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What is Income Tax?

Two or more persons enter into a partnership and establish a Income tax is a levy imposed by the government on your income earned during a financial year. You are required to file an ITR if your income exceeds a certain limit set by the government (e.g., Rs. 2.5 lakh for FY 2023-24). Even if your income is below the limit but you have TDS (Tax Deducted at Source) or wish to claim a tax refund, filing a return is advisable.

What are the different types of Income Tax Returns (ITRs) and which one should I file?

There are various ITR forms designed for different income profiles. Common types include:

• ITR 1: For salaried individuals with income from salary, pension, and one house property.
• ITR 2: For individuals with income from capital gains, foreign income, or multiple house properties
• ITR 3: For businessmen and professionals with income from business or profession
• ITR 4: For individuals and HUFs (Hindu Undivided Family) with income from business or profession exceeding Rs. 50 lakh.

What documents do I need to file my ITR?

The documents required may vary depending on your income sources. Generally, you'll need Form 16 (from employers), investment proofs, bank statements, and other income-related documents.

What are deductions and how can they help me?

Deductions are allowed expenses that reduce your taxable income. Utilizing deductions like medical expenses, home loan interest, and investments under sections like 80C and 80D can significantly lower your tax liability.

What happens if I miss the deadline for filing my ITR?

Missing the deadline can attract penalties. Early filing is recommended to avoid any last-minute complications.

I'm a freelancer/businessman - how do I file my ITR?

Freelancers and business owners typically file under ITR 3 or ITR 4, depending on the nature and scale of their business. PRISM can help you determine the correct form and guide you through the specific requirements for business income.

What happens if there's a mistake in my ITR filing? Can it be rectified?

Yes, mistakes in ITR can be rectified through a revised return filing process. However, there may be penalties involved depending on the nature of the error. PRISM's experienced professionals handle your return with utmost care to minimize the risk of errors.

What are some tax-saving investment options I can consider?

Several investment options can help you reduce your tax burden. Popular options include:

• Public Provident Fund (PPF)
• Equity Linked Savings Scheme (ELSS)
• National Pension System (NPS)
• Unit Linked Insurance Plans (ULIPs) with tax benefits

How long does it take to process an ITR filing?

The processing time for ITR filing can vary depending on government verification procedures. While some ITRs are processed quickly, others might take a few weeks. PRISM can submit your ITR electronically, expediting the process whenever possible.

Can I e-file my ITR myself, or do I need professional help?

You can certainly attempt e-filing yourself. However, the process can be complex, especially with deductions, investments, and potential errors. PRISM's professionals ensure accuracy, maximize tax benefits, and handle any complications that might arise.

What happens if I receive an Income Tax Notice? What should I do?

Don't panic! Income Tax Notices can have various reasons. PRISM's tax experts can analyze the notice, explain its implications, and guide you on the appropriate course of action, including drafting a response if necessary

What are some common mistakes people make while filing ITRs?

Common mistakes include:

• Filing the wrong ITR form
• Missing out on eligible deductions and credits
• Incorrect calculation of income or tax liability
• Filing after the deadline

What are capital gains, and how are they taxed?

• Capital gains refer to the profit earned from selling capital assets like stocks, property, or gold. These gains are taxed at different rates depending on the type of asset and holding period. PRISM can advise you on calculating capital gains tax and ensure proper filing.