Overview income tax return filing

An income tax return is a form where a taxpayer pronounces their income, expenses, tax deductions, and investments. As per the income tax Act, 1961, it is mandatory for a taxpayer to file an income tax return. The tax levied on income is to be paid to the central government.

An income tax is filed to report the annual income of a taxpayer. It is necessary to pay income tax even in the absence of any income in a particular financial year. A taxpayer has to file income tax to report his income, losses, income tax refunds, and deduction for a financial year. In case you have filed more tax required then the IT department will refund the additional amount into your account.

Individuals need to understand how to file income tax returns and get help from professionals to avoid unwanted disputes.

What is an income tax return?

It is a form to be filed with the income tax department. Any individual or company earning an income above a certain limit is subject to income tax. Income could be from salary, interest earned on savings, sale of property, business, or income from investing in stocks. The Income tax return form is arranged properly to allow you to calculate tax liability, scheduling tax payments, and requesting refunds in case of overpayment of taxes.

The income tax department has various forms such as ITR 1, ITR 2, ITR3, ITR4, ITR5, ITR6, and ITR7 for various types of incomes and different types of entities

Documents required to file an income tax return

  • PAN or Aadhar card copy
  • Bank statements
  • Investment proofs
  • Purchase or sale documents of assets
  • TDS certificate in form 16
  • Additional information regarding income from deposits
  • For business – a copy of audit report, balance sheet, pro0fit and loss account, personal account of proprietors.
  • Payment receipts of insurance premiums, equity shares, mutual funds, etc to claim deductions.

Types of ITR forms

ITR-1 (SAHAJ) : This form is filed by an individual having income exceeding Rs 50 lakhs from salary, one house property, agriculture, and other sources.

ITR-2 : This form is filed by individuals and HUF’s having income other than profits and gains of business or profession.

ITR-3 : This form is filed by individuals and HUF having income from profits of business or job.

ITR-4 (Sugam) : This form is filed by individuals, HUF, and firms having presumptive income tax returns.

ITR-5 : This form is filed by entities other than individuals, HUF, company, and the person filing ITR-7.

ITR-6 : This form is filed by all companies except those who claim tax exemption as per section 11.

ITR-7 : This form is filed by every person including companies who are required to file returns under 139(4A), 139(4B), 139(4C), and 139(4D).

Benefits of income tax return filing

  1. It makes you a responsible citizen : The government has mandated those individuals earning a specific amount of annual income must file income tax returns. Failing to pay taxes may invite penalties from the IT department. Filing timely returns is a sign of a responsible taxpayer.
  2. Processing of loans : The eligibility and quantum of loan assessed by filed ITR’s. ITR will also help your lender to assess your repaying capability.
  3. Allows carrying forward of losses : As per the IT rules, carry forward of losses are allowed for individuals who file ITR in the relevant assessment year.
  4. Claiming TDS refund : Many Salaried individuals don’t file ITR thinking that their employer must have paid their tax on their behalf. Refunds from the IT department can be claimed for the investments and insurances bought by them.
  5. Avoiding tax notices : In case you are not filing your returns correctly and in time, the IT department may serve you legal notices and impose heavy penalties.

Who should file income tax returns?

As per the Income Tax Department, one has to file income tax if coming under the following conditions

  • Every company, be it private limited, LLP, or partnership irrespective of the turnover, income, profit, or loss.
  • Individuals enjoying income from mutual funds, bonds, stocks, fixed deposits, house property, etc.
  • People exceeding the prescribed income limit
  • Individuals who want to claim tax refunds
  • All individuals with foreign income, foreign assets, interests
  • If one receives income from property under charitable trusts, religious trusts or from voluntary contributions

Procedure for Income tax return filing

Income tax return filing is a completely online process. You can follow these steps to file your return

  • Collect all the necessary documents such as form 16 (TDS certificate issued by the employer if tax is deducted from salary), form 16A (issued by the bank on interest payment of fixed deposits).
  • Download form 26AS. It shows the tax deducted from salary or interest earned from deposits. The amount on form 16 should match this form.
  • In case of any errors, rectify them on Form 26AS.
  • Next step is calculating the total tax chargeable on income.
  • Download the correct ITR form applicable for you. If you do not know the correct form consult taxpotter.
  • Once all taxes are paid, you can proceed with filing ITR.
  • Verification of income tax returns will be done and communicated through the mail.

Common mistakes while filing an Income tax return

Selecting the wrong form

A taxpayer should choose the correct ITR form based on under which category they fall

Selecting wrong assessment year

Incorrect selection of assessment year may attract double taxation and unwanted penalties.

Providing incorrect details

While filing ITR all details of the assessee such as name address, E-mail ID and mobile number should be correctly filled.

Not disclosing all sources of income

It is important to disclose all income sources irrespective of they are taxable or exempted

Not reporting incomes that are exempted

Although you don’t pay any taxes on the exempted sources of income it is important to report them.

Not verifying before filing

After filing the form it is important to check the form to avoid errors.


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