What is an Income Tax Return (ITR)?
An Income Tax Return (ITR) is a form primarily used for filing details about your income and the applicable tax to the Income Tax Department of India. The Indian income tax laws state that the IT return should be filed by every individual and business earning an income. It assists in declaring taxable income, tax liability, and tax deductions claims, if any.
It is mandatory for Firms or corporations, Hindu Undivided Families (HUFs), and self-employed or salaried individuals to file income tax returns before the due date otherwise, a penalty will be levied for late filing.
ITR filing is the process through which a taxpayer must record his total income earned during the fiscal year. Individuals can file their taxes through the Income Tax Department’s official portal. It has been notified in seven different forms.
Types of ITRs
There are nearly nine different sorts of ITR forms available for a taxpayer to use while filing his taxes. Individuals must, however, use only the following forms for filing returns, according to the Central Board of Direct Taxes in India-
- ITR 1 or Sahaj : For individuals with a Annual Income less than 50 Lakh from Salary & One House property
- ITR 2: For individuals who have earned income from capital gain, more than one house property income more than Rs 50 lakhs
- ITR 3: For individuals who are engaged in business or profession
- ITR 4 or Sugam : For individuals who own a business or earn a living through a vocation. This form is appropriate to all types of businesses, undertakings, or professions, with no income restriction. Presumptive income scheme under section 44AD or 44AE
- ITR 5: For Hindu Undivided Families (HUFs), BOPs, AOPs, Firms
- ITR 6: Companies not calming exemption under section 11 trusts and charitable organizations
- ITR 7: For individuals who have income from overseas sources
Who Should File Income Tax Returns?
According to the Income Tax Act in India, An individual is in obligation to file an income tax return (ITR) if he falls under any of the following categories:
If an individual is less than 60 years of age and his total annual gross income exceeds ₹2.5 lakh.
If a person is a senior citizen (aged 60-79), and his annual gross income surpasses the threshold of ₹3 Lakh.
If a person is a super senior citizen (aged 80 and above) and his annual gross income exceeds the exemption threshold of ₹5 lakh.
It is important to note that even if an individual doesn't have a tax liability, it is required to file an (ITR) income tax return in order to avail of tax benefits.
- Assessee with a total income of Rs. 5 lakhs or more.
- Individual/HUF resident with assets outside of India.
- An Assessee is required to file returns under Section 139 (4B) (ITR 7).
- The assessee must provide the assessing officer with a notice under Section 11(2) (a).
- A person who claims relief or deductions under sections 90 or 90A.
- A person who is a resident and has signing authority over any account situated outside of India.
- Every business.
- An assessee who is obliged by the Act to provide an audit report stated in sections 10(23C) (IV), 10(23C) (v), 10(23C) (VI), 10(23C) (via), 10A, 12A (1) (b), 44AB, 80IA, 80IB, 80IC, 80ID, 80JJAA, 80LA, 92E, or 115JB.
- AOP, BOI, Local Authority (ITR 5), Artificial Juridical Person, or Cooperative Society that does not fall under the terms of Section 44AB.
Mandatory to file income tax returns (ITR) in India
- If your income is below the basic exemption limit, you will still be required to file your tax return if you meet any of these conditions:
- Deposited more than Rs 1 crore in 'current' bank account:
- Deposited more than Rs 50 lakh in 'savings' bank account:
- Spent more than Rs 2 lakh on foreign travel:
- Electricity expenditure is more than Rs 1 lakh:
- TDS or TCS is more than Rs 25,000 for In case of a senior citizen Rs 50,000.
- Business turnover is more than Rs 60 lakh:
- Professional income is more than Rs 10 lakh:
Penalty for Late Submission
A late fee of up to Rs 5,000 for individuals having an annual income of more than Rs 5 lakh will be levied. This income tax penalty amount can go up to Rs 10,000 if the income tax return is filed post the deadline.
Benefits of e-filing the return of income
- Bank Loan: you wish to apply for a visa or a loan
- Online Status Check: Once you file your ITR electronically, it becomes easy to track the status of your return online.
- No More Errors: E-filing software programs can help you avoid errors on your tax forms. This is because the software programs are designed to follow the latest tax laws and regulations.
- Faster Refund: E-filed tax returns are processed faster than offline tax returns. I.e., you will get your refund faster.
- Auto Saving of Records: Many e-filing software programs can automatically save your tax forms with information from your previous tax returns. This can save you a lot of time and hassle.
- Easy Access to Documents: E-filing of your taxes gives you the option to save your documents online.
- E-Verification: E-filing allows taxpayers to verify their identity and sign their tax returns electronically
How to file ITR online
- Step 1 - Go to the Income Tax e-filing website
- Step 2 - Register or Log in to the website
- Step 3 - Enter the required details
- Step 4 - Select the mode of Filing
- Step 5 - Select the status
- Step 6 - Select the appropriate ITR form
- Step 7 - If you select ITR 1
- Step 8 - If you select ITR 4
- Step 9 - Summary of tax computation
- Step 10 - Proceed to validation
- Step 11 - Submit the ITR