You must file an income tax return to provide information to the income tax division about your earnings and taxes (ITR). A taxpayer’s tax liability is computed based on their income. If the return reveals that an excessive amount of a tax was paid in a given year, the taxpayer is entitled to a refund from the Income Tax Department. The IRS will impose a penalty of 5% each month if you fail to file a required tax return before the deadline. The IRS will also assess a 0.5% monthly fee if you owe taxes on the return. A failure to pay penalty of 0.5% per month will also be assessed by the IRS. From the day the return was due until the day you pay the tax in full, interest will also be charged on any outstanding balance. Every individual or a organization must file tax returns by a certain deadline. He or she must pay a penalty if an individual has unfiled tax returns by the due date.
The Income Tax Act states that only people or firms that fall under specific income brackets are required to pay income tax. Entities or businesses who must compel fully file their ITRs in India are listed below:
- All individuals under the age of 59 whose annual gross income exceeds Rs 2.5 lakh. For elderly citizens (aged 60 to 79), the maximum increases to Rs. 3 lakh, and for (aged 80 and above). It is crucial to keep in mind that the income amount should be calculated prior to applying further Section 10 exemptions and Sections 80C through 80U deductions.
- All registered businesses that produce revenue, whether or not they have turned a profit this year.
- those who want to request a reimbursement for the extra tax they paid or had deducted.
- Individuals with assets or financial stakes in companies based outside of India.
- Foreign businesses that profit from India-related treaty benefits.
- NRIs who accumulate or earn more than Rs. 2.5 lakh in one financial year in India.