Income Tax Return (ITR)
An ITR is the tax form/forms, reporting your income, profit & losses and the expenses occurred in your business, along with other deductions applicable, at the end of each financial year. The income, includes regular wages, capital gain, interest on deposits, dividends, rent, royalties or any other resources. It can be separated under either of the 5 Heads of Income Tax.
This is to declare the total income of an individual or a firm to the Income Tax Department of India, CBDT. The ITR is to be filed in a predefined worksheet format where the income figures, used to calculate the tax liability, are written into the documents themselves.
The law states that tax returns have to be filed every year, by a specified date, for any individual or business that received any income during the year.
Various Types of Forms for Income Tax Return
There are nine types of income return form, that can be used to file the tax returns, the appropriate one is to be decided based on the income level of the individuals/businesses.
For Individuals: ITR-1, ITR-2, ITR-2A, ITR-3, ITR-4, ITR-4S,
For Companies and Firms: ITR-5, ITR-6, ITR-7.
The forms of ITR that are commonly used, are given in detail below:
ITR-1, also known as SAHAJ
This form is an uncomplicated one-page form, to be filed solely by a Resident Individual taxpayer, who earns through ANY of the below means. The income up to INR 50 lakh per annum,
- Salary or Pension,
- Profit or loss occurring from Single House Property (Loss brought forward from a previous year is not allowed to be deducted)
- Income from Other Sources (not from a lottery, winning or race horses)
- Agricultural income below Rs 5,000.
- Don’t earn any income from outside India.
- Doesn’t own any assets or property in outside India.
- Is not earning from the equity market
- Have taxable Short-term or Long-term Capital Gains.
In case the individual wishes to file a clubbed Income Tax Returns, by including a spouse or a minor, this can be done only if their income falls within the above specifications.
This Return Form is to be used for individual or a Hindu Undivided Family (HUF) who is not eligible to file ITR-1 under Sahaj, or ITR-3. These are having income other than, from “Profits and Gains from Business or Profession”. Resident Not Ordinarily Resident and Non-Resident come under this orbit.
- Salary and/or Pension.
- Income from one/more House Property.
- Capital Gains/loss on sale of any investment or property (Both Short-Term and Long-Term)
- Income from Other Sources (any winning from Lottery, bets on Race Horses and other legal means of gambling is included in this)
- Any Foreign Assets/Foreign Income.
- Agricultural Income of more than INR 5000
This ITR form is to be used for individuals and HUF having income from a proprietary business or profession). Income from proprietary business or profession (mandatory)Includes income from any other sources, such as Salary/Pension, House Property, Capital Gain/Loss, Income from outside India etc
- The Income Tax Return form for those taxpayers who have opted for the presumptive income scheme as per Section 44AD and Section 44AE of the Income Tax Act.
- Business income computed in accordance with special provisions referred to in sections 44AD and 44AE of the Act.
- Income from Profession computed as per the special provisions referred to in sections 44ADA.
- Includes income from any other sources, such as Salary/Pension, House Property, Capital Gain/Loss, Income from outside India etc.
The ITR-5 form has to be filed only by the following entities, as referred under section 2(31)(vii),
- persons referred to in section 160(1)(iii) or (iv)
- Firms Limited Liability Partnerships (LLPs)
- Association of Persons (AOPs)
- Artificial Judicial Persons,
- Local Authorities,
- A Body of Individuals (BOIs)
- Co-operative Societies Registered Societies
However, a person whose income falls under the ambit of section 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4F) shall not use this form.
Companies that are not claiming exemption under section 11 must furnish their income tax details in ITR-6 Form. These are, generally, those whose income from property is held for charitable or religious purposes.
Persons including Companies, falling under section 139(4A) or section 139 (4B) or section 139 (4C) or section 139 4(D) are to file their ITR under this category.
Section 139(4A)covers every person with income derived from property held under trust or other legal obligation, wholly/partially for charitable or religious purposes.
Section 139(4B) covers the political parties.
Section 139(4C) applies to Scientific Research Associations, News Agencies, Hospitals, Universities, Educational Institutions, or other Institutions falling under the scope of section 10.
Section 139(4D) Returns are to be filled by colleges, universities or any other such institution that is not covered by Section 139(4C).
Filing Tax Returns (E-Filing)
Filing the Return, on-line or off-line, is mandatory for all income-earning individuals in India.
The process of Income tax return filing, is known as e-filing, Filing online returns eliminates the need to complete tedious documentation, requiring less time and inconvenience. Out of all the forms options usable, ITR-1 and ITR-4 can be filed completely online. For filing under any of the rest of the Forms, you may need to download software utility in Excel or Java format. You can also seek professional help, the most Reliable & easy ITR software to file
tax returns or to file by yourself by registering on the income tax department website or other websites.
To file ITR online, you will have to submit below details on the portal and have the documents ready with you,
- Permanent Account Number (PAN),
- Investment details,
- Form 16,
- Bank account details etc.
Enter the Personal Information as matching to your Pan etc, as the page requires. Enter your Income Details. Enter Details for Claiming Deductions. Details of any Tax paid. Provide Bank Details.
A few points to remember before E-filing ITR;
- Choose the Right Form,
- Check your Tax-credit under Form 26AS and Form 16,
- Deduction from Total Income,
- Claim Deductions under Section 80G,
- 80C Deductions,
- Statement of Interest earned from various investments,
- Bank Statement,
- Tax Deducted at Source (TDS) Certificate,
- Last year’s tax return filed,
- Profit and Loss,
- Balance Sheet and Audit Reports whichever applicable,
- All Documents related to Income from other sources, such as capital gains etc.
You must also have a good understanding of the Types of Income Tax Return Filing available. Once you have submitted the above information, you’ll receive an acknowledgement and e-filing of the Return is complete.
People Exempt from Filing Income Tax Return
CBDT has specified certain segments of people that are exempted from filing tax returns.
There are certain conditions for the exemption. A salaried individual with a taxable income that is below the limit, as set for that particular Financial Year, do not have to file income tax returns. They must not have Bank Interest exceeding the Rs 10,000/-, e.g. Additional factors, such as the type of income, your age, and your filing status, also matter for exemption from filing an Income Tax Return.
Despite the process remaining similar every year, many individuals still end up making errors and end up paying more tax or a few rounds to the Govt offices. It is necessary that you make sure to submit the correct information income, deductions, and tax paid via ITR filing.
Filing your income tax returns, before the deadline, is important to ensure that you avoid any hefty fine. While you will get some time, as per the latest Govt Notifications to file it later, still the penalty is considerable.
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