that are located outside of India.

• Foreign companies that enjoy treaty benefits on transactions made in India.

• Non-Resident Indians who accrue more than INR 250,000 in India in a single financial year.

Filing the ITR can be a long and tedious process, as multiple documents and verification stages can make it difficult. Such a process may often become delayed due to a missing document or information. In particular, the tax return for companies is deemed as more complicated than for individual taxpayers.

The following are the documents required for ITR filing for businesses: 

a. Bank statements for the financial year,

b. Income and Expense statements,

c. Auditor reports,

d. Bank statement if the interest received is above INR 10,000.

If the online ITR filing is still in the drafting stage, the Income Tax Department will send a notice reminding the taxpayer/s to complete it. The Income Tax department may also send a notice in case of a submission delay or failure, which may result in prolonged legal issues.

In general, individuals may seem to consider filing tax returns as voluntary and, therefore, possible to dismiss such compliance, however, under the Income Tax Act, the non-filing of returns can attract a fine of up to INR 10,000 as well as further other penalties. 

The last day to file the ITR for the financial year 2021-22 was July 31st,2022. However, if this deadline was missed, it was still possible to file the ITR until the end of the year, although considered as a belated ITR and requiring the payment of related late fines. In 2023, a taxpayer will not be able to file the previous year’s ITR unless the income tax department sends a corresponding tax notice. 

It is always better to rely on a service provider who keeps track of all the necessary deadlines to avoid legal implications in the future, at PHC Advisory a team of experts is constantly monitoring the most recent changes and deadlines concerning tax compliance in India. Feel free to reach out to us at info@phcadvisory.com to find out more about our services that your company could benefit from.