ITR Filing

Income Tax Return Filing Overview

ITR Filing is a mandatory process which has to be followed by the taxpayer for multiple reasons for instance, maintenance of the financial records and for availing loan. Get your Income Tax Return filing done by Compliance for India, one of the leading tax consultants.

The income earned by the individuals and companies is subject to tax liability therefore, they have to file income tax return with the income tax department as per the provisions of Income Tax Act, 1961. The tax levied on the income is collected by the Central Government.

Who is Eligible to file an Income Tax Return?

• Individuals (Indian residents & NRI's) – Necessary for those whose income is exceeding the prescribed limit.
• Sole Proprietors
• Companies
• LLPs and Partnership Firms 

(The ITR filing is compulsory for 'Partnerships Firm', 'Sole Proprietorship Firm', 'Companies', and 'LLPs' irrespective of their turnover, income, profit, or loss.)

• Individuals getting income from mutual funds, bonds, stocks, fixed deposits, income from interest, house property, etc.
• Individuals obtaining income from property under charitable trusts, religious trusts, or income from voluntary contributions, and also who want to claim tax refunds.
• Salaried persons whose gross income before deductions under section 80C to 80U exceeding the exemption limit.
• All individuals with foreign income and assets, NRI’s and technology professionals on onsite projects.

Type of Income Tax Return Filing Forms

ITR 1 (Sahaj)
For individuals earning income from salary, single house property, agriculture, & income from other sources. This form is to be filed by individual residents having total income up to Rs. 50 lakhs and agricultural income up to Rs. 5,000.

Note Not applicable to individual being director in a company or has invested in unlisted equity shares or having foreign assets or foreign income.

ITR 2
For individuals and HUFs having earnings other than from PGBP (profits and gain of business or profession). It may be from capital gain, lottery, or foreign assets, etc. while total income should exceed Rs. 50 lacs. In case of agriculture income, it should exceed Rs. 5,000. Also, it is filed by those who invested in unlisted equity shares during the financial year.

ITR 3
For individuals and HUFs having earnings from profits and gains of business or profession. It also needs to be filed by the individuals having their income as a partner in a firm.

ITR 4 (Sugam)
For Individuals, HUFs, and Firms (other than LLP) being a Resident having entire Income of up to Rs.50 lakhs from business or Profession. It also covers those who have opted presumptive income scheme under Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act.

Note : Not applicable to individual director in a company or who has invested in unlisted equity shares

ITR 5
ITR 5 is filed by firms, LLPs, AOPs (Association of Persons), BOIs (Body of Individuals) etc.

ITR 6
ITR 6 is filed by companies other than those claiming exemption under section 11 (Income from property held for charitable or religious purposes).

ITR 7
It is required to be filed by those falling under section 139(4A) or section 139 (4B) or section 139 (4C) or section 139 4(D) that can either be individuals or a company.

What are the Benefits of ITR Filing?

• It makes taxpayers eligible for loan processing.
• It helps in claiming a TDS refund or any other tax paid in excess.
• Also, it allows carrying forward losses.
• It makes an individual a responsible citizen.
• Helps in avoiding penalty provisions.
• Considered as financial evidence for availing loan or visa.
• Helps the government in keeping track of the income of taxpayers.

What Documents are Required to File Income Tax Return?

• Copy & PAN of Aadhaar
• Address details
• Bank Account details
• Additional disclosures with reference to income from payroll & fixed deposits
• Data required for claiming deduction
• Data required regarding TDS return filing and advance tax payments
• Investment proof
• TDS certificate in Form 16
• Interest income certificate in Form 16A
• Form 26AS

What is the Procedure for Filing Income Tax Return?

• Collection of necessary documents such as Form 16 (TDS Certificate issued by the employer in case tax is deducted from salary), Form 16A (It is issued by the bank for TDS deducted on the interest payment on the fixed deposit) in the TRACES format & capital gain statement. TDS certificate should be digitally signed by the taxpayer. 
• Download Form 26AS & cross-check with the TDS certificate to ensure that tax deducted from your salary or from your interest income is deposited with the government.
• In case of any error, rectify Form 26AS. If the error is not rectified, the taxpayer won’t be able to claim the credit on deducted tax.
• The next step is to calculate the total income chargeable to tax.
• After this, the taxpayer needs to calculate tax liability.
• Once all the taxes are paid, you can proceed for Income Tax Return filing. You can only claim for a refund if you file an income tax return.
• Verification of Income Tax Return
• Receive e-verification acknowledgment
• Department will process your return and will communicate through the mail.

Penal Provisions

• Under section 156, a demand notice is given to the taxpayer for the payment of tax.
• The amount determined should be paid within 30 days of the notice at the place and to the person specified in the notice.
• If the taxpayer makes a default in the payment of tax due, he will be treated as an assessee in failure.
• Before levying a penalty, a fair opportunity of being heard is given to the taxpayer.

Tax Rates

Slab Rates

Note* As per the financial bill 2020 for the financial year 2020-21.

In order to claim above mentioned tax rates, the following exemptions and deductions are allowed/disallowed.

Surcharge