1. Definition of Tax
Tax is a fee paid to the government on income of any goods or services. It is the government’s revenue or source of income, with which the government carries out its expenditure for public purposes. Taxes are of two kinds:
Taxes are mandatory contributions that are levied on person that are defined under section 2(31) of Income Tax Act 1961, in case of direct taxes, or Section 2(84), The Central Goods and Service Tax Act 2017, in case of indirect taxes or whichever act as applicable.
2. What is Taxation?
Taxation is the act of levying or charging taxes through which government revenue is generated. It is applicable on goods, tangible and intangible, and on services as well.
While direct taxes are levied on income, indirect taxes are levied on expenses.
Direct taxes are charged on individual persons whereas indirect taxes are charged on goods and services.
Direct taxes, as the name suggests, are directly paid to the government by the assesses and the burden of tax cannot be shifted. It is imposed on the income of a person and paid by the same person. Also, direct taxes are paid after income reaches the hands of the taxpayer. In the case of businesses, the rate of tax depends on the income and slab rates are applicable.
Whereas indirect taxes are levied on goods and services, and borne by the consumers. In case of indirect taxes, the rate of tax is flat for all consumers.
a. Direct Taxes
- Income tax
- Profession tax
- Corporation tax
- Capital gains tax
b. Indirect Taxes
- GST – Goods and service tax
- Customs duty
- Excise duty
- Value-added tax
- Sales tax
3. How to File Income Taxes?
Incase of income tax, here is a step-by-step guide on how to file taxes.
Step 1: Collect Necessary Documents
Collect the documents you would need such as Aadhar Card, Pan Card, bank account details, expenses proofs, details of investments, capital gains, tax-saving investments which can be used to claim deductions, Form 16 (TDS certificate issued by employers), interest incomes, Form 16A, Form 26AS and TDS certificates from other incomes.
Step 2: Login to the Income Tax Portal
Login to the e-filing Income Tax Portal of India, www.incometaxindia.gov.in to file tax returns online. Enter User ID (PAN), password, captcha code and then click Login.
Step 3: Download the Relevant ITR Form
Download the ITR form applicable to you. The following information below will help you to identify which ITR form you need to download.
- ITR 1 is for individuals having income from salaries, house property and other sources, and having a total income upto ₹ 50 lakhs per annum
- ITR 2 is for individuals and Hindu Undivided Family (HUF) members not carrying out business or profession under any proprietorship
- ITR 3 is for individuals and HUF having income from proprietary business or profession
- ITR 4 (Sugam) is for presumptive income from business and profession
Step 4: Filling the Form
You can fill the ITR online as well as offline.
For offline filing, download the applicable ITR, fill the form offline, save the generated XML file and then upload it.
For online filing, you need to follow the below-mentioned steps.
- Enter Details in Form 16 – Open the Return Preparation Software (Excel Utility) that you have downloaded, follow the instructions and enter all the details from your Form 16.
- Compute the tax payable, pay the tax and enter the relevant challan details in the tax return. If you do not have tax liability, you can skip this step.
- Confirm the details entered by you and generate an XML file which is automatically saved on your computer.
- Go to the submit return section and upload the file.
- After the ITR is submitted, a message confirming successful e-filing will be flashed on your screen. The acknowledgement form ITR-Verification can also be downloaded. It is also emailed to the registered email-id.
- The last step of the ITR filing process is verification.
There are six ways to verify your ITR, five of which being electronic modes (Aadhar Card, Net Banking, Digital Signature, Bank Account, Demat Account, Bank ATM) and one is physical verification.
For physical verification, one needs to send the hardcopy of your return, duly signed to CPC, Bengaluru.
Note: The due date for filing Income Tax Return for the financial year 2020-2021 is 31 December 2021
4. How To File GST Returns?
GST Registration is the most fundamental requirement for ensuring tax compliance. Registration of any business entity under the GST law implies obtaining a unique number from the concerned tax authorities for the purpose of collecting tax on behalf of the government and to avail Input Tax Credit on inward supplies.
- Normal taxpayer
- Composition taxpayer
- Casual taxable oerson
- Non-resident taxable person
Step 1: Go to www.gst.gov.in
Step 2: Based on your State Code and PAN number, a 15 digit number will be issued
Step 3: Upload invoices on the GST portal or the software. An invoice reference number will be issued against each invoice
Step 4: After uploading the invoices, the next step is to file the outward returns, inward returns and cumulative monthly returns. If there are any errors, you can correct them and refile the returns
Step 5: File the outward supply returns of GSTR-1 using the information at the GST Common Portal on or before 10th of the following month
Step 6: Details of outward supplies furnished by the supplier will be made available in GSTR-2A to the recipient
Step 7: After this, the recipient must verify the details of outward supplies and file details of credit or debit notes
Step 8: The recipient must file the details of inward supplies of taxable goods and services in GSTR-2 Form
Step 9: The supplier can accept or reject the details provided by the inward supplies made apparent in GSTR-1A
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