Income Tax Filing
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Income Tax Return (ITR)
An Income Tax Return (ITR) is a form that taxpayers use to report their income details and tax payments to the income tax department. There are seven different ITR forms available for ITR e filing: ITR 1 through ITR 7. The appropriate form for a taxpayer depends on various factors, including their sources of income, the total amount earned, and the type of taxpayer they are (such as individuals, Hindu Undivided Families (HUFs), companies, etc.). Each taxpayer must accurately complete and submit their income tax filing by a specified deadline to comply with tax laws.
Who Needs to eFile an Income Tax Return?
Income tax return filing is not only a legal duty but also a financial responsibility that applies to various groups under different circumstances. Here’s a detailed look at who is required for income tax e filing:
Salaried Individuals
If your total income before deductions under Sections 80C to 80U exceeds the basic exemption limit, you are mandated for income tax filing.
Firms
All corporate entities, including private limited companies, LLPs (Limited Liability Partnerships), and traditional partnerships, must file their ITR e filing annually, regardless of profit or loss.
Directors and Partners
Individuals serving as directors in private limited companies or partners in LLPs are required to do income tax filing reflecting their income and financial activities within the company.
Dividend Earners
If you receive dividends from sources such as mutual funds, bonds, equities, fixed deposits, and interest, you need to done the ITR e filing. This Income tax filing ensures that all sources of income are properly reported and taxed if applicable.
Charity and Religious Trusts
Income received from managing charity funds, religious trusts, or voluntary contributions also necessitates the Income tax e filing meant to maintain transparency and adherence to tax laws.
Tax Refunds
Those eligible for tax refunds, including individuals and businesses, should do income tax filing online to claim refunds on taxes previously overpaid.
NRIs and Tech Professionals
Non-resident Indians (NRIs) and technology professionals must complete income tax filing if their income derived from India surpasses the exemption limit or involves specific financial transactions.
Eligibility for Income Tax Filing
In India, the obligation to do ITR e filing arises under certain conditions. One of the primary criteria for Income tax e filing is when your gross total income exceeds the basic exemption limits, which are age-dependent:
- Individuals under 60 years: Rs 2.5 lakh
- Individuals between 60 and 80 years: Rs 3.0 lakh
- Individuals over 80 years: Rs 5.0 lakh
However, there are other specific circumstances that required for an income tax filing, even if your income is below these thresholds:
High-value Transactions: You are required to do Income tax filing if you have:
- Deposited Rs 1 crore or more in one or more current bank accounts.
- Deposited Rs 50 lakh or more in one or more savings bank accounts.
- Spent over Rs 2 lakh on foreign travel.
- Incurred electricity expenses exceeding Rs 1 lakh during the financial year.
- Had TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) exceeding Rs 25,000 (or Rs 50,000 for senior citizens).
Business and Professional Income:
- Businesses: Mandatory if your total sales, turnover, or gross receipts exceed Rs 60 lakh during the financial year.
- Professionals: Mandatory if gross receipts exceed Rs 10 lakh during the financial year.
Income Tax Return Forms in India
In India, the process of ITR e filing is streamlined through various forms, each designed to cater to different types of taxpayers. Here’s a comprehensive overview of these income tax return forms:
ITR-1: SAHAJ
This Income tax return form is designed for individuals whose annual income from salary or pension is below Rs. Fifty lakhs who own just one house property.
ITR-2: Beyond Business
Ideal for Non-Resident Indians (NRIs), directors of companies, and shareholders of private companies. This ITR form is used if you have capital gains income or foreign income or own two or more house properties and if your income exceeds Rs. 50 lakhs.
ITR-3: Professionals and Proprietorships
This ITR form Suitable for professionals and individuals running a proprietorship business in India.
ITR-4: Presumptive Taxation Enrollees
This Income tax return form is for individuals opting for the presumptive taxation scheme, where business income is below Rs. 2 crores or professional income is below Rs. 50 lakhs.
ITR-5: Partnerships, LLPs, and More
This income tax form must be filed by partnership firms, Limited Liability Partnerships (LLPs), associations, and bodies of individuals.
ITR-6: Companies
This ITR e filing form is Applicable to companies that are registered in India.
ITR-7: Special Entities
This ITR e filing is Used by entities such as charitable/religious trusts, political parties, scientific research institutions, and colleges/universities.
Penalty for Late Filing Income Tax Return
When filing your Income Tax Return (ITR), it’s crucial to meet the Income tax return filing last date to avoid penalties and maximise benefits:
- Interest: If you miss the deadline for Income tax filing, under Section 234A, you will incur an interest charge of 1% per month or part thereof on any unpaid tax amount.
- Late Fee: As stipulated by Section 234F, a late filing fee is imposed if you missed the last date to file ITR. The fee is Rs. 5,000 but is reduced to Rs. 1,000 for those with a total income below Rs. 5 lakh.
- Loss Adjustment: Timely income tax e filing allows you to carry forward losses from investments or business activities, which can be offset against future income tax liabilities. Failing to file your Income tax returns on time results in forfeiting this benefit.