tax returns

Know the Usage of E-Filing Income Tax Return


Filing income tax return is as important as paying your income tax. E-filing your income tax return is one of the best ways to have an authentic proof of your income. Moreover, regularly filing ITR also helps you create a good record with the Income Tax Department of India.

It is a must-do task for every individual to pay their income tax and file income tax return within the provided time every financial year. By doing this you can avoid the stress and embarrassment of receiving notices issued by the Income Tax Department of India.

Besides this, being tax-compliant has other benefits, like if you want to take a loan -for a vehicle, a house, higher education, etc.- then you will have to provide the receipts of your income tax return to process the loan. In case, you haven’t filed your ITR for 3 continuous years then the bank will not provide a loan.

Apart from this, a delay while e-filing income tax return can create many other problems too. According to the Income Tax Act of India, the basic limit of exemptions provided is Rs 2,50,000, for senior citizens the exemption limit is Rs 3,00,000, and for very senior citizens Rs 5,00,000 is the maximum limit of exemption. Thus, if one’s income is higher than these limits then it is mandatory for them to file income tax return. With the help of online income tax filing process, one can file ITR in a very simple and hassle-free way.

E filing Income tax return is very important and is beneficial in many different ways. Further, in this article, we have given some insight on some of the benefits of filing income tax return.

Tax Refund-

Many organizations deduct tax at source (TDS) on the salary earned by the employees. The tax deducted at source often exceeds one’s tax liability and the employee can avail tax refund on it. But, without filing their income tax returns, the employees won’t be able to receive the tax refund. And, without a proof of your income tax return, the income tax department will not be able to process the tax refund. So, it is very important to e-file ITR in order to avail your refund.

To Get Loans-

As mentioned above, filing income tax return helps an individual to take loans as all major banks ask for a copy of income tax return while giving a loan to any individual. The State Bank of India asks loan applicants for either a recent salary slip which has all the deduction, TDS / IT form 16, or a copy of the last two financial years’ ITR. Moreover, showing an ITR receipt copy is also helpful if the application of the loan is rejected or if an individual is not getting the required amount of loan.

To Carry Capital Losses Forward-

Capital losses in a fiscal year are adjusted against capital gains made in the subsequent years. If you don’t file your income tax return, you will be unable to carry over any short term and long term losses. A long-term loss can be carried over for the next consecutive eight years. In a financial year, the long term capital losses can only be adjusted against long-term capital gains. Contrary to this, short-term capital loss can be adjusted alongside both short as well as long-term capital gain.

Processing One’s Visa-

If a person wants to apply for a visa to travel overseas, then he/she is required to showcase the ITR receipts of the last few years to the foreign consulates during the visa interview. The income tax return receipt legitimizes the individual’s source of income in India and strengthens the case for visa approval. While traveling abroad either for business or leisure trip it is always suggested by experts to keep the income-related proof at hand, along with one’s salary slip, ITR receipt and Form 16. In most cases, the requirement of income tax proof is specified by the consulates.

Purchasing a High Life Cover

In today’s day and age, buying a high life coverage, be it of Rs. 50 lakh or Rs. 1 crore has become very common. However, in order to avail a life coverage so high, one needs to verify the annual ITR documents. Almost all the major life insurance providers, especially LIC, ask for a receipt of one’s ITR if an individual wants to buy a term insurance policy with Rs 50 lakh or more as the sum assured.


All self-employed individuals like consultants, businessmen, and partners of a firm do not use form 16. Thus, the receipt of Income Tax Return becomes much more important and a valuable document for them, under the condition that their yearly income exceeds the basic deduction limit of Rs 2.50 lakh.
For all types of financial transactions, income tax return receipt is the only income proof and tax payment for the self-employed.

Wrapping it up!!

Don’t wait until the last minute to file your online income tax return. Even if you think that you will not face any difficulty filing income tax return in the last moment, you can make silly mistakes and can miss important information. So, as you pay your income tax regularly, you should file your income tax return before the completion of the financial year.

How Could a Contractor Stay on Top of Finances in the 2013-14 Tax Year?

Finance MattersIf you are a contractor or considering becoming one, you may be easily forgiven for thinking that all you need to do is source and complete your own contracts. Unfortunately, this isn’t quite the case, as you will also need to stay on top of various financial and administrative matters, including – among other things – tax returns and accounts.

While setting up as a limited company gives you the opportunity to set your own working hours and decide which projects you work on, it is worth bearing in mind that this freedom also means you must take on the responsibility for making sure you meet all the necessary accounting regulations. Unlike when working for an employer, such matters cannot be left to your HR team to sort out for you, and if things like tax assessment returns are submitted late then you might find that you are issued with a fine from HM Revenue and Customs (HMRC).

As such, it is vital that you make the effort to keep a firm grip over your finances. With the new financial year just a few weeks away (in case you weren’t aware already, the 2013-14 fiscal period begins on April 6th), now is a good time to start getting your finances in order. This will require you, among other things, to maintain accurate records about all the income received from your contracts and have receipts for all the goods and services you have bought as part of your work and that you wish to claim tax back on as expenses.

Creating a methodical system for tracking all your incoming and outgoings throughout the tax year ought to be your first step in doing this. However, it can be difficult to stick to when you’re busy working on existing projects and simultaneously attempting to secure future contracts.

Even if you are relatively confident with financial matters, you might not always be able to devote as much time to sorting out tax and other accountancy affairs as you would like. As such, it’s a good idea to utilize the services of an accountancy services provider. In doing so, you will have a team of accountants and other financial experts who will assist you to make sure all of your records are accurate and can help to maximize your income in the most tax-efficient manner possible. Working with such an organization will also help you to ensure that all compliant statutory tax returns that need to be submitted to HMRC and Companies House are done so correctly and on time, enabling you to devote more energy to working on projects.

The above is only a brief guide for contractors looking to manage tax and other finance-related matters, so if you need further guidance it is best to speak to HMRC or an accountancy services provider like PayStream. In doing so, you will be able to get advice that will be relevant to your individual circumstances.

Please share your experiences of keeping on top of your finances and other administrative matters by posting a comment below.

5 Top Tips to Avoid a Tax Audit

5 Top Tips to Avoid a Tax Audit

We all know taxes are a necessary part of our lifestyles. We need schools, emergency services and government. What we really don’t need as small and medium business owners is a comprehensive tax audit. Tax audits are a very lengthy and involved process, which usually calls for the services of a professional, so if there is any way to avoid being highlighted as a company that requires such an inspection, you can be sure your profits and costs will benefit from taking the appropriate action. Here are 5 top tips to help you avoid becoming one of this year’s tax audited companies.

1. Complete your return thoroughly and competently

Tax returns with calculation errors or prices of information missing will immediately flag you up to the tax authorities as someone who needs some help and an inspection. Make sure whatever you declare on your tax return can be easily matched up with what you have filed on PAYE or any other payroll system you are using, and be sure to fill in the form legibly, as forms the computer can’t understand will automatically be sent for checking.

2. Include ALL income, even that which you feel is insignificant

Whether you loaned the services of an employee to a business associate for a week, or sold your old computers on eBay, all these incomes should be stated on your tax return whether you deem them to be important or not. Similarly if you had capital in the bank that was accruing interest, or got paid on dividends during the last financial year, the best strategy is just to declare it all and then there is no grey area to investigate.

3. Check your income compared to last year

If you suddenly have an abnormally high income compared to last year, or even a really low one, this can raise a red flag to authorities and instigate further investigations to be made. If you have genuinely had a very different year to last year, then this just has to be swallowed and the potential for a full tax audit has to be dealt with, but if you are reporting an unusual income because of miscalculations or omission of some expenses, this should be easy to fix.

4. Itemized deductions

Of course you are entitled to the usual tax deductable expenses, whether these be cars, equipment or sustenance. However, be aware that if these deductions run to several pages of listings you will invariably be investigated by the auditing authority as this can highlight a potential problem to them.

5. Self employment

You can’t help working for yourself; indeed it is a commendable achievement. However, it does put you in the firing line for a tax audit, so make sure you have all your books in order all year round, so that audit time is not a stressful experience for you. If you have a small business that continually shows losses, the tax authorities may well start investigating deeper, so make sure anything you have put down as expenses actually is an expense relating to the business.

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