What Is ITR?

Income Tax Return or ITR is a form used to show 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.

According to the Income Tax Act of 1961, a person under 60 years of age must file
tax returns if a part of their income is taxable. If your taxable income exceeds Rs. 5
lakh in a financial year or you have paid advance tax, you also need to file an ITR.
When filing tax returns, you also have to pay your due taxes as decided by your
applicable income tax slabs.

Types of ITR Forms

There are nine different types of ITR forms which you can use during ITR filing.
According to the Central Board of Direct Taxes in India, you must use the relevant
form to file your income tax. Here is a brief about the forms:

ITR 1 or Sahaj
ITR 1 or Sahaj is a form for those individuals who have an income of up to Rs. 50
lakhs from pension, salary, income from other sources and one house property.
However, all salaried persons cannot use this form to file taxes.

ITR 2
This form can be used by resident individuals or Hindu Undivided Families (HUF)
who cannot file the ITR 1 or Sahaj form. However, if your income comes from a
business or profession, then you cannot use ITR-2.

ITR 2A
This is a newly launched ITR form created for HUFs and individuals who own
more than one house property without any capital gains income and have salary
income. If you have long-term capital gains and you have paid Securities
Transaction Tax, this form is for you.

ITR 3
This form is for individuals or HUFs having income from proprietary business or
profession. In short, Hindu Undivided Families or individuals who are ineligible
for ITR 1, ITR 2, and ITR 4, can file ITR 3. Anyone receiving interest, bonus,
salary or commission from a partnership firm as business income must also file
ITR 3.

ITR-4 or Sugam
ITR 4 or Sugam is for all types of professions, businesses, HUFs and undertakings.
You can file ITR-4 if your total income includes business or professional income
u/s 44AD, 44ADA or 44AE, income from one house property, salary income, and
income from other sources. However, you can not file this form if your income is
more than Rs. 50 lakh in a financial year.

ITR-4S
ITR-5 is for LLPs (Limited Liability Partnerships), firms, business trusts, Artificial
Juridical Persons (AJP), Estate of deceased, BOIs (Body of Individuals), AOPs
(Association of Persons), estates of insolvents and investment funds.

ITR 5
Co-operative societies, firms, Artificial Juridical Persons, Associations of Persons,
local authorities, and Bodies of Individuals are eligible to file their income taxes
with this form.

ITR 6
This form can be filed by any company only through online mode. Firms and
organizations can use this form only if they are not claiming tax exemption under
Section 11.

ITR 7
This form can be used only by political parties, religious or charitable trusts,
colleges, universities, etc. to claim tax exemption.

Is it mandatory to file Income Tax Return?

As per the tax laws laid down in India, it is compulsory to file your income tax
returns if your income is more than the basic exemption limit. The income tax rate
is pre-decided for taxpayers. A delay in filing returns will not only attract late filing
fees but also hamper your chances of getting a loan or a visa for travel purposes.

Who should file Income Tax Returns?

According to the Income Tax Act, income tax has to be paid only by individuals or
businesses who fall within certain income brackets. Mentioned below are entities
or businesses that are required to compulsorily file their ITRs in India:

All individuals, up to the age of 59, whose total income for a financial year
exceeds Rs 2.5 lakh. For senior citizens (aged 60-79), the limit increases to Rs. 3
lakh and for super senior citizens (aged 80 and above) the limit is Rs. 5 lakhs. It is
important to note that the income amount should be calculated before factoring in
the deductions allowed under Sections 80C to 80U and other exemptions under
section 10.

All registered companies that generate income, regardless of whether they've made
any profit or not through the year.
Those who wish to claim a refund on the excess tax deducted/income tax they've
paid.

Individuals who have assets or financial interest entities that are located outside
India.

Foreign companies that enjoy treaty benefits on transactions made in India.

NRIs who earn or accrue more than Rs. 2.5 lakh in India in a single financial year.

How to File ITR?

Income Tax filing can be completed from both online and offline channels. Here
are the ways to file your ITR. Steps to file ITR online -

Online Process
Step 1: Visit the official page of income tax e-filing.

Step 2: Log in to your account using your PAN number and password. In case you
do not have an account, you have to create a new account using the correct
information.

Step 3: Go to ‘File Income Tax Return’ from the ‘e-file’ tab.

Step 4: Select the correct income category from the list. (individual, HUF, and so
on).
Step 5: Choose the correct ITR form and go ahead by entering your bank account
details.

Step 6: Check the preview of your income tax return by checking the prefilled
form. You can make changes if required.

Step 7: Confirm the form and take a printout. Send a hard copy to the Income Tax
Department for verification. Alternatively, you can E-Verify your Income Tax
Returns via Aadhaar OTP or prevalidated bank account.

Offline Process
Step 1: Visit the e-filling page of Income Tax India.

Step 2: Download the Utility software (ZIP file) from the ‘Downloads’ page.

Step 3: After downloading the ZIP, extract the file in a different folder.

Step 4: Select the relevant form and enter all the details in it.

Step 5: Generate the form preview as an XML file and save it.

Step 6: Do a quick re-check before calculating your final tax liability.

Step 7: Now open the Utility software and log in using your PAN number and
password.
Step 8: Go to 'Income Tax Return' and choose the Assessment Year and the ITR
Form Number.

Step 9: Select the ‘Filling Type’ as ‘Original/Revised Return’.

Step 10: Select the 'Upload XML’ option as the ‘Submission Mode.’ After selecting
the correct verification option, submit the ITR.

Documents Required to File ITR

These are the most important documents you need in hand when filing your ITR:

Form-16:
It is a TDS certificate which is issued by your employer when the TDS is deducted
from your salary. It has two parts including Part A containing the employer's and
employee's details, including the name and address, Permanent Account Number
(PAN), and TDS details. Part B includes the details of salary paid, exemptions
allowed, deductions claimed, and tax payable on the employee's income.

Bank/Post Office Interest Certificates:

As per the Income Tax Act, interest earned from post office savings accounts,
savings bank accounts, recurring deposits and fixed deposits are taxable. So, you
need to provide the break-up of the interest received from different sources.

Form-16A and Other TDS Certificates:

Salaried individuals have to collect other TDS certificates if applicable on them.
Banks are required to deduct TDS if your total fixed deposit income goes above
Rs. 40,000 (50,000 for senior citizens). Mutual fund houses have to deduct TDS on
dividend payments of more than Rs. 5,000 in a financial year. Collect Form- 16A
in both cases.
Annual Information Statement (AIS):
The Annual Information Statement (AIS) was introduced by the Income Tax
Department in 2021. It is a more comprehensive document compared to Form
26AS and includes all details of your financial transactions in a financial year.

Form 26AS:
Form 26AS is like a tax passbook which includes the information about taxes
deposited and deducted against your PAN. You can download this from the new
income tax portal.

Proof of Investment and Expenditure:

You should keep documents like deposit certificates, demat account statements,
investment receipts, etc., as investment and expenditure proofs.

Capital Gains:
If you have investments in shares, mutual funds debentures and property and your
realized gains are more than Rs. 1 lakh in a financial year, it is taxable under Long
Term Capital Gains. So it is important to prepare the relevant document to show
your capital gains income.

Details of Foreign Assets:

You must mention all the assets you hold in any foreign country, including bank
accounts, property and so on in your ITR.

Aadhaar number:
As per Section 139AA of the Income-tax Act, 1961, it is mandatory to mention
your Aadhaar card number in your ITR.
Bank Account Details:
You have to mention the account number, bank name, account type and IFSC code
of all the bank accounts you own. It is required even if you have closed your
account in the middle of the financial year.

What's new in the ITR forms?

The new IT return forms include relief measures announced due to the COVID-19
global pandemic. These new tax return forms were recently notified by the Central
Board of Direct Taxes.

The forms have the following features:

Wider scope of taxpayers:

The tax net has been widened to include individuals, Hindu undivided families
(HUFs) as well as partnership firms who have deposited more than Rs 1 crore in a
bank, incurred personal travel expense of Rs 2 lakh plus or paid a power utility bill
of more than Rs 1 lakh.

Separate schedule:
A separate schedule called Schedule DI has been allotted in the new form to enable
the taxpayer to indicate the amount invested or spent on which he/she needs a tax
rebate.
The earlier amendment prohibiting joint owners of a house from filing tax return,
either with ITR-1 or ITR-4, has been done away with.

What are the Advantages of filing an Income tax return?

1. Prompt processing
The acknowledgment of Income Tax Return (ITR) is quick. More importantly,
refunds, if any, are processed faster than paper-filed returns.
2. Better accuracy
E-filing software with built-in validations and electronic connectivity is seamless
and minimizes errors considerably. Paper-filings can be prone to errors. Also, when
any paper-based form is migrated to the electronic system, there is a possibility of
human error in data entry.

3. Convenience
No time and place constraint in filing returns online. E-filing facility is available
24/7 and you can file anytime, anywhere at your convenience.

4. Confidentiality
Better security than paper filings since your data is not accessible to anyone either
by design or by chance. With paper filings details of your income can fall in the
wrong hands at your chartered accountant's office or in the Income Tax
Department's office.

5. Accessibility to past data

You can easily access past data while filing returns. Most e-filing applications store
data in a secure manner and allow for easy access at the time of filing subsequent
returns.

6. Proof of receipt
You get prompt confirmation of filing, both at time of filing and subsequently, via
email on your registered email id

7. Ease of use
E-filing is friendly, and the detailed instructions make it easy even for individuals
not very conversant with the internet

8. Electronic banking
Convenience of direct deposit for refund and direct debit for tax payments. You
have the option to file now, pay later - decide what day to debit your bank account
for tax payment, among other convenient features.