3 min read
25 May 2021

Have you ever wondered, "What is an income tax return?" Simply put, an income tax return (ITR) is a form used to declare your gross taxable income for a given financial year. It includes income from all sources and determines the income tax slab you qualify for. Filing an ITR helps you claim deductions and thereby determines your annual tax liability. The last date for ITR filing is 31 August, and it is mandatory to file your tax returns if your earnings qualify as taxable according to the income tax slabs set by the government. Make sure to file your ITR on time to avoid penalties and ensure compliance with tax regulations.

However, you can also file your returns voluntarily if your income is below the threshold, as it helps you qualify for loans and partake in other similar transactions. To understand the importance of filing ITR, read on.

An introduction of Income Tax Return (ITR)

Why is it important to file income tax returns in India?

The most important reason to file ITR in India is that the government mandates it beyond a certain income. Further, even voluntarily, producing proof of tax returns, helps with availing certain financial products and services. Typically, for loans and other credit options, you must show tax returns of the past three years to qualify. Also, since the previous year incurred losses cannot be shown for exemption later, it helps to have them on record via income tax returns filing. Doing so allows you to reduce your tax liability in the subsequent years

Now that you’re aware of the reasons and benefits of filing tax returns take a look at how you can go about filing your returns.

What are the eligibility criteria to file ITR?

As per the Income Tax Act of 1961, any individual under 60 years of age and earns a total income of Rs. 2.5 lakh or more in a financial year must file ITR. Read on to know who else is eligible.

  • Any individual between the ages of 60 and 80 years with a total annual income of Rs. 3 lakh or higher
  • Any individual over the age of 80 years with a total annual income great than Rs. 5 lakh
  • Any company or organisation operating in India, regardless of whether it is in profit or loss
  • Any Indian resident who owns an asset or has any financial ties to an international entity
  • Any individual who wishes to carry forward losses that have been incurred

What are the documents required to file tax returns?

The documents required for the online income tax returns filing procedure are as follows:

  • PAN card
  • Proof of tax-saving investments, if any
  • Form 16A/ 16B/ 16C
  • Salary slips
  • Bank statements
  • TDS certificate
  • Interest certificates
  • Form 26AS

What are the different types of ITR forms?

There are 7 types of forms that you should know of when you’re considering the online filing of income tax returns. They are as follows:

  • ITR-1: Individuals who earn an income from salary, pension, 1 house property, interest, or any other form up to Rs. 50 lakh in a financial year are eligible to use this form.
  • ITR-2: Any individual or Hindu Undivided Family (HUFs) whose income is not from the profit of a business or a profession in a financial year is eligible to use this form.
  • ITR-3: Individuals or HUFs whose source of income is from the profits of a business or profession in a financial year are eligible to use this form.
  • ITR-4: Individuals who qualify under the presumptive taxation scheme, earning less than Rs. 50 lakh from a profession or under Rs. 2 crore from a business income, are eligible to use this form.
  • ITR-5: Associations, partnerships, and Limited Liability Partnerships reporting their income for a financial year must use this form.
  • ITR-6: Any company registered in India, filing tax for a financial year, is supposed to use this form.
  • ITR-7: Entities including universities, research institutions, political parties, or charitable trusts filing tax returns for a financial year are to use this form.

How can you download the income tax return form?

To proceed with the e-filing of income tax returns, you need to download the right form, as stated above. Here’s how to go about the selection and download process.

  • Visit the Income Tax Department’s online portal.
  • Look for the ‘Forms/Downloads’ button on the homepage.
  • Hover over it and click on the ‘Income Tax Returns’ option.
  • You will be redirected to a page that lets you choose from different forms. Pick the one that matches your financial profile.
  • Download it and fill in the necessary information.

How can you file your income tax returns?

As per the latest income tax filing policy change, filing your ITR is now an online process and must be done through the official Indian income tax website. However, to begin, you must first register yourself by visiting this website.

After registering for the e-filing service, here are the steps to follow:

  • Login by entering your user ID and CAPTCHA.
  • Select the appropriate assessment year and ITR form.
  • You will be redirected to a page to fill the form. Read the guidelines carefully to avoid mistakes.
  • After entering the relevant information, check the details. Then, click the ‘Preview and Submit’ button to proceed.
  • After submitting, your will need to verify the return either through your Aadhaar card or via an electronic verification code.
  • Upon successful verification and processing, you will receive an e-mail on your registered email address and an SMS on your registered mobile number.

How can you check your ITR status online?

Checking your ITR status can only be done after you’ve successfully filed your income tax returns. These are the two methods that you can follow.

  • You can either use your acknowledgment number by logging into the portal and clicking on the ‘ITR Status’ button.
  • You can also use your login credentials to check the status on your dashboard.

Both methods are fairly straightforward and help you access your ITR status in minutes.

What is the penalty if you don’t file income tax returns?

The penalty you incur for not filing tax returns depends on two main factors: the income tax rate applicable and the number of days it has been since the due date for filing. Based on these parameters, you can be penalised anywhere between Rs. 1,000 and Rs. 10,000 if your income is below Rs. 5 lakh. On the other hand, if you earn more than Rs. 5 lakh, you may be penalised between Rs. 5,000 and Rs. 10,000.

The most important thing to note is that filing tax returns is imperative to being a law-abiding citizen. To simplify the process, try to file your tax returns well before the income tax return last date. Keep in mind the above pointers, and take note of the clauses that apply to your financial profile before filing your ITR.

What are the eligibility criteria to file ITR?

For FY 2024-25, income tax filing due dates vary based on entity type and income sources.

Category

Due Date for Tax Filing (FY 2024-25) (AY 2025-26)

Individual / HUF/ AOP/ BOI

31st July 2024

Businesses (Requiring Audit)

31st October 2024

Businesses requiring transfer pricing reports

30th November 2024

Revised return

31 December 2024

Belated/late return

31 December 2024

Updated return

31 March 2024

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Frequently asked questions

Can I file my ITR myself?

Yes, you can file your ITR yourself using the online portal provided by the Income Tax Department or through various tax filing software and apps. The process is user-friendly and guided step-by-step.

Who should file an ITR?

Anyone with income above the basic exemption limit set by the government should file an ITR. This includes salaried individuals, self-employed professionals, freelancers, and businesses.

Why should I file an ITR?

Filing an ITR is mandatory if your income exceeds the taxable limit. It helps claim deductions, avail tax refunds, and serves as proof of income for various financial transactions, such as applying for loans.

How much income is tax free?

For the financial year 2023-24, the basic exemption limit under the old tax regime is up to Rs. 2,50,000 for individuals, Hindu Undivided Families (HUFs) below 60 years, and Non-Resident Indians (NRIs). It is up to Rs. 3,00,000 for senior citizens aged between 60 and 80 years and up to Rs. 5,00,000 for super senior citizens aged above 80 years. Under the new regime, income tax exemption limit is up to Rs 3,00,000 for individuals, and HUF.

What if I don't file ITR?

If you don't file your ITR, you may face penalties, interest on unpaid taxes, and possible legal consequences. Additionally, you may miss out on refunds and face difficulties in financial transactions requiring proof of income.

How can I check my ITR return amount?

To check your ITR return amount, you can log into your account on the official Income Tax e-filing website using your credentials and navigate to the 'View Returns/Forms' section.

How much income tax returns am I eligible for?

The amount of income tax returns you’re eligible for depends upon various factors like your total taxable income, deductions claimed, and tax exemptions availed. It's advisable to consult with a tax advisor for accurate calculations.

Which investment is 100% income tax free?

Public Provident Fund (PPF), Loans on Life Insurance Policies, and investments in Tax-free Bonds are some options that provide income that is 100% tax-free, subject to terms and conditions.

What to do if an income tax refund is pending?

If an income tax refund is pending, you can check the status on the official Income Tax e-filing website. If it's delayed, you can file a grievance through the 'e-Nivaran' section.

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