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Guide to Income Tax Return (ITR) Filing


Income Tax Return (ITR) filing is an essential compliance requirement for individuals, businesses, and other entities with income sources. This guide provides detailed information on types of ITR forms, eligibility, benefits of timely filing, and a comprehensive filing process.

Governing Act and Rules


  • Income Tax Act, 1961: The primary legislation governing income tax in India, which includes rules for income calculation, deductions, exemptions, and tax filing procedures.
  • Income Tax Rules, 1962: Sets the procedural guidelines for computing income, deducting taxes, and filing returns.

Types of ITR Forms


The Income Tax Department provides various forms for different types of taxpayers. Selecting the correct form is essential for accurate filing.

ITR Form Applicable For Description
ITR-1 (Sahaj) Individuals with income up to ₹50 lakh For salary, house property, and other sources (excluding business income)
ITR-2 Individuals and HUFs without business income For income from salary, house property, capital gains, and other sources
ITR-3 Individuals and HUFs with business/profession income Suitable for proprietors, freelancers, and professionals
ITR-4 (Sugam) Individuals, HUFs, and Firms under presumptive income scheme For businesses with presumptive income under sections 44AD, 44ADA, or 44AE
ITR-5 Partnership firms, LLPs, AOPs, BOIs Suitable for firms and LLPs (not for individuals or HUFs)
ITR-6 Companies (except those claiming 11 exemption) For companies not eligible for tax exemption under section 11
ITR-7 Entities under sections 139(4A), 139(4B), 139(4C), 139(4D) For trusts, political parties, and research institutions

Who Must File an Income Tax Return ?


  • Mandatory Filing: Filing is compulsory for individuals and entities if:
    • Gross income exceeds the basic exemption limit (₹2.5 lakh for individuals below 60, ₹3 lakh for 60-80 years, and ₹5 lakh for those above 80).
    • Income from foreign assets, capital gains, or deemed dividend is reported.
    • Individuals with bank deposits above ₹1 crore, electricity bills exceeding ₹1 lakh annually, or foreign travel expenses exceeding ₹2 lakh.
  • Voluntary Filing: Those with income below the exemption limit may still file returns to:
    • Establish financial records.
    • Carry forward losses.
    • Claim tax refunds.

Who is Exempt from Filing ITR?


  • Individuals with income below the exemption threshold and no specified financial transactions may skip filing. However, filing is beneficial for proof of income and ease in accessing loans or visas.

Step-by-Step Process for Income Tax Return Filing


  • Step 1

    Gather Required Documents

    Income Proof: Salary slips, Form 16 (for salaried individuals), interest certificates, etc. Tax Deduction Certificates: Form 16A (other than salary), Form 26AS (tax credit statement). Investment Proofs: For deductions under sections 80C, 80D, etc. Bank Statements and Property Details: To report rental income, gains, or other investments.

  • Step 2

    Log In to the Income Tax Portal

    Visit the Income Tax e-Filing portal and log in using your PAN and password.

  • Step 3

    Select the Appropriate ITR Form

    Choose the correct ITR form based on your income source(s) and taxpayer category.

  • Step 4

    Fill Out the ITR Form

    Fill out sections on income, deductions, tax credits, and tax liability. Verify pre-filled information with Form 26AS to ensure accuracy.

  • Step 5

    Compute and Pay Tax Liability (If Any)

    Calculate tax after deductions and exemptions. Pay any outstanding tax via net banking or challan.

  • Step 6

    Verify and Submit

    Review the filled form, and submit it online. Verify the return through Aadhaar OTP, net banking, or digital signature.

Benefits of Timely ITR Filing


  • Avoids Penalties: Delayed filing attracts penalties up to ₹10,000 for individuals and higher for corporate taxpayers.
  • Enables Tax Refunds: Timely filing ensures quick processing of tax refunds if applicable.
  • Carries Forward Losses: Losses under certain heads (e.g., capital gains) can be carried forward for future offset.
  • Establishes Financial Record: Filing ITR builds financial credibility for loan and visa applications.
  • Tax Savings: Optimized tax planning through deductions under sections like 80C, 80D, 80G, etc., can significantly reduce tax liability.

Income Tax Exemptions and Deductions


    Popular Deduction Options
  • Section 80C: Deductions up to ₹1.5 lakh on investments in PPF, EPF, NSC, ELSS, etc.
  • Section 80D: Deductions on health insurance premiums (up to ₹25,000 for self, ₹50,000 for senior citizens).
  • Section 80G: Deductions for charitable donations.

Example of Tax Savings with Deductions


If an individual earns ₹6 lakh annually, they can reduce taxable income by investing ₹1.5 lakh in Section 80C instruments, ₹25,000 in health insurance under Section 80D, and ₹10,000 in donations under Section 80G. This effectively reduces the taxable income to ₹4.15 lakh, lowering the tax liability.

Due Dates for Filing ITR


  • Individuals and HUFs: July 31 of the assessment year.
  • Businesses (Audit Required): September 30 of the assessment year.
  • Tax Audit and Transfer Pricing Cases: October 31 of the assessment year.
  • Revised/Belated Returns: December 31 of the assessment year.

Penalties for Non-Compliance


  • Late Filing Penalty: ₹5,000 if filed after the due date but before December 31; ₹10,000 if filed later.
  • Interest on Tax Due: Interest at 1% per month on unpaid tax from the due date until payment.

YathraFin’s Expert ITR Filing Services


  • Accuracy & Compliance: Ensures returns are error-free and compliant with current tax laws.
  • Timely Reminders: Automated reminders help avoid penalties and meet deadlines.
  • Customized Advice: Guidance on deductions and exemptions for tax optimization.
  • Hassle-Free Refunds: Fast-tracks refund processing for eligible clients.
FAQ

Frequently Asked Questions

These FAQs cover essential details like eligibility, required documents, process steps, and benefits. It helps clarify common queries about setup, compliance, costs, and timelines.

Any individual or business with income exceeding the exemption limit or those with certain financial transactions.
ITR-1 or ITR-2, depending on income sources.
Penalty ranges from ₹5,000 to ₹10,000 based on filing delays.
Yes, ITR can be revised until December 31 of the assessment year.
A tax credit statement showing TDS, TCS, and advance tax payments.
Popular sections for deductions related to investments and health insurance.
Individuals making donations to eligible charitable institutions.
Yes, it establishes financial records, useful for loans and visas.
No, they should file ITR-3 or ITR-4 depending on business income type.
A simplified tax scheme under Section 44AD for small businesses with turnover up to ₹2 crore.
By claiming deductions under sections 80C, 80D, HRA, and other eligible sections.
Yes, but within the permitted timeframe (before December 31).
Late fees, interest on tax due, and limited carry-forward of losses.
Income proofs, investment proofs, bank statements, Form 16, and Form 26AS.
Business income is taxed at applicable slab rates for individuals, with options for deductions.
Slabs vary based on age and income; check updated slabs.
Yes, to complete the filing process.
Profit from the sale of capital assets, subject to capital gains tax.
Pre-paid tax for individuals/businesses with tax due above ₹10,000.
YathraFin provides filing assistance, tax-saving guidance, and filing reminders.


Filing your income tax returns not only fulfills a legal requirement but also strengthens your financial credibility. If you need expert assistance, YathraFin offers comprehensive ITR filing services to ensure accuracy, compliance, and tax savings.

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