Basics of Income Tax Return (ITR) in India

Filing an Income Tax Return (ITR) is not only a legal requirement but also a smart financial practice. It helps you:

• Claim TDS refunds
  
• Simplify loan and credit applications
  
• Carry forward losses for future tax adjustments
• Claim eligible deductions and exemptions under the Income Tax Act, 1961 (for example, term insurance premiums under Section 80D, saving up to ₹1 lakh per year)

 

What Is an Income Tax Return (ITR)?

An ITR is a formal declaration of your gross taxable income for a given financial year. By filing it, taxpayers report:

• Income from salary, business, or other sources
• Deductions and exemptions claimed
• Taxes already paid (TDS, advance tax, etc.)

The ITR calculates your net tax liability for the year.

According to the Income Tax Act, 1961, individuals below 60 years must file ITR if:

• Any part of their income is taxable, or
• Taxable income exceeds ₹5 lakh, or
• They have paid advance tax during the year

Importance of Income Tax in India

Income tax is a primary source of revenue for the government. It funds:

• Salaries for government employees
• Welfare and social schemes
• Infrastructure and development projects
• Defence and national security

As of 10th January 2024, India’s direct tax collection rose 19.41% YoY, crossing ₹14.70 lakh crore, achieving over 80% of the FY 2023-24 target.

Types of ITR Forms

The Income Tax Department provides nine different ITR forms. Selecting the correct form is essential to avoid processing issues:

1. ITR-1 (Sahaj)

• For individuals with income up to ₹50 lakh from salary/pension, one house property, and other sources
  
• Not all salaried taxpayers can use this form

2. ITR-2

• For resident individuals or HUFs who cannot file ITR-1
• Not applicable if income includes business or professional income
  

3. ITR-2A

• For HUFs and individuals owning multiple house properties without capital gains
• Includes salary income
• Suitable for long-term capital gains with STT paid
  

4. ITR-3

• For individuals or HUFs with business/professional income
  
• Also for those receiving income from partnership firms (salary, bonus, commission)

5. ITR-4 (Sugam)

• For professionals, businesses, and HUFs with income under Sections 44AD, 44ADA, 44AE
  
• Includes salary, one house property, and other sources
• Total income must not exceed ₹50 lakh

6. ITR-5

• For LLPs, firms, business trusts, AOPs, BOIs, estates of deceased or insolvent persons
  

7. ITR-6

• For companies (online filing only) not claiming exemptions under Section 11
  

8. ITR-7

• For political parties, charitable trusts, religious institutions, universities, colleges, etc.
• Used to claim tax exemptions
  

9. ITR-4S

• For specific business trusts, LLPs, and other entities not covered under regular ITR forms

Filing the correct ITR form ensures faster processing, avoids notices from the Income Tax Department, and helps maintain a clean financial record.

Is It Mandatory to File Income Tax Return (ITR)?

Yes. Under Indian tax laws, filing an Income Tax Return is mandatory if your income exceeds the basic exemption limit.

Failing to file your ITR on time can:

• Attract late filing fees
• Delay tax refunds
• Affect loan approvals or visa applications

The Income Tax Department sets pre-determined tax rates depending on your income slab, so timely filing ensures compliance and avoids unnecessary penalties.

Who Should File Income Tax Returns?

Filing ITR is required for individuals and entities whose income or financial activities meet certain criteria:

1. Individuals
   • Below 60 years: Total income exceeds ₹2.5 lakh
   • Senior citizens (60–79 years): Total income exceeds ₹3 lakh
   • Super senior citizens (80+ years): Total income exceeds ₹5 lakh
2. Tip: Use an income tax calculator with gross income before deductions (Sections 80C–80U) and exemptions (Section 10) for accurate results.
3. Companies
   • All registered companies earning income, regardless of profit or loss, must file ITR.
4. Refund Claims
   • Individuals or businesses claiming tax refunds for excess TDS or advance tax paid.
5. International Assets / Income
   • Taxpayers with assets or financial interests outside India.
   • Foreign companies enjoying treaty benefits on transactions in India.
   • NRIs earning ₹2.5 lakh or more in India in a financial year.

How to File ITR in India

You can file ITR online or offline. Online filing is faster, convenient, and allows e-verification.

Online ITR Filing Process

Step 1: Visit the official Income Tax e-filing portal.

Step 2: Log in using your PAN number and password.

• If you do not have an account, create one with correct personal and tax details.

Step 3: Go to ‘File Income Tax Return’ under the ‘e-File’ tab.

Step 4: Select your income category (Individual, HUF, Firm, etc.).

Step 5: Choose the appropriate ITR form and enter your bank account details for refunds.

Step 6: Preview the pre-filled ITR form, verify details, and make any necessary corrections.

Step 7: Submit the ITR:

• E-Verify: Instant verification via Aadhaar OTP or pre-validated bank account (recommended).
• Physical Submission: Print the ITR-V acknowledgment and send it to the Centralized Processing Center (CPC), Bengaluru within 120 days.

Is It Mandatory to File Income Tax Return (ITR)?

Yes. Under Indian tax laws, filing an Income Tax Return is mandatory if your income exceeds the basic exemption limit.

Failing to file your ITR on time can:

• Attract late filing fees
• Delay tax refunds
• Affect loan approvals or visa applications

The Income Tax Department sets pre-determined tax rates depending on your income slab, so timely filing ensures compliance and avoids unnecessary penalties.

Who Should File Income Tax Returns?

Filing ITR is required for individuals and entities whose income or financial activities meet certain criteria:

1. Individuals
   • Below 60 years: Total income exceeds ₹2.5 lakh
   • Senior citizens (60–79 years): Total income exceeds ₹3 lakh
   • Super senior citizens (80+ years): Total income exceeds ₹5 lakh
2. Tip: Use an income tax calculator with gross income before deductions (Sections 80C–80U) and exemptions (Section 10) for accurate results.
3. Companies
   • All registered companies earning income, regardless of profit or loss, must file ITR.
4. Refund Claims
   • Individuals or businesses claiming tax refunds for excess TDS or advance tax paid.
5. International Assets / Income
   • Taxpayers with assets or financial interests outside India.
   • Foreign companies enjoying treaty benefits on transactions in India.
   • NRIs earning ₹2.5 lakh or more in India in a financial year.

•  

What’s New in the ITR Forms?

The new Income Tax Return (ITR) forms were recently notified by the Central Board of Direct Taxes (CBDT), including relief measures in response to the COVID-19 pandemic. Key updates include:

1. Wider Scope of Taxpayers

The tax net now covers more individuals and entities, including:

• Individuals and HUFs
  
• Partnership firms who:
  
  • Have deposited more than ₹1 crore in a bank
  • Incurred personal travel expenses of ₹2 lakh or more
    
  • Paid power utility bills exceeding ₹1 lakh
    

2. Separate Schedule for Investments and Deductions

• Schedule DI has been introduced in the new forms
• Enables taxpayers to declare investments or expenses for claiming tax rebates

3. Removal of Earlier Restrictions

• The earlier restriction preventing joint owners of a house from filing ITR-1 or ITR-4 has been removed
  
• Now, joint owners can file these forms individually

Which ITR Form Should You Fill?

The Income Tax Department specifies different forms depending on your income source and financial activities. Here’s a quick guide:

1. ITR-1 (Sahaj)

• For resident individuals (other than NRI)
  
• Total income up to ₹50 lakh
  
• Income sources:
  
  • Salaries
  • One house property
    
  • Other sources (interest, family pension, etc.)
  • Agricultural income up to ₹5,000

2. ITR-2

• For Individuals and HUFs
  
• Who do not have income from business or profession
  

3. ITR-3

• For Individuals and HUFs
  
• With income from profits and gains of business or profession
  

4. ITR-4 (Sugam)

• For Individuals, HUFs, and Firms (other than LLPs)
  
• Total income up to ₹50 lakh
  
• Income from business or profession under presumptive taxation (Sections 44AD, 44ADA, 44AE)

How to Check ITR Status Online

Once you file and verify your Income Tax Return (ITR), its status will initially show as “Verified.” After processing by the Income Tax Department, the status changes to “ITR Processed.”

You can check the status online using two methods:

Option 1: Without Login Credentials

1. Visit the Income Tax e-filing portal.
2. Click on the ITR Status tab on the left menu.
3. Enter your:
   
   • PAN number
     
   • ITR Acknowledgement Number
     
   • Captcha code
     
4. Click Submit to view the status of your filed return.

Option 2: With Login Credentials

1. Log in to your account on the Income Tax e-filing portal.
2. Click on View Returns/Forms.
3. Select Income Tax Returns and the relevant Assessment Year from the dropdown menu.
4. The status of your filing (whether Verified or Processed) will be displayed on the screen.

Keeping track of your ITR status ensures compliance and prevents legal or financial issues. Filing your ITR on time every year is crucial.

How to Download Your Income Tax Return (ITR-V)

After filing your ITR without a digital signature, the Income Tax Department generates an ITR-V verification form. This form must be printed, signed, and sent to the CPC, Bengaluru within 120 days.

Follow these steps to download your ITR-V:

1. Log in to the Income Tax e-filing portal.
2. Click on View Returns/Forms.
3. Select Income Tax Returns. You will see all years for which returns are filed.
4. Click on the Acknowledgement Number of the desired year.
5. Select ITR-V Acknowledgment to begin the download.
6. Open the downloaded document using your password, which is:
   
   PAN in lowercase + Date of Birth (DDMMYYYY)
   Example: PAN – ASIJP2345P, DOB – 31/12/1980
   Password – asijp2345p31121980

Verification Options

You can complete verification in multiple ways:

• E-Verify using Aadhaar OTP, Net Banking, or ATM (Recommended)
• Physical Submission of the signed ITR-V to CPC Bengaluru

Timely verification ensures your ITR is valid, allows refunds to be processed, and keeps your financial record up to date.

Why Should You File Your Income Tax Return?

Many individuals mistakenly think that filing tax returns is optional and dismiss it as unnecessary. However, filing your Income Tax Return is not only a legal requirement in certain cases but also a smart financial practice. It demonstrates responsibility, facilitates transactions, and enables you to claim refunds or adjustments.

1. Filing Returns Shows Responsibility

The government requires individuals earning above a certain threshold to file an ITR by a pre-determined due date and pay the applicable tax.

• Filing on time reflects that you are a responsible citizen.
• It helps maintain an official record of your income, making future financial transactions easier.
• Individuals earning below the threshold can still file voluntarily to build a financial record.

2. Filing Returns is Mandatory in Some Situations

Even if your income doesn’t require mandatory filing:

• Certain transactions, like registering immovable properties, often require proof of tax returns from the last 3 years.
• Filing voluntarily ensures smooth processing of such transactions.

3. Loan or Credit Applications May Require Your Returns

Financial institutions such as banks and credit card companies often require proof of past ITRs before approving:

• Home loans or property loans
• Personal or business loans
• Credit cards

Filing regularly strengthens your financial credibility and simplifies future loan or credit applications.

4. Claim Adjustments Against Past Losses

Filing ITRs is necessary to:

• Record capital gains or losses
• Claim exemptions or adjustments for speculative and non-speculative losses
• Ensure that losses from one financial year can be adjusted in subsequent years for tax calculations

Without filing, you lose the opportunity to carry forward losses for future tax benefits.

5. Enables Filing of Revised Returns

If you need to revise a previously filed return:

• Non-filing of the original return prevents filing a revised return.
• The Income Tax Act may impose a penalty of ₹5,000 for failure to file.

Regular filing ensures that you can make corrections in case of errors and remain compliant with the law.

Advantages of Filing Your Income Tax Return (ITR)

Filing your Income Tax Return has many benefits beyond legal compliance. Here are the key advantages:

1. Prompt Processing

• E-filing ensures quick acknowledgment of your ITR.
• Refunds, if any, are processed much faster compared to paper-based returns.

2. Better Accuracy

• Online filing software comes with built-in validations, reducing errors.
• Paper-based filings are prone to human error, especially when data is manually entered into the system.

3. Convenience

• No time or location constraints—you can file your returns anytime, anywhere.
• E-filing is available 24/7 for your convenience.

4. Enhanced Confidentiality

• Digital filing keeps your financial information secure.
• Paper filings risk exposure of sensitive data at offices or during transit.

5. Easy Access to Past Data

• E-filing platforms securely store your previous ITRs.
• This makes it easy to retrieve past data for filing current returns or making corrections.

6. Proof of Receipt

• You receive instant confirmation upon filing.
• Subsequent notifications are sent to your registered email ID, serving as official proof.

7. User-Friendly Process

• E-filing platforms are intuitive with detailed instructions.
• Even those not very tech-savvy can file returns easily.

8. Integrated Electronic Banking

• Direct deposit of refunds into your bank account.
• Direct debit for tax payments with flexibility—choose the date to debit your account.
• Options like “file now, pay later” add to the convenience.

Due Dates for Filing Income Tax Return (ITR) – FY 2023-24

Here’s a quick overview of ITR filing deadlines for different categories of taxpayers:

Category of Taxpayer	Due Date for Filing
Individual / HUF / AOP / BOI (where audit is not required)	31st July 2024
Businesses (requiring audit)	31st October 2024
Businesses requiring transfer pricing reports	30th November 2024
Revised return	31st December 2024
Belated return	31st December 2024

Penalty for Late Filing of ITR

Failing to file your ITR on time can attract penalties and legal action from the Income Tax Department. Here’s a simplified table of penalties:

Filing Period	Penalty for Income ≤ ₹5 lakh	Penalty for Income > ₹5 lakh
Before 31st July	Nil	Nil
1st September – 31st December	₹1,000	₹5,000
1st January – 31st March	₹1,000	₹10,000

Note: Timely filing not only avoids penalties but also ensures smooth processing of refunds and compliance with legal requirements.

Conclusion

Filing your ITR is important for multiple reasons:

• Nation-building: Contributes to government revenue for welfare schemes and infrastructure.
• Refunds: Enables you to claim TDS refunds efficiently.
• Loans & Credit: Simplifies loan or credit approvals with proof of income.
• Carry Forward Losses: Helps adjust past losses against future income.
• Tax Deductions: Claim deductions and exemptions under the Income Tax Act, 1961, such as term plan premiums under Section 80D (up to ₹1 lakh/year).

Disclaimer: The content on this website is for informational purposes only and does not constitute legal, financial, or professional advice. Please consult qualified experts before acting on any information. K M GATECHA & CO LLP accepts no liability for errors, omissions, or outcomes from the use of this content. This site is not an advertisement or solicitation.