ITR & GST with Legal Support

Income Tax Return (ITR) and GST Return are both mandatory tax compliance filings in India, but they serve different purposes and operate under separate taxation systems: Income Tax is a direct tax on income, while Goods and Services Tax (GST) is an indirect tax on consumption. Income Tax Return (ITR)

  • Nature: It is a direct tax levied on the income and profits of individuals and entities (like companies, HUFs, firms, etc.).
  • Purpose: To report total income, claim deductions/exemptions, calculate the final tax liability or refund, and submit this information annually to the Income Tax Department.
  • Who Must File:
    • Individuals whose gross total income exceeds the basic exemption limit (e.g., ₹2.5 lakh for individuals below 60 years).
    • All companies and firms, irrespective of profit or loss.
    • Residents who have assets or financial interests outside India.
    • Those who need to claim a tax refund or carry forward losses.
  • Filing Frequency: Annually for a financial year (April 1 to March 31).
  • Key Forms: There are seven forms (ITR-1 to ITR-7), and the applicable form depends on the taxpayer’s income sources and category.
  • Governing Law: The Income Tax Act, 1961.
  • Penalty for Late Filing: A late fee is charged (e.g., up to ₹5,000, or ₹1,000 for income up to ₹5 lakh), along with interest on any unpaid tax amount. 

GST Return

  • Nature: It is an indirect tax levied on the supply of goods and services.
  • Purpose: To report details of sales (outward supplies), purchases (inward supplies), calculate tax collected (output tax) and tax paid (input tax credit or ITC), and settle the net tax liability. It is crucial for the seamless flow of ITC and preventing the cascading effect of taxes.
  • Who Must File:
    • All businesses and dealers registered under the GST system, if their annual turnover exceeds the threshold (generally ₹40 lakh, or ₹20 lakh for service providers, with exceptions for special category states).
    • Filing is mandatory even if there are no business transactions (Nil return).
  • Filing Frequency: Typically on a monthly or quarterly basis, with an annual consolidated return also required.
  • Key Forms: Common forms include GSTR-1 (outward supplies), GSTR-3B (summary return and tax payment), and GSTR-9 (annual return).
  • Governing Law: The Central Goods and Services Tax (CGST) Act, 2017, and relevant State GST (SGST) Acts.
  • Penalty for Late Filing: A daily late fee (₹50 per day for regular returns; ₹20 for NIL returns) and interest (18% per annum) on the outstanding tax amount is imposed. Continued non-filing can lead to the cancellation of registration. 

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