ITR Definition
An Income Tax Return (ITR) is a document that individuals submit to the IT Department of India to report their income and payable expenses for a year which runs from April 1st to March 31st of the following year.
Table of Content:
How to file ITR online?
Now you can conveniently submit your tax return from the comfort of your home long as you have an internet connection. This has been made possible through e-filing, which utilizes tax preparation software provided by the Income Tax Department.
More and more taxpayers are opting to file their returns due to the benefits it offers. Here are a couple of advantages:
1. Seeking Refunds: If tax has been deducted at source from payments made to you and you wish to claim a refund for that amount you need to furnish your ITR for that year in order for the refund process to be initiated.
2. Proof of Credit Eligibility: When applying for a loan your annual income plays a role in determining your eligibility. By providing an ITR form with details of your earnings it gives lenders an insight into your income and enhances credibility when reviewing your loan application.
3. Proof of Income: In essence when applying for a visa you will also need to provide proof of income. The accepted documents, for this purpose are tax forms.
When you purchase a term plan your insurer may ask for your Income Tax Return (ITR) as proof of income to determine the compensation amount that would be paid to your beneficiaries in case of death or disability. The ITR serves as confirmation of your income.
The Personal Assessment Division offers forms for each taxpayer based on their income category:
1. ITR 1: This form is applicable to individuals (not applicable to NRIs/HUF/any other entity) who have a total income up to Rs 50 lakhs and earn income under the following heads;
a) Salary/Pension
b) Income from one house property
c) Income from other sources
2. ITR 2: This form applies to all /HUF taxpayers who’re not eligible to file ITR 1 and have income from any source other than business or profession.
3. ITR 3: This form is relevant for individuals and HUFs who have income from profits and gains derived from business or profession.
4. ITR 4: This format is applicable, to all individuals/HUF/Firms (excluding LLP) with income up to Rs 50 lakhs and income falling under the following categories:
a) Income from business or profession computed on presumptive basis under section 44AD or 44AE or 44ADA.
b) Income from Salary/Pension.
c) Income from House Property.
There are payment sources to consider when filing your income tax return (ITR). Here’s a breakdown of the ITR forms and who they apply to;
5. ITR 5: This form is applicable to individuals than individuals Hindu Undivided Families (HUFs) companies and those filing under ITR 7. It covers entities such as partnership firms, Limited Liability Partnerships (LLPs) Associations of Persons (AOPs) Bodies of Individuals (BOIs) Artificial Judicial Persons, Co-operative Societies, Local Authorities, investment funds, business trusts well as estates of deceased individuals and insolvents.
6. ITR 6: This form is for all types of companies except those claiming exemption under Section 11. Section 11 pertains to trusts/ trusts that should use ITR 7.
7. ITR 7: This form applies to individuals and organizations required to file returns under sections 139(4A) 139(4B) 139(4C) 139(4D) 139(4E) or 139(4F). This category includes charitable trusts, political parties, scientific research associations, universities and colleges.
Why should you file an income tax return?
- To claim a tax refund from the tax department.
- If you have earned income from or invested in assets during the year.
It’s important to fulfil your obligation by filing the ITR form based on your circumstances.
If you want to apply for a visa or a credit card, there are conditions that need to be met. For organizations or firms whether they make a profit or suffer a loss specific rules apply. Additionally, if you have experienced losses, under the business/professional or capital gains category you can only carry them forward to the following years if you file your return, before the date.
Frequently Asked Questions
1. How do I file my Income Tax Return (ITR) online?
Answer: To file your ITR online you need to register or sign into the Personal Assessment e site. Enter your client ID or Dish secret phrase and manual human test code to access the site. Once logged in go to the ‘e Document’ menu. Click on the ‘Annual Assessment form’ to proceed with filing your return.
2. When is the deadline for filing ITR in 2024?
Answer: The last date to file your ITR for the year 2022 23 (assessment year 2023 24) without incurring a charge is July 31st, 2023. If you file your return after that date, you will be required to pay interest under Section 234A and a penalty under Section 234F.
3. What are the penalties for filing of ITR?
Answer: Filing your ITR after the due date can result in penalties and consequences. If your total income exceeds Rs 5 lakh the penalty is Rs 5000; whereas if it falls within the income limit it is Rs 1000. After December 31st, 2023, the penalty increases to Rs 10,000.
4. What happens if I don’t file my income tax return?
Answer: If you fail to submit your income tax return you may face imprisonment for a duration ranging from six months to seven years in accordance with the provisions of Section 276CC of the Income Tax Act.
5. Why is it necessary to submit an income tax return (ITR)?
Answer: If you fail to file your ITR you won’t be able to carry on or offset your losses. Filing your income tax return does not benefit you. It also contributes to the betterment of our country.