Step-by-step Guide for ITR (Income Tax Return) Filing

The Income Tax Return Filing is the process of recording the total income earned by a taxpayer during the fiscal year. An ITR (Income Tax Return) filing is crucial for nation-building, claiming TDS refunds, making loan applications, and carrying forward losses.

Nowadays, India is setting new records for direct and indirect tax collection. In FY 2023-24, the target tax collection has crossed 80% of the total budget estimates.

Brief Overview of ITR Filing

ITR filing is a mandatory return declared to record the income, expenses, tax deductions, investments, taxes, etc., of the taxpayer. The taxpayers, including individuals, associations, HUF, LLP, or any firm, must file their ITR on an annual basis.

Additionally, the taxpayers must mandatorily file the ITR under the Income Tax Act of 1961. The income tax return can also be e-filed through the online income tax portal.

What is Income Tax?

Income tax refers to a tax charged on the annual income earned by taxpayers during the fiscal year. The regulations defined under the Income Tax of 1961 govern the imposition, calculation, assessment, and collection of income tax in India. Income tax is considered a financial and legal obligation for all taxpayers in India.

Is ITR Filing Compulsory?

Yes, every citizen of India earning more than the limit specified in Union Budget are compulsorily required for filing ITR as per the provisions of the Income Tax Act of 1961. The tax slabs of every year must be mandatorily reviewed before filing income tax return in India.

Different Types of ITR Filing Forms

There are different types of ITR filing forms that taxpayers must use to file their taxes directly to the Central Board of Direct Taxes in India. Consider the following income tax return forms available to the taxpayers:

1.Form ITR-1

Form ITR-1 also known as Sahaj is an income tax return filed by the individuals earning an annual income of less than Rs. 50 lakhs.

2.Form ITR-2

Form ITR-2 is an ITR form filed by individuals and Hindu Undivided Families (HUFs) earning an annual income of more than Rs. 50 lakhs from the sale of property or assets.

3.Form ITR-2A

Form ITR-2A is a new type of income tax return used by the HUFs, and individual taxpayers in the year 2015-16.

4.Form ITR-3

Form ITR-3 is an ITR filed by the individuals or HUFs earning income either from conduct of a business, profession, or being a partner in a firm, or investment in unlisted equity shares.

5.Form ITR-4

Form ITR-4, also known as Sugam, is an ITR filed by all types of businesses, undertakings, or professionals earning income up to Rs. 50 lakhs.

6.Form ITR-5

Form ITR-5 is an ITR form filed by the firms, bodies of individuals, cooperative societies, LLPs, association of persons, judicial persons, business trusts, estates of insolvent, except individual citizens.

7.Form ITR-6

Form ITR-6 is an ITR return filed by the businesses reporting revenue from occupation, and all other forms of income expect income from religious or charitable purpose.

8.Form ITR-7

Form ITR-7 is an ITR return filed businesses, partnerships, trusts, colleges, universities, scientific research centres, etc. excluded from the payment of income tax.

Why is ITR Filing Important?

ITR filing is important for individual citizens and businesses filing regular income tax returns. The following are some of the importance of filing Income tax returns in India:

1. Easy Loan Approval

ITR filing simplifies the loan access and approval for the taxpayers intending to apply for an auto-loans, housing loans from major banks & lending institutions.

2.?Claim Tax Refund

The ITR filing assists taxpayers in getting reimbursed and claiming tax refunds for any excess tax paid to the government.

3.?Easy Visa Processing

ITR filing and handling of tax returns assist towards a hassle-free & easy processing of visas in India.

4.?Avoid Penalty

Every taxpayer (including Indian citizens and businesses) must ensure Tax Compliance Services to avoid any resulting penalties.

5. Income and Address Proof

Filing of ITR return acts as a government accepted documents which verifies both the income as well as address of the taxpayers.

Challenges Faced While Filing Income Tax Returns

Taxpayers face various challenges while filing income tax returns for every fiscal year. The following are some of the challenges that taxpayers must pay proper attention to while filing an ITR return in India:

• While choosing the correct ITR forms;
• While making a declaration of all sources of income;
• While providing personal information;
• While mentioning TDS as mentioned under Form 26A, 16, or 16A;
• While calculating the HRA tax relief;
• While payment of advance taxes on-time.

Who Are Required to File Income Tax Returns?

Whatever be the source of income, everyone with the income of specified limit are required to file ITR. The list as provided below comprises of the people and enterprises required to file income tax return every financial year.

• Salaried Individuals;
• Self Employed and Other Professionals;
• Firms and Businesses;
• Hindu Undivided Family;
• Directors and Partners;
• Dividend Earners;
• Charity and Religious Trusts;
• NRIs and Tech Professionals.

Eligibility Requirements for ITR Filing

The individual and businesses must possess the following eligibility requirements for filing the income tax return under the Income Tax Act of 1961.

• Any individuals who are below 60 years of age earn Rs. 2.5 lakhs or higher;
• Any individuals who are above 60 and below 80 years of age (senior citizens) earn Rs. 3.0 lakhs or higher;
• Any individuals who are above 80 years of age (super senior citizens) earn Rs. 5 lakhs or higher;
• Any company or entity operating in India, regardless of whether it is in profit or loss;
• Any Indian resident who owes an asset or has financial ties with the international entity;
• Any individual who wishes to carry forward losses accrued.

Documents Required for ITR Filing

Next, the taxpayers are required to compile documents for ITR filing in India. The following is the required checklist of documents required for all the categories of taxpayers filing income tax returns:

• PAN Card;
• Aadhar Card;
• Form 16 (details of salary paid by employer);
• Form 16A (details of TDS deducted on interest);
• Form 16B (details of TDS applied on the amount received after the sale of the property);
• Form 16C (details of TDS of rent paid by tenant);
• Form 26AS (comprehensive statement of taxes) & AIS/TIS;
• Bank Account Details;
• Bank Statement or Passbook;
• Home Loan Statement;
• Rental Income;
• Foreign Income;
• Dividend Income;
• Interest Certificate;
• Capital Gains Details;
• Tax Saving Instruments.

What is the Process for ITR Filing in India?

The process for ITR filing in India can be carried out either through online or offline mode. The following is the complete process for ITR filing required for every taxpayer to comply with:

Step 1: Determine the Mode for ITR Filing

The first step requires every taxpayer to decide the mode of filing the application for filing the ITR. Basically, there are two modes for filing ITR return in India:

• Online mode (through the official portal of income tax dept.);
• Offline mode (by uploading offline ITR form through JSON file)

Step 2: Determine Sources of Income

The next step requires every taxpayer to determine their source of income. The following are the income sources that the taxpayers must determine before filing the ITR:

• Salaried income, i.e., income from employment;
• Income from renting of house property;
• Income from self-employment, carrying profession, or business activities;
• Profit or capital gains arising from the sale of assets like shares or property;
• Other sources of income include interest income, dividends, etc.

Step 3: Choose the Correct ITR Form

In the next step, the taxpayers are required to choose the appropriate and correct ITR form for filing their taxes. The choice of ITR form must be made based on the income and category of taxpayer.

Step 4: Gather all Relevant Documents

The next step requires every taxpayer is require to gather all the relevant documents as provided above for avoiding any delay or penalty while filing the income tax return.

Step 5: Calculate Taxable Income

Next, the taxpayers must calculate their taxable income after making relevant deductions (under Sections 80C, 80D, and 80G of the Income Tax Act) from the total gross income from all sources.

Step 6: Compute Tax Liability

The taxpayers must compute their tax liability as per the tax slabs provided under Budget 2024-25 (AY 2025-26). Further, the taxpayers must deduct any advanced tax or TDS already paid while computing their tax liability.

Step 7: File Online or Offline ITR Return

The taxpayers are required to file their ITR either by way of e-filing portal or offline portals. Further, the taxpayers are required to pay taxes due through an e- Payment Gateway if applicable.? ?

Step 8: E-Verify Income Tax Returns

Next, the taxpayers must complete the process of ITR filing by e-verifying their return either through an AADHAR verification, net banking, or any other available verification. The e-verification of your income tax return must be done within 30 days of filing the ITR.

Step 9: Track ITR Filing Status

Lastly, the taxpayers must track their ITR filing and tax refund status if the tax has been deducted on source.

Due Date for ITR Filing for FY 2023-24

The current due date for ITR filing for FY 2023-24 varies depending on different types of entities. The following are the due dates for ITR filing for different categories of taxpayers:

Delayed Filing of Income Tax Return

The taxpayers if delayed in filing their timely income tax return, must submit their “belated or late income tax return” by the end of the assessment year. In case if the taxpayer fails to file their regular or delayed ITR, are liable to pay a penalty of Rs. 5,000/- to 10,000/- and 1% as an interest on the outstanding tax liability.

New Tax Slabs under Union Budget 2024-25

Every taxpayer must compute and file their ITR in consonance with the new tax slabs as provided under Union Budget 2024-25. The following are the new tax slabs required for computing the tax liability of every taxpayer:

Comparative Analysis of New vs Old Tax Regime

The comparison of the New Vs Old Income Tax Regime is as provided below:

Conclusion

Taxpayers must mandatorily file their income tax return to build their financial credibility and progress. The ITR filing, which assists in the declaration of taxable income, tax liability, and tax deduction claims, must be done in compliance with the provisions of the Income Tax Act. Lastly, the taxpayers are required to comply with the seamless ITR filing requirements as provided under the Income Tax Act.

FAQs

What is the last date for ITR filing in 2024?

The last date for filing ITR for FY 2023-24 (AY 2024-25) is 31st of July, 2024 (until extended).

When can we file ITR for FY 2024-25?

The taxpayers are free to file ITR for FY 2024-25 (AY 2025-26) from April 2024.

Is the ITR filing due date extended?

No, the ITR filing due date has not been extended till now.

What happens if I don't file an ITR?

The taxpayer is charged with a penalty of Rs. 5000/- to 10,000/- upon the failure of timely ITR filing.

What is the minimum salary to file an ITR?

The taxpayers must possess a minimum salary of Rs. 3,00,001/- for filing an ITR in India.