According to the 2023 Oxford Economics report, Telangana’s capital city is expected to beat economic growth among many global cities in the Asia Pacific region. The city has surpassed Bengaluru in the new office space addition in the first half of the financial year 2022-23. The city is on its way to becoming a larger economy with different types of businesses.
The need for Income Tax Return Filing also increases as there is exponential growth in the economy and the number of people filing. Most people refrain from doing it because of the hectic procedures, but it is mandatory and also your right as it is the confirmation of your income? Lets look on what is Income Tax Returns and ITR filing.
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What is Income Tax Return Filing?
According to the Income Tax Act, Income Tax Return filing to the Government of India is mandatory for all Indian Citizens to file Income Tax Returns.
- All individuals, an association or a firm, LLP, a local authority, or a Hindu undivided family are required to pay Income Tax for each financial year under Income Tax laws.
- Income Tax Return is often termed as ITR or IT returns. Through this Income Tax Return filing, a taxpayer must record his total income earned during the fiscal year. Individuals can file their taxes Online or Offline at their convenience. It is filed in seven different forms: ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7.
| ITR Forms | Applicable Individuals/Bodies |
|---|---|
| ITR 1 or Sahaj Form | It is exclusively for individual taxpayers and not applicable to any other assessee. It can be used by individuals who earn a salary or pension, have income from a single property, have no income from capital gains or windfall wealth, and have no foreign assets or income. It can also be used to combine the income of a spouse or underage child if it meets the mentioned criteria, and if the agricultural income is less than INR 5,000. It applies to individuals who earn from multiple sources such as investments and have no foreign income or assets. |
| ITR 2 | Individuals or HUF who earn money from the sale of assets/property or foreign sources. It is also applicable to those who own multiple residential properties, have foreign assets, or earn above INR 5,000 from agriculture. |
| ITR 2A | Individuals or HUFs who earn income from multiple rental properties or various sources such as investments, fixed deposits, shares, etc. It is also applicable to those whose primary income is a salary or pension, and who have no income from foreign sources, capital gains, or windfall gains. Additionally, they should not have assets outside of India, and their agricultural income should be less than INR 5,000. |
| ITR 3 | To be used by individual taxpayers or HUFs who are partners in a firm but do not conduct any business through the firm and do not earn any income from the firm’s operations. Typically filed by taxpayers whose only taxable income from the business is in the form of the following- Commission Remuneration Interest Bonus Salary |
| ITR 4 | Business persons and professionals such as doctors, engineers, designers, agents, retailers, and contractors, among others. |
| ITR 4S | Companies are other than companies claiming exemption under section 11. Section 11 pertains to charitable trusts / religious trusts for which ITR 7 is applicable. |
| ITR 5 | Individuals earning income from a business, a single housing property, or agriculture (below INR 5000), and those owning assets only in India. |
| ITR 6 | Companies other than companies claiming exemption under section 11. Section 11 pertains to charitable trusts / religious trusts for which ITR 7 is applicable. |
| ITR 7 | Persons including companies required to furnish return u/s 139(4A), 139(4B), 139(4C) or 139(4D) or 139(4E) or 139(4F). This includes religious & charitable trusts, political parties, scientific research associations, universities & colleges. |
What are the documents required for filing ITR?
To do Income Tax Return filing online, certain documents are necessary. These include,
- Pan Card
- Form 26AS
- Form 16A, 16B, 16C
- Salary Pay Slips
- Bank Statements
- Interest Certificates
- TDS Certificate
- Proof of Tax Saving Investments
What is the importance of Income Tax Return filing?
- Failing to file an Income Tax Return can result in fines and legal repercussions. Income Tax reports are required to be filed by everyone with a particular level of income.
- Submitting an ITR is evidence of income and is frequently needed when requesting loans, visas, or other official documents.
- Income Tax Return filing enables people to claim tax credits and benefits, lowering their tax obligations and raising their take-home pay.
- It indicates financial responsibility and dependability to lenders and financial institutions, completing ITR regularly can help improve a credit score.
- Last but not least, submitting an ITR also aids in the development of the country because taxes collected by the government are used for the development of infrastructure, social welfare programs, and other public services.
What are the process of Income Tax Return filing?
For Income Tax Return filing, you should follow the step by step processes.
- Step 1: Evaluate your income tax liability using the procedures outlined in the Income Tax Rules.
- Step 2: Check Form 26AS for a summary of your Tax Deducted at Source (TDS) payment for each quarter of the assessment year.
- Step 3: Check which group you fall into based on the eligibility requirements provided by the Income Tax Department (ITD).
- Step 4: Go to the Income Tax Department’s Official E-Filing Portal.
- Step 5: If you are a first-time user, click the ‘Register’ button to create an account. If you have registered before, click the ‘Login’ option.
- Step 6: Under the ‘E-File’ menu, select the ‘File Income Tax Return’ option.
- Step 7: From the website’s list, select the category that applies to you – Individual, Hindu Undivided Family (HUF), and so on.
- Step 8: Select the appropriate ITR Form for your situation.
- Step 9: Enter your bank account information. If you have previously submitted the same information, you will be requested to pre-validate the information.
- Step 10: Review the pre-filled details of your ITR on a new online page. Check the details and make any necessary adjustments. Once you are certain that all of the relevant data in the form is correct, confirm and validate it.
- Step 11: When the process is finished, verify the returns and mail a hard copy to the Income Tax Department.
What is the due date for Income Tax Return filing?
According to the Income Tax Act, penalties may arise if the Income Tax is not paid within the specified period. Income Tax Return filing should be completed within the assessment year following the financial year. The government may extend the due dates, and there are penalty provisions under Sections 234 A and 234 F of the Income Tax Act.
What are the penalties for late filing ITR?
Huge penalties are imposed on taxpayers if the returns are not filed by the deadline. If the returns are not filed, the person may experience extra hassles and repercussions in addition to penalties. Individuals may be subject to fines ranging from INR 1,000 to INR 10,000 depending on when their returns are filed beyond the deadline.
| Due date of ITR filing | Penalty for Income below INR 5 lakh | Penalty for Income above INR 5 lakh |
|---|---|---|
| Before 31 July | Nil | Nil |
| From 1 September to 31 December | INR 1,000 | INR 5,000 |
| From 1 January to 31 March | INR 1,000 | INR 10,000 |
Conclusion
For taxpayers in India, Income Tax Return Filing is a requirement that must be fulfilled in order to reap several benefits. ITRs are also used as proof of income for self-employed people, and they can speed up the loan and visa application process.
The Income Tax Department’s streamlined e-filing approach makes it simple for people to file their ITRs from the comfort of their homes. To avoid any inconvenience and enjoy the benefits that come with it, it is therefore advised that all taxpayers file their ITRs on time.
Reach out to 24efiling to ensure timely and accurate tax filing to avoid penalties and stay compliant with regulations. Experience a seamless and efficient process.
FAQs
1. Who is required to file an Income Tax Return?
Individuals whose total income exceeds the basic exemption limit, which varies based on age and income sources, are required to file an Income Tax Return. Additionally, individuals with foreign assets or those seeking a refund should also file their returns.
2. What documents are needed for Income Tax Return filing?
Essential documents include PAN card, Aadhar card, Form 16 (for salaried individuals), bank statements, investment proofs, and details of any other income sources. Keep these documents handy to ensure a smooth filing process.
3. What is the due date for Income Tax Returns filing?
The due date for Income Tax Returns filing in India is typically July 31st of the assessment year. However, it’s crucial to check for any changes or extensions made by the government, as these can occur based on various factors.
4. Can I file my Income Tax Return online?
Yes, the majority of taxpayers can file their Income Tax Returns online. The government provides an e-filing portal where individuals can fill out and submit their returns electronically. It’s a convenient and time-saving method compared to traditional paper filing.
5. What happens if I miss the deadline for filing my Income Tax Return?
If you miss the deadline, a belated return can be filed. However, there may be penalties and interest applicable, depending on the delay. It’s advisable to file your return on time to avoid unnecessary financial implications.
