Income Tax Return (ITR) Filing - Overview
An income tax return, or ITR, as it is commonly called, is a document filed by a taxpayer with the Income Tax Department of India. ITR reflects your contribution directly to public services and infrastructure. This contains all the information you need about your income sources, deductions & exemptions, tax liabilities, and filing information.
e-filing of income tax returns is mandatory for registered companies, individuals, HUFs, or other professionals. Based on the type of taxpayer, there are multiple income tax return forms filed. Every taxpayer should complete their ITR filing within the deadline to avoid penalties.
"Act: The Income Tax Act, 1961 (India)"
This act provides the framework for levying, collecting, and administering income tax in India. It specifies the rules and procedures for filing income tax returns by companies, individuals, businesses, and other entities.
Advantages of Income Tax Returns (ITR ) Filing
Filing income tax returns offers multiple advantages for a citizen. Here are the top 5 advantages of filing an income tax return in India.
Easy to Claim Tax Refunds
If a taxpayer earns less than ₹5 lakh in a year, they can claim tax refunds that are deducted from their income. It is crucial to file IT returns online by 31 July of every year.
Avoid Legal Consequences
Not filing your income tax returns online in India may result in penalties and legal consequences. The income tax authority may send a notice that carries hefty fines and penalties. It is essential to prevent it by submitting ITR returns on schedule.
Effective for Easy Loan Processing
While applying for a loan or a visa, you should provide your last three years of ITR filing. Submitting the tax returns increases credibility and can help lenders assess your financial status.
ITR Returns Can Act as a Verified Income Statement
Freelancers or other self-employed individuals who don't have an official income statement can use their ITR returns to verify their income.
Documents Required to File Income Tax Return File
Along with other forms, the following documents should be provided to file your income tax returns online:
- PAN Card
- Aadhar Card
- Form 16
- Form 16A
- Form 16b
- Form 16c
- Bank account details
- Investment details
- Bank statement or passbook
- Home loan statement
- Details of capital gains
- Details of Rental income
- Details of foreign income
- Details of dividend income
- Investments in tax saving instruments
- Life insurance receipts
- PPF receipt
- Donation receipts
- Details regarding equity or mutual funds
Eligibility Criteria for Income Tax Returns (ITR ) Filing
Individuals or companies that fall under the following criteria should file IT returns in India:
- Salaried individuals whose gross income exceeds the threshold level before considering deductions under Section 80c and Section 80u should file ITR returns
- Entities like private limited companies and limited liability partnerships, irrespective of profit or loss, should file ITR returns
- Individual directors or partners holding positions in private limited companies or limited liability partnerships should file income tax returns online
- Individuals earning dividends from multiple sources like mutual funds, equity, fixed deposits, interests, and bonds should file their ITR online
- Individuals sourcing income from charity, religious trust, or other forms of voluntary contributions should file IT returns
- Businesses and individuals who are eligible for tax refunds should definitely file their income tax returns online
- Non-resident Indians should file an income tax return based on their incomes.
Checklist for Income Tax Returns (ITR ) Filing
Here is a detailed checklist for filing ITR returns
- Make sure to have all your personal information, like your name, address, contact details, and PAN
- Find out the appropriate income tax return forms
- Select the proper forms and collect all the income details
- Keep proofs of all the deductions and exemptions
- Take note of the information on TDS returns, capital gains, and foreign assets and incomes
- In the case of a firm or registered company, make sure to have all the financial statements, audit reports, TDS compliances, and other related party transactions.
- Have proof of all the annual compliances in hand.
Process of Income Tax Return Filing
Filing your income tax returns online is a complex process. Errors during income tax return filing may result in multiple issues.TheLegalLabsprovides a one-stop solution for filing out your income tax returns online. We have a team of tax experts who can complete your ITR filing in India in just three easy steps:
Step 1: Consult our tax Experts
Step 2: Provide all the Required Documentation
Step 3: Get your ITR Filed
1. Consult our tax Experts
Get in touch with our tax experts to resolve all your queries. Our in-house CA will provide you with tailor-made advice to save on taxes
2. Provide all the Required Documentation
As per the requirement to submit all the income statements and documentation of investment proves to our team.
3. Get your ITR Filed
Based on the scenario, our team will choose the apt ITR forms and file them on your behalf on time.
Why Should You File ITR?
As per the income tax laws, every citizen who is earning income should file an income tax return if their total income exceeds the basic threshold. Online ITR return filing helps you carry forward the losses in the present year to the next financial year.
Filing ITR returns online creates a valid proof of income. It is mandatory for applying for any loans in the future; filing ITR returns is required for applying for credit cards in the future. It is valid proof when it comes to visa applications.
Mandatory E-filing for Individuals
Filing income tax return in India is mandatory for individuals under the following circumstances:
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Individuals below 60 years whose gross total income exits ₹2.5 lakh
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Individuals above 60 years but below 80 years who's gross total income exit ₹3 lakh
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Individuals above 80 years who's gross total income exceeds ₹5 lakh
Apart from this if the income falls within these sources one must file and it are return online
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Individuals having deposits over ₹1 crore in the current bank Account
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Deposits over ₹50 lakhs and savings bank account Individuals who spent over ₹2 lakh on foreign travel
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Electricity expenses more than ₹1 lakh
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TCS or TDS over ₹25000
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Business turnover above ₹60 Lakhs
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Professional income over ₹10 lakh
ITR Last Date and Penalty
Last Date for e-filing Income Tax Return
Generally one can file ITR returns after the financial year ends. The online income tax return filing deadline is July 31, of the applicable assessment year.
Penalty for Late Filing of ITR
If the income tax returns are not filed on time it may incur late filing fees and interest. Here is a complete outline of the same:
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If the income tax return is not filed within the due date one might have to pay a late filing penalty of ₹5000
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If the overall income is less than ₹5 lakhs then the penalty amount is further reduced to ₹1000
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Under Section 234a one percent interest collected per month is part of the month for the unpaid Tax amount.
Types of ITR Forms and Their Applicability
In India, there are seven distinct ITR forms that each have their own requirements and eligibility criteria. Your income, the sources of your income, and whether you live in India or not will determine which ITR form you must file. Here are the different ITR forms and their eligibility criteria:
- ITR-1 (Sahaj): This form is for individuals with a total income of up to ₹50 lakhs. It is the simplest ITR form and can be filed by anyone who does not have any complex income sources
- ITR-2: This form is for individuals with a total income of more than ₹50 lakhs. It is more complex than ITR-1 and requires taxpayers to provide more details about their income and deductions
- ITR-3: This form is for individuals who have income from a business or profession. It is also used by individuals who have capital gains
- ITR-4: This form is for individuals who are salaried and have opted for the presumptive taxation scheme. This scheme allows taxpayers to pay tax at a flat rate of 5% of their turnover
- ITR-5: This form is for Hindu Undivided Families (HUFs). It requires HUFs to provide details of their members
- ITR-6: This form is for companies. It is a complex ITR form and requires companies to provide detailed information about their income, expenses, and taxes
- ITR-7: This form is for individuals who are non-residents of India.
File ITR Without Form 16
Form 16 is crucial for salary employees to file their ITR returns online. However, you can also file your idea returns without Form 16 by using any one of the following methods:
Use Pay Slips
Form 16 contains all the information with respect to the taxable income. The same information can be collected using a pay slip received from the employer.
You Can Also use Form 26as
Form 26as contains all the information regarding the tax deducted at source during a particular financial year. This contains all the salary details.
Apart from this, you can also calculate your deductions under Section 80c or your income from other sources before filing your Idea returns.
How TheLegalLabs Can Help You With Income Tax Return Filing?
TheLegalLabs offers a one-stop solution when it comes to filing your income tax returns in India. Our team of tax experts and chartered accountants can provide you with tailor-made insights on how to save more on taxes and file them without any errors. Our team will make sure that you stay tax-compliant throughout the year. Irrespective of whether you are an individual or an organisation we have the perfect solution for all your tax needs. Get in touch with our experts today and file your ITR returns in India without any hassle.
