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A complete guide on filing income tax IT returns in India


  • What is Income Tax Return (ITR)?

    Income tax return is a proof that you have an income for which you have paid tax. According to the Income Tax Act, 1961, the term ‘return of income’ means proof of income earned by an individual or a business entity. Filing of income tax returns (ITR) is a voluntary but mandatory obligation where you report your income, capitals gain, and other allowances and reliefs claimed for a particular year. It is mandatory for every person to file his ITR as per the taxation rates imposed by the government if his income exceeds the exempted tax bracket.
     

    Who is required to file Income Tax Return (ITR)?

    Individuals
    All those individuals whose annual income exceeds the basic exemption tab have to file ITR, you have to file your returns if you fall under any of the following categories.
    1. Individuals (men and women both) with taxable income exceeding Rs 250,000 p.a.
    2. Senior Citizens with taxable income exceeding Rs 300,000 p.a.
    3. Senior citizens aged more than 80 years with taxable income exceeding Rs. 500,000 p.a.
     
    Businesses
    Companies, Partnerships, and Proprietorship: Income tax is calculated at a flat 30% on the total income of companies and firms.
     

    When to file your Income Tax Return (ITR)?

    The due date for filing of IT returns is 31st of July every year after the financial year ending 31st March.
     

    Why to file your Income Tax Return (ITR)?

    • Banks and High commissions of various countries, certain credit card companies insist on proof of tax return before extending you credit and issuing a card. The same goes for financial institutions, which may rely on ITRs of past few years before undertaking business transactions with you.
    • A good record of ITR can reflect strongly on your image as an individual and as a business when it comes to winning contracts and procuring high-profile projects. Sometimes, tender applications for large-scale infrastructure and other government projects are scrutinized based on the ITRs of past 5–7 years along with other factors.
    • In case of accidental death of an insured individual due to road accident, insurance claims are empowered by providing a clean record of ITR. Any missing returns can weaken the claim in case the insurance policy hits a disputed path. The Life insurance companies also ask for ITR documents against high-value policies.
    • ITRs are taken as a trusted yardstick by angel and seed investors and venture capitalists. Gaining visibility on your cash flows can become easy with a healthy tax record.
    • Short- or long-term capital losses, or losses of any other type incurred by an individual or a business can be recovered if they are accounted for in the tax return filed in that financial year.
     

    How to file your Income tax return online?

    1. Register yourself on the Income Tax Department's website using your personal details. Your permanent account number (PAN) will be your user ID. 
    2. There are two ways of e-filing your income tax return. First, you can go to the download section and select the requisite form, save it on your desktop and fill all the details. Click on 'generate XML'. Then go to the website again and click on the 'upload XML' button. You will have to first log into to upload the XML file saved on your desktop and click on submit. 
    3. You can go to the quick e-file section of the website. Log in and select the form and the assessment year for which you are filing return and fill in all the details. 
    4. Select the forms on the basis of the source of your income. In case of an individual with salary, pension income, income from one house property or income from other sources excluding lottery, you have to select Form ITR-1, also known as 'SAHAJ'. If you have capital gains, you will have to file Form ITR-2. 
    5. Keep a few documents such as your PAN number, Form 16, your interest statement, tax deducted at source (TDS) details and investments proves handy while e-filing your income tax return. 
    6.  An additional column called "AL" has been added, in which you will have to disclose the value of your assets and liabilities at the end of the year, in case your income for the year is more than Rs 50 lakh. 
    7. You can also download your Form 26AS, which is your consolidated tax statement summarizing tax paid against your PAN. You can validate your tax return with Form 26AS to check you tax liability. 
    8. Once you are submitting the form, an acknowledgement number is generated in case the return is submitted using digital signature. If the return is submitted without a digital signature, an ITR-V is generated and is sent to your registered email ID. ITR-V is an acknowledgement that your return has been submitted. 
    9. You can also e-verify your return through electronic verification by using the e-verify return option on the website. You can also use the net banking, Aadhaar-based one-time password to e-verify it.

     

    These guides are not legal advice, nor a substitute for a lawyer

    These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.

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