Filing IT Returns – Popping The Financial Dependency Bubble

By Kishore Sabareeshan | July 19, 2018

What good can come from filing your tax returns? Well, apparently a lot! Find out how filing your returns can benefit you in your pursuit of financial independence!

Filing IT Returns - Popping The Financial Dependency Bubble

If you’re a woman with an income (and even if you aren’t), then this article on filing your IT returns is for you. Filing your returns is the first step towards your financial liberation. Why, you ask? Well, turns out that IT return documents go a long way in helping you, secure your child’s school admission, and much more!

These, however, are not the only reasons to get your tax practices in place – read on and discover why is a big deal and how it could benefit you!

Liberate yourself from the ‘dependent’ cliché

Not an earning individual? Well, did you know you can still file your tax return as ‘nil’? Doing this not only makes you eligible for a host of services but also identifies you as an independent individual – this is your official first step towards not being typecast as a financially dependent person.

At the risk of stating the obvious, we strongly advise that you have an active PAN card and number; you’re going to need that to file your taxes, plus it works as a valid government identity proof in any case. To those who do work full-time, filing your tax returns is equally important, now more than ever, because the IT department has tightened its screws on late fees and penalties.

Save yourself from the ‘penalty’ kick

Just because it’s football season, it doesn’t mean you need to score your share of penalties. The official deadline for filing your returns is July 31st. If you happen to file them after that but before the end of the calendar year, i.e. December 31st, you’ll need to pay up a penalty fee of Rs. 5,000! For those who earn less than Rs. 5 lakhs p.a., the late fee is fixed at Rs. 1,000. The only thing worse than a penalty is when the IT department decides to show you a ‘red card’ in scenarios where you are just too late to file your ITR – for example, you can’t file your ITR returns for the financial year 2017-18 post March 31, 2019.

 An ‘interest-ing’ reason to file your IT returns on time

Dodging penalties is not the only reason to file your tax returns before the official deadline; the latter enables you to be eligible for interest of 6% per annum in case you have a tax refund coming your way – now who wouldn’t want that! On the other hand, let’s say you’re expecting a refund but you file your returns late; poof! Your eligibility for interest on refund vanishes into thin air. To add insult to injury, you’ll actually have to pay an interest of 1% per annum for every month that you delay filing your tax returns.

Befriending the infamous Form 16

 Here’s a question that has haunted a majority of us for years; what in the world is this Form 16 anyway? Well, it’s nothing but a statement issued by your employer that shows the tax amount they have paid through the year on your behalf. Now, simply obtaining this document from your employer doesn’t mean your return has been filed; form 16 is just a proof of tax payments made against your name. You’ll need to use the details mentioned in this statement to go ahead and file your tax returns.

Additional Reading: Form 16 Demystified

 Hmmm, but isn’t Form 16 accepted as proof of IT payment?

In some cases, yes. However, let’s say you plan to travel abroad on a holiday in the coming months and have your visa interview coming up. You’ve got most of your documents in place, and you choose to produce your Form 16 as proof of taxes paid; chances are the consulate of the country you wish to visit will reject your application as this statement may not hold the same value as, say, an ITR receipt.

Why run the risk of ruining your dream vacation plans when you can have your IT returns in place and keep calm!

Additional Reading: Top 4 International Destinations To Visit In July 2018

IT returns in the age of the freelancers

Today, quite a few individuals have established themselves as independent professionals who don’t work for a corporation but offer services to clients in the capacity of a freelancer; if you identify as one of them, you must probably be wondering how to go about filing your taxes. Also, how do you know how much tax you owe? Well, most clients send you the Form 16As, which contains details of tax against your name, so you can start with that.

Now, some of you may aspire to spread your wings and board the entrepreneurial flight; that’s great, but it’s highly recommended that you also stay grounded and firm up your accounting and tax-related practices at the very onset, because, hey, as long as you’re professionally earning by providing a service, you’re taxable under the Income Tax Act; it’s only fair!

How do I, a freelancer, identify my income and expenses?

Let’s start with the good part – the income! It’s simple really; all you have to do is add up all your various receipts from clients. Your bank statement should help you easily isolate all your credits.

The expenses that you can declare as deductions can include any direct expense you have incurred in relation to your work, such as the rent you pay for your office space, any costs you’ve incurred in repairing your laptop or other devices that you use for business, the money you’ve spent for travelling out of town or even abroad for meeting purposes as well as any entertainment expenses you may have incurred for arranging client outings and meetings.

Once you have these figures in places, filing your taxes can be a smooth process. Of course, you can always consult an expert accountant to take care of your tax-related work if you’re too busy handling multiple clients and projects.

 In case of IT returns, familiarity breeds contentment

When it comes to tax, the more you know, the easier it gets for you in the long run. It’s natural to feel intimidated by the barrage of numbers flying about when you attempt to file your taxes, but once you get a hold of it, you’ll no longer see it as such a daunting task.

A prerequisite to your financial independence

As a woman, whether you’re a full-time employee, an entrepreneur, an independent freelancer or a homemaker, your big step towards being identified as a financially independent law-abiding individual is by meeting these basic but crucial requirements.

Additional Reading: Financial Planning For Women
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