Step By Step Guide to ITR Filing and Income Tax Return Online – Process, Documents, Fees, Types and Benefits

Income tax is a vital source of revenue for any government, levied on the income of persons in a country. The government in India imposes taxes on incomes accrued to all residents. An income tax return (ITR) is a form to report your earned income throughout the year to the income tax department. Filling your Income Tax Return is a legal obligation and a part of your financial planning.

What is an Income Tax Return?

An Income Tax Return (ITR) is a form you file with the Income Tax Department. It indicates your income earned during one financial year (April 1st to March 31st). This form contains information about the taxes you have paid, deductions you can make, and tax refunds you can get. An ITR is a requirement on the part of every individual or entity whose income exceeds the threshold limit of exemption as fixed by the Government. Moreover, even if your income is below the set limit, there might be benefits in ITR Filing since it is proof of income and can further be helpful in various financial dealings.

Types of ITRs

There are different types of ITR forms, each specifically designed for a particular category of taxpayers.

• ITR 1 (Sahaj): For individuals having income from salary, one house property, and other sources (excluding business or profession).
• ITR 2: For individuals and HUFs who do not have income from business or profession.
• ITR 3: For individuals and HUFs who have income from a proprietary business or profession.
• ITR 4: Sugam-For those individuals, HUFs, and firms (other than LLPs) having income from a presumptive business.
• ITR 5: For firms, LLPs, AOPs (Association of Persons), BOIs (Body of Individuals), artificial juridical persons, cooperative societies, and local authorities.
• ITR 6: Companies besides the one that are claiming exemption under section 11.
• ITR 7: For persons including companies required to furnish returns under sections 139(4A), 139(4B), 139(4C), 139(4D) or 139(4E).

Features of Income Tax Return (ITR)

• Income Details: ITRs require you to disclose his income amount, salary, business income, capital gains, income from house property, and other sources of revenue.
• Tax Calculation: ITR forms help you calculate your tax liability as per legal rules and rates.
• Deductions and Exemptions: ITRs let you claim deductions for investments, expenses, and allowances as allowed under the Income Tax Act.
• Tax Credits: Through ITRs you can claim credit for the taxes you have paid in advance or taxes that are deducted at source (TDS).
• Refund Claim: If you've paid excess taxes, you can claim a refund through your ITR.

Benefits of ITR Filing

• Claiming Refunds: Get back any excess tax paid during the year.
• Proof of Income: An ITR is an official document that shows your income, which may be needed to avail of loans, visas, and many other financial transactions.
• Bring Losses Forward: Losses can be forwarded from a financial year and set off against incomes to be obtained in future, provided you file your return on time.
• Avoid Penalties: If you file your ITR late or do not file it, you might face trouble due to penalties or interest.
• Legal Compliance: Filing your return is a legal responsibility if your income exceeds the exemption limit. • Easy Loan Approvals: A consistent ITR history shows financial stability that will increase your loan approval chances.

Consequences of Not Filing an ITR

• Penalty: Late filing may lead to a penalty of up to ₹10,000.
• No more carry-forward losses: If you don't file your ITR, you cannot carry your losses forward to the next financial year.
• Interest: You will have to pay interest on any outstanding tax.
• Prosecution: In severe cases, non-filing of ITR can cause prosecution and even imprisonment.

Who is Required to File ITR?

You will be required to file ITR in the following cases:

• Your Total Income Exceeds the Basic Exemption Limit: This limit, valid for the current financial year, varies according to age and residential status.
• You possess assets or financial interests outside India.
• You are a company or firm, whether or not you have made any profit or loss during the year.
• You wish to claim an income tax refund.

What documents do you need for ITR Filing?

PAN Card: Permanent Account Number is a must to file an Income Tax return.
Aadhaar Card: Link your Aadhaar with your PAN; it is mandatory.
Form 16: Salary certificate from the employer.
Form 26AS: A tax credit statement reflecting TDS deductions from various sources.
Bank Statements/Passbook: To verify income via interest and other financial transactions.
Proof of Investment: For claiming a deduction under various sections of the Income Tax Act.

How to File ITR Online?

• Visit the official Income Tax e-filing portal and create your account
• Choose the correct form type as per the income sources and taxpayer category
• Fill in all your personal and financial information correctly in the ITR form
• Carefully verify the return and submit your ITR
• E-verify your return using Aadhaar OTP, net banking, or by sending a signed physical copy to the CPC

Conclusion

Filing your Income Tax Return (ITR) is the most integral part of being a responsible taxpayer. It is obligatory by law and has many advantages like claiming refunds, carrying forward losses, and sometimes being a proof of income for several reasons. If you need expert ITR Online Filing Consultants in Delhi to file your return, PSR Compliance is the best choice for you. Contact us for a smooth and efficient process.