ITR Filing In India

What is ITR Filing?

The tax forms or forms needed to file income tax with the Income Tax Department are known as income tax returns (IT returns). The revenue statistics used to determine the tax burden are typically entered into the tax return itself, which is typically formatted in a predetermined format of the ITR form. Tax returns give the person the option to estimate their tax burden, make payments, and obtain refunds. For every person or company that received income during the year, whether from wages, interest, dividends, capital gains, or other profits tax returns must be submitted each year.

What are the Benefits of Filing an Income Tax Return?

E-filing has made the process of ITR filing easy and quick, and due to this reason, people now get their ITR filed through online mode. Therefore, let us dive deep, and understand the benefits of filing an Income Tax Return:

Avoid Tax Notices

By filing the income tax return on time, you save yourself from any notices that might be issued in your name from the income tax department in case of failure or delay in filing the ITR.

Establish Financial Records

If you will file your income tax return on time, then it will become easy for you to maintain your financial records, and keep track of your money earned and invested.

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 Income Tax Returns online on time will result in a quick and easy tax refund, which can have a positive financial impact.

Boost Credit Score

If your income is less, even then, it is always advised to file an ITR as this will help you in maintaining 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 of Income Tax Returns can help firms fulfill their tax responsibilities more easily by streamlining the tax procedure.

Better Financial Planning

ITR filing helps you properly evaluate your financial status

Who Should file an Income Tax Return?

Any individual will have to mandatorily file ITR in the following circumstances:

• If the income of an individual is more than the exemption limit provided by law, that is 2.5 lakhs for people below 60 years, 3 lakhs for individuals more than 60 years, but below the age of 80 years, and 5 lakhs for those above 80 years of age.

You must file your tax return even if your income is below the basic exemption level if any of the following apply to you:

• Rs 1 crore or more deposited into a “current” bank account: If you have deposited a total of Rs. 1 crore or more in one or more current bank accounts, you are required to file an income tax return.
• Deposited Rs 50 lakhs or more to the “savings” bank account: If you have deposited a total of Rs 50 lakhs or more in one or more of your savings bank accounts, you are required to file an income tax return.
• More than Rs 2 lakhs was spent on travel abroad: If you have spent more than Rs 2 lakhs on international travel, either for yourself or another person, you are required by law to file a tax return.
• The cost of electricity exceeds Rs one lakh: If your annual electricity costs incurred were more than Rs. 1 lakh.
• If your TDS or TCS exceeded Rs. 25,000: You are required to file an income tax return, if the previous year’s tax deducted at source (TDS) or tax collected at source (TCS) exceeded Rs 25,000. This limit is Rs 50,000 in the case of a senior citizen (over 60 years old).
• Business Turnover exceeds Rs 60 lakh: If, as a company owner, your gross receipts, turnover, or total sales for the preceding year exceeded Rs 60 lakh, you are required to file an income tax return.
• More than Rs 10 lakh is earned professionally: If you work as a professional and your gross income for the previous year is above Rs 10 lakh, you are required to file an income tax return.

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: Those who are NRIs, directors of corporations, shareholders of private firms, or who have capital gains income, foreign-source income, two or more residential properties, or income over Rs. 50 lakhs are required to file an ITR-2 form.

Form ITR-3: Individuals who are professionals or who run a sole proprietorship in India are required to file the ITR-3 form.

Form ITR-4: Taxpayers who are enrolled in the presumptive taxation scheme may file an ITR-4 form. The taxpayer must have less than Rs. 2 crores in business revenue or less than Rs. 50 lakhs in professional income in order to be eligible to file this form.

Form ITR-5: Partnership businesses, LLPs, organizations, and bodies corporates are required to file the ITR-5 form in order to declare their revenue and compute their taxes.

Form ITR-6: India-registered companies are required to file the ITR-6 form.

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 and foremost, save all soft copies that is, scanned copies of all the necessary paperwork, such as your bank statement and previous 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: By reaching at the official website, the professional or the experts at AccountsWaale will file your ITR online by selecting the correct ITR form.

Step 5: The source of your income category will determine which ITR Filing Form will be used, and professionals will complete it with all the necessary data and claim any relevant exemptions.

Step 6: After accounting for all exemptions, our professionals will make you aware of any pending taxes or answer your queries, if any.

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 will be required to pay a late charge of ? 5,000 if you file your ITR after the due date but before December 31 of the applicable assessment year. However, the late charge increases to ?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 may go up to seven years if you have made default in paying a big amount to be the income tax department.
• In addition to the late filing penalty, interest under Section 234A will be assessed on overdue taxes until they are paid, at the rate of 1% per month or fraction thereof. 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. On the other hand, failing to file on time or not at all might result in a poor credit score, which makes it harder to get loans at favorable interest rates.