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Overview of Income Tax Return Filing

Every Indian who falls under the Income Tax slab rates must file an Income Tax Return with the authorities. Consulting an Income tax filing consultant can simplify this process, ensuring accuracy and compliance with the latest regulations. With online filing, it is now possible to file your income tax return easily and quickly. No time limits exist, and this method is precise and quick.

Moreover, submitting ITR forms is a must when filing an income tax return in India through the official website. Individuals and salaried individuals must use separate ITR forms. Working with experienced income tax filing consultants helps you choose the right ITR form. They ensure you report your income correctly and meet all compliance requirements.

What is ITR Filing?

People know the tax forms needed to file income tax with the Income Tax Department as income tax returns (IT returns). Taxpayers usually include the revenue statistics used to calculate the tax burden in the tax return. This return follows a specific format of the ITR form.

Tax returns give the person the option to estimate their tax burden, make payments, and obtain refunds. Every person or company that earned money during the year must submit tax returns. This includes income from wages, interest, dividends, capital gains, or other profits. By engaging a professional Income tax filing consultant, you ensure precise tax calculations and minimise the chances of errors.

What are the Benefits of Filing an Income Tax Return?

E-filing has made filing your ITR easy and fast. Because of this, many people now file their ITR online. Therefore, let us dive deep, and understand the benefits of filing an Income Tax Return:

Avoid Tax Notices

Filing your income tax return on time helps you avoid notices from the tax department. If you delay or fail to file, you may receive these notices.

Establish Financial Records

If you file your income tax return on time, it will be easier to manage your financial records. You can also keep track of the money you earn and invest.

Carry Forward Losses

In case you have incurred losses in the previous financial year, and have filed a proper Income Tax Return. Then, ITR filing will enable you to utilize losses incurred in the past to reduce your future taxes.

Quicker Tax Refunds

Filing your income tax returns online and on time will help you get a quick and easy refund. This can improve your finances.

Boost Credit Score

If your income is low, it is still a good idea to file an ITR. This will help you keep a good tax record. Filing an ITR will increase your credit score and increase your accessibility to credit cards and loans.

Simplify Business Finances

E-filing Income Tax Returns helps firms meet their tax duties more easily. It makes the tax process simpler.

Better Financial Planning

ITR filing helps you properly evaluate your financial status

When Are You Required to File an Income Tax Return (ITR)?

Filing an Income Tax Return (ITR) isn’t just a legal necessity; it ensures financial transparency. Here are the circumstances that mandate filing your ITR:

1. Income Above Exemption Limit

You must file an ITR if your income exceeds the basic exemption limit prescribed by the Income Tax Act:

• Below 60 years of age: Income above ₹2.5 lakhs.
• 60–80 years (Senior Citizens): Income above ₹3 lakhs.
• Above 80 years (Super Senior Citizens): Income above ₹5 lakhs.

2. High-Value Transactions

Even if your income is below the exemption limit, you must file an ITR in these cases:

a) Current Bank Account Deposits

• Deposits totaling ₹1 crore or more in one or more current accounts.

b) Savings Bank Account Deposits

• Deposits totaling ₹50 lakhs or more in one or more savings accounts.

c) Foreign Travel Expenses

• Spent over ₹2 lakhs on international travel for yourself or someone else.

d) Electricity Bills

• Paid more than ₹1 lakh in electricity bills during the financial year.

3. TDS/TCS Deductions Beyond Threshold

• Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) exceeds ₹25,000 in a financial year (₹50,000 for senior citizens).

4. Business or Professional Income

a) Business Turnover

• If your business turnover exceeds ₹60 lakhs in the previous year.

b) Professional Income

• If your gross professional income exceeds ₹10 lakhs in the previous year.

Understanding Different ITR Forms

The different types of ITR forms are mentioned below:

Form ITR-1: Individuals with only one residential property and less than Rs. 50 lakhs in annual income from salaries or pensions may file an ITR-1 form.

Form ITR-2 is for NRIs, corporate directors, private firm shareholders, and those with capital gains income. It is also for people with foreign-source income, two or more homes, or income over Rs. 50 lakhs are required to file an ITR-2 form.

Form ITR-3: Professionals and sole proprietors in India must file the ITR-3 form.

Form ITR-4: Taxpayers in the presumptive taxation scheme can file an ITR-4 form. To be eligible, they must have less than Rs. 2 crores in business revenue or less than Rs. 50 lakhs in professional income..

Form ITR-5: Partnership businesses, LLPs, organizations, and corporations must file the ITR-5 form. This form is used to report their revenue and calculate their taxes.

Form ITR-6: Companies registered in India must file the ITR-6 form.their revenue and compute their taxes.

Form ITR-7: Entities seeking exemption as political parties, colleges or universities, scientific research institutions, and charitable or religious trusts, must complete the ITR-7 form.

What are the Documents Required for ITR Filing?

The following are required to be furnished in order to file an ITR:

• If you are a salaried individual, then you must file Form 16 provided by the employer.
• PAN card of the employee.
• Salary slips of the employee is very important for online ITR filing.
• Report on trading for business owners or entrepreneurs.
• Details of a business account.
• Profit and loss statement, if required
• Investment Proof.
• Purchase/sale documents of the assets.
• TDS certificates provided by the banks.
• Statement of Interest Income.
• Receipts for contributions made in the form of mutual funds and other investments.

Procedure of filing Income Tax Return online

The procedure of online income tax filing is mentioned below:

Step 1: First, save all soft copies. This means scanned copies of important documents. These include your bank statement and last year's return for your online ITR filing. 

Step 2: File and submit the ITR Form 16.

Step 3: Gather and compile all the required documents, and provide these to a professional to apply for ITR.

Step 4: Visit the official website to have the experts at PSR Compliance file your ITR online. They will choose the right ITR form for you.

Step 5: The source of your income will decide which ITR Filing Form to use. Professionals will fill it out with the needed information and claim any relevant exemptions.

Step 6: After considering all exemptions, our team will inform you about any pending taxes. They will also answer any questions you may have.

Penalties for not Filing Income Tax Return on Time

• If your Income Tax Return (ITR) is not filed before the last date, you will be charged with late filing penalties. Depending on the filing date, these fees have different amounts.
• For example, you must pay a late fee of Rs.5,000 if you file your ITR late. This applies if you file after the due date but before December 31 of the assessment year. However, the late charge increases to Rs.10,000 if you file after December 31st.
• If the taxpayer intentionally disregards notifications and fails to file a return, the income tax officer may begin prosecution. A fine may accompany a sentence of three months to seven years of imprisonment. The prosecution term can be up to seven years if you fail to pay a large amount to the income tax department.
• Along with the late filing penalty, interest under Section 234A will be charged on overdue taxes. This interest is 1% per month or part of a month until the taxes are paid. It's crucial to remember that you need to pay taxes in order to file an ITR.
• One of the factors that affect your credit score is how timely you file your ITRs. When assessing loan applications, banks and financial institutions take your credit score into account.
• On-time ITR filings demonstrate proper tax observance, which improves your credit score. If you fail to file on time or not at all, it can hurt your credit score. A low credit score makes it harder to get loans with good interest rates.

Why Choose an Income Tax Filing Consultant?

Working with an Income tax filing consultant has several advantages:

• Expert Guidance: They help you choose the correct ITR form based on your income source and category.
• Accuracy: A consultant ensures accurate filing, reducing the risk of notices or penalties.
• Time-Saving: They handle complex computations, saving you valuable time.
• Compliance: Consultants stay updated with tax laws, helping you stay compliant

Why PSR Compliance for ITR Filing?

PSR Compliance offers expert e-filing services through our team of experienced Income tax filing consultants. We streamline the process for individuals and businesses, ensuring maximum deductions and exemptions while maintaining compliance with tax regulations.

Frequently Asked Questions

Q1. When shall I file my income tax returns?

Answer: Every year, individuals, NRIs, partnerships, LLPs, companies, and trusts must file income tax returns.

Q2. Is there any penalty for default in filing ITR?

Answer: Absolutely, there are penalties and interest charges for taxpayers who fail to file their income tax returns on time.

Q3. How can I claim Income Tax Refund?

Answer: The easiest way to get your tax refund is to file a full income tax return before the deadline. As you submit your return, you may review the entire amount of advance tax payments made on Form 26AS.

Q4. Is it required to file income tax even if I have incurred loss?

Answer: If you experience any financial loss in any given year, you still have to file your return on time. In the next years, you can simply file less tax while showing the carry forward losses. You can only use this option if you file your income tax return on time each year. This rule applies no matter if you make a profit or a loss.

Q5. What should be my minimum salary for filing an ITR?

Answer: If your total income for the given financial year exceeds? 2.5 lakh, you are required under the Income Tax Act to file an income tax return in India.