How to file Income Tax Return (ITR)

Income Tax Return or ITR is a form that shows your gross taxable income for the given fiscal year. The form is used by taxpayers to formally declare their income, deductions claimed, exemptions, and taxes paid. Therefore, it calculates your net income tax liability in a fiscal year.

As per the Income Tax Act of 1961, an individual below 60 years old is required to file tax returns if a portion of their income is taxable. If your tax payable is over Rs. 5 lakh during a financial year or you have paid advance tax, you must also file an ITR. While filing tax returns, you also need to pay your due taxes as determined by your relevant income tax slabs.

ITR Form Types

You can use nine different types of ITR forms while filing ITR. You need to file your income tax using the corresponding form, according to the Indian Central Board of Direct Taxes. Below is a brief on the forms:

- ITR 1 (Sahaj): For people with up to Rs. 50 lakh income from salary, pension, a house property, and other sources.

- ITR 2: For individuals and Hindu Undivided Families (HUFs) who do not have business or profession income.

- ITR 2A: For individuals and HUFs having more than one house property without any income from capital gains.

- ITR 3: For individuals or HUFs who have income from a proprietary business or profession.

- ITR 4: (Sugam): For businesses and professionals under presumptive taxation.

- ITR 5: For LLPs, companies, business trusts, BOIs, AOPs, etc.

- ITR 6: For those companies that don't claim exemption under Section 11.

- ITR 7: For political parties, religious trusts, colleges, and other tax-exempt institutions.

Is it Mandatory to File an Income Tax Return?

According to Indian tax laws, an income tax return must be filed if your income is above the basic exemption limit. All taxpayers must pay the pre-decided tax rate. Late submission would attract a penalty and would impact the loan or visa application.

Who Should File Income Tax Returns?

The following are obliged to file ITR in India:

- Individuals below 60 years with income above Rs. 2.5 lakh, senior citizens (60-79 years) above Rs. 3 lakh, and super senior citizens (80+) above Rs. 5 lakh.

- Companies generating income, even without profit.

- Individuals seeking tax refunds.

- Persons with financial interests abroad.

- NRIs earning more than Rs. 2.5 lakh in India annually.

1. Visit the official income tax e-filing website.

2. Log in with your PAN and password.

3. Navigate to 'File Income Tax Return' under the 'e-file' option.

4. Choose the applicable ITR form and provide bank details.

5. Verify and authenticate the pre-filled form.

6. E-verify through Aadhaar OTP or pre-validated bank account.

1. Download the ITR utility from the e-filing portal.

2. Enter the required details and save them as an XML file.

3. Transfer the XML file to the portal.

4. File the ITR and e-verify.

- Form-16: Provided by employer, with salary details.

- Bank/Post Office Interest Certificates: For tax calculation on interest income.

- Form-16A: TDS certificates for non-salary income sources.

- Annual Information Statement (AIS): A detailed tax document.

- Form 26AS: A passbook on tax deducted and deposited.

- Proofs of Investment and Expenditure: Necessary for availing deductions.

- Capital Gains Information: For taxation on investments over Rs. 1 lakh.

What's New in the ITR Forms?

New developments in the ITR forms are pre-filled salary, interest income, and capital gains. Virtual digital assets, foreign investments, and dividend incomes entail further disclosures.

Which ITR Form Should You Fill?

Choosing the correct ITR form is based on your source of income, the nature of your business, and your taxpayer status. Salaried individuals typically file ITR-1, whereas business persons file ITR-3 or ITR-4.

1. Log in to the e-filing portal.

2. Click on 'View Filed Returns .'

3. Choose the applicable assessment year.

4. Verify your return status (processed, pending, or defective).

How to Download Income Tax Return?

1. Log in to the e-filing portal.

2. Go to 'My Account' > 'View Filed Returns. '

3. Choose the return and press 'Download. '

Why Should I File My Income Tax Return?

Filing an ITR is a must for tax compliance, obtaining loans, making refund claims, and visa purposes. It also ensures avoiding legal fines.

Advantages of Filing Income Tax Return

- Legal Compliance: Prevent delay in filing charges.

- Loan Approvals: Facilitates availing personal loans, home loans, and car loans.

- Visa Processing: Mandatory for foreign travel requests.

- Claiming Refunds: Mandatory for tax refund claims.

Late filing incurs penalties under Section 234F:

- Rs. 5,000 if filed after the due date but before December 31.

- Rs. 10,000 if they are filed after December 31

- No penalty for individuals having an income of Rs 5 lakh or less, but a fine of Rs 1,000 is charged.

Submission of an income tax return is important for financial planning and compliance. It facilitates easy financial transactions, tax refunds, and government benefits. Being timely and accurate while filing can prevent the imposition of penalties and legal problems.