A Simplified Guide to Income Tax for Housewives

Do homemakers need to file ITR? When it comes to filing Income Tax Returns, many homemakers often find themselves in a dilemma. After all, if they do not have a primary source of income, do they really need to go through the process of filing ITR? Understanding the tax obligations for homemakers is essential to ensure compliance with tax laws and to take advantage of available benefits. 

Whether you are a homemaker or know someone who is, this will help you navigate the tax filing process effectively and optimize your financial planning.

What is  ITR and why is it important to file an ITR?

ITR or Income Tax Return, is a document that taxpayers need to submit to the tax authorities declaring their income, expenses, deductions, and tax liability for a given financial year. It serves as a crucial tool for the Government to assess the taxpayer’s income and ensure compliance with tax regulations.

Homemakers and Income Tax filing: Do homemakers need to file ITR?

Yes, if a homemaker’s total income exceeds the basic exemption limit, they immediately become liable to pay taxes. 

Scenarios where homemakers should consider filing taxes –

1. If your total income exceeds the basic exemption limit i.e. ₹2.5 lakh for the old regime and ₹3 lakh in the new regime.

2. If the FD interest earned for the year is more than the exemption limit, the same will be treated as her income and will be taxed in the hands of the homemaker.

3. If you are planning to take a loan or apply for a visa, proof of return filing may be required from you

4. If the amount of gift received exceeds Rs 50,000, it shall form part of the total income and due tax shall be paid accordingly.

5. If you have any investments and you have earned capital gains from this and if it is more than the basic exemption limit then you have to file ITR.

6. If your total taxable income is less than the exemption limit and if TDS is deducted from investments such as interest income from bank deposits, then for claiming a refund you should file ITR for that financial year.

Who is considered a Homemaker for Income Tax Purposes?

A “homemaker” refers to an individual who primarily manages the household but may not have a regular income. Eligibility Criteria for homemakers to file Income Tax Return (ITR) depends on Income Thresholds and taxable transactions. 

Step-by-Step Guide to File ITR for Homemakers:

Step 1 – Gather necessary documents and information for ITR filing including Aadhaar Card, PAN Card, bank statements, interest certificates, investment details, and all other documents related to income, deductions and exemptions.

For a detailed ITR document checklist, checkout this one pager on the LXME app.

Step 2 –  Register and create an account on the income tax e-filing portal, if not already done. Provide the required details and complete the registration process. 

Step 3 – Choose the appropriate ITR form for homemakers. If you are not earning any business income then ITR-1(SAHAJ) or ITR-2 may be applicable. Check the eligibility criteria and select the form that matches your situation.

Check out this one pager on ITR forms for more information.

Step 4 –  Understand the various sections and fields in the ITR form relevant to homemakers. Check the sections such as Personal Information, Income Details, Deductions, Tax Computation, and Verification.

Step 5 – Fill in the income, deductions, and exemptions. Report any income earned such as interest on savings, rental income, or capital gains. Enter details of deductions available, such as section 80C for Investments, Section 80D for health insurance premiums, and other applicable sections.

Step 6 – Verify and review all the information entered in the ITR form. Ensure accuracy and completeness of the details provided.

Step 7 – Submit the ITR online on the Income Tax e-filing portal.

Remember to keep a copy of the filed ITR and any supporting documents for future reference.

It is advisable to consult a tax professional for any specific queries or detailed instructions during the filing process.

Tips on filing ITR as homemakers to save taxes:

Now that we understand the importance and scenarios of ITR filing for homemakers, let us explore some strategies to help them save taxes effectively:

• Invest in Tax-Saving Instruments: Invest in tax-saving instruments like Public Provident Fund(PPF), ELSS, e.t.c. as these investments offer tax benefits under Section 80C of the Income Tax Act. 

• Claim Exemptions: Ensure you are aware of the exemptions available, such as the basic exemption limit, which varies based on age and Income bracket. Additionally, exemptions on long-term capital gains from the sale of certain assets or interest earned on specified savings can be explored. They should also take advantage of deductions available under the Income Tax Act. Expenses such as medical bills, contributions to specific savings schemes can be claimed as deductions, reducing overall taxable income.

• File ITR Regularly: Homemakers should develop a habit of filing ITR regularly, even if not mandatory, as it helps build a financial history and facilitates future financial transactions. It also provides an opportunity to avail of benefits like carrying forward losses and claiming refunds.

• File taxes on time: Remember to file your taxes on time to avoid penalties and unnecessary complications. 

Bottom-line

In conclusion, homemakers may not have a conventional income source, but understanding the significance of filing Income Tax Returns is crucial for their financial well-being.

Homemakers can improve their tax situation and make smart financial choices by understanding when they need to file taxes. Let’s encourage homemakers in recognizing their financial roles and responsibilities, so that they can confidently handle taxes and make the most of their money.

Related Article You may Like :- 5 Benefits of Filing Income Tax Returns

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FAQs- Frequently Asked Questions

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