What is Income Tax Return Filing?
Income Tax Return (ITR) is a declaration made by an assessee to the Income Tax Department regarding the income and tax paid thereon. It is a proof showcasing the amount of income and the tax that has been charged on it and duly paid. Income Tax Return is paid for one financial year and the income earned in the particular financial year is shown in it.
In the ITR, it has to be shown from where the assessee is earning income- be it salary, other sources, via investments, etc.
Requirement of Filing Income Tax Return
The following are required to file income tax return:
- An individual below the age of 60 years and annual gross total income exceeding INR 2,50,000.
- An individual between the age of 60 and 80 years with annual gross total income exceeding INR 3,00,000.
- An individual above the age of 80 years (super senior citizen) with an annual gross total income exceeding INR 5,00,000.
- In case of a company or a firm, filing of Income Tax Return is mandatory, irrespective of the fact that the company is running into profits or losses.
- If an individual seeks tax refund for a financial year.
- If an Indian resident act as a signing authority for a foreign account.
- If an Indian resident is in possession of an asset or financial interest that is situated outside of India.
- If an individual holds equity shares or unity oriented mutual funds or units of business trust and has sold the same for an amount more than INR 2,50,000 making tax-exempt long-term capital gain from this sale.
- If an individual receives any income by way of sale of property that was held under political party, educational institution, charitable trust, religious trust or any other body or trust.
- A foreign entity that has been making treaty benefit on any transaction that has been undertaken in India.
- If an individual is an NRI (non-resident Indian) and his/her annual total gross income- earned or accrued in India is over INR 2,50,000.
In case, an individual comes under the above-mentioned categories and fails to file the ITR, he/she can be subjected to penalty by the Income Tax Authorities, for the default.
If any individual does not fall in any of the categories mentioned above but wants to avail a loan, he/she should file an ITR as they serve as valid income proofs and the financial institutions ask for it prior to approving a loan request.
Here are the benefits of filing an Income Tax Return (ITR) for individuals:
- Easy Loan Approval: Filing ITR makes it easier to obtain loans such as home loans or car loans as most banks require copies of tax return filings as proof of income.
- Quick Visa Processing: Many embassies and consulates require individuals to provide copies of their tax returns for visa applications. Filing ITR in a timely manner ensures smooth visa processing.
- Carry Forward Losses: Filing ITR within the due date allows taxpayers to carry forward any losses incurred to future years. These losses can be set off against income in subsequent years, reducing tax liability.
- Proof of Income & Address: ITR serves as a valuable document to establish proof of income and address, which may be required for various purposes such as applying for loans or renting a property.
- Penalty Avoidance: Filing ITR on or before the due date helps avoid penalties. Failure to file can result in penalties imposed by tax authorities, which can amount to Rs 10,000. Timely filing ensures penalty avoidance.
By understanding these benefits, individuals can recognize the importance of filing their Income Tax Return and take advantage of the various opportunities it provides.
To file your Income Tax Return (ITR), you will need the following documents and information:
- PAN and Aadhaar: Provide your Permanent Account Number (PAN) and Aadhaar number as identification.
- Email ID and Registered Mobile Number: Ensure you have a valid email address and registered mobile number for communication and receiving updates.
- Bank Account Statement: Gather the bank account statements for the relevant previous year to report your income and transactions accurately.
- Form 16 & Other Income Details: Obtain Form 16 from your employer, which provides information about your salary, TDS deducted, and other allowances. Also, gather details of any additional sources of income such as rental income, interest, or dividends.
- Investment Details: Collect information on your investments, such as investments under Section 80C (like life insurance premiums, PPF contributions, etc.), investments in mutual funds, fixed deposits, and any other relevant investment details.
By organizing and providing these documents and information, you will be ready to file your Income Tax Return accurately and in compliance with the requirements.
Step-by-step process for filing Income Tax Return (ITR) for individuals:
- Gather Required Documents: Collect all the necessary documents for filing ITR.
- Verify Documents: Review and verify the documents and income sources for accuracy.
- Calculate Income Tax: Calculate your income tax liability based on your income and applicable deductions.
- File ITR: Fill in the required details and submit your ITR online through the official income tax e-filing portal.
- Receive Acknowledgement: After successful submission, you will receive an acknowledgement receipt confirming the filing of your ITR.
By following these simple steps, you can easily complete the process of filing your Income Tax Return.
Key deliverables for filing Income Tax Return (ITR):
- ITR Acknowledgement: You will receive an acknowledgement receipt after successfully filing your ITR. It serves as proof of filing.
- E-Forms: You will need to fill in the required electronic forms with accurate information while filing your ITR.
- Challans: If there are any tax payments or advance tax payments made, you may receive challans as proof of payment.
These key deliverables are important documents that you will receive or generate during the process of filing your Income Tax Return.
What do you want to know?
Following are the Deductions through which you can save your tax:
- 80C: You can invest in various options like LIC, PPF, Tax Saving Mutual Funds, NSC, etc. Up to Rs 1,50,000
- 80D: You can save taxes by investing in Health Insurance. Up to Rs 1,00,000
- 80E: You can save taxes by paying the Interest portion of EMI on an Education loan. 100% of the interest paid up to 8 assessment years
Yes, the tax payer can claim/adjust the TDS, excess debited by his employer (in the same financial year) to the tax liability against his other income while filing the return.
Yes, partners have to file their individual returns. ITR-3 form applies to a taxpayer who is a partner in a partnership firm and earning salary/ payment, interest, and profits from the firm. The due date for filing the ITR of a working partner of a firm whose accounts are required to be audited is 30th September.
You cannot file Tax returns without Form-16. Form-16 contains TAN of Employer. Even if you file returns taking all 12 Pay Slips as Base – still the Return will not be processed till the relevant return of Employer’s TAN is available with Tax Authorities. It is not possible that Form-16 is not issued by the Employer till Dec. Even if you resign mid-FY, Form-16 is issued. Almost all Employer use Software for Salary processing – where Form-16 is auto-released. Check with your Employer.
If you are a non-salaried individual and have an income of more than 2.5 Lakhs in a financial year. Then we will have to look into your sources of income, then we will be able to guide you and help you with your Income Tax Return Filings.
You have to pay your taxes before filing your tax return. If you are a salaried individual. Then most of your tax liability is deducted from your salary by your employer in the form of TDS and paid to the government on your behalf. In case you are liable to pay advance tax, then you have to pay 90% of it before the 31st of March every financial year. You can file your ITR once the financial year ends.
Yes, you should file an ITR in case of losses, which may be from business or sale of shares or interest paid on a home loan. An ITR filing helps you to set-off the loss and also carry forward the loss to future years. Do note that you should file ITR on or before the due date.