itr-filing

Income Tax Return Filing

Posted by CA Pankaj Kumar Vats
On 14 Dec 2023

Contents Covered

  • What is ITR Filing
  • Who should file ITR
  • Due dates of ITR Filing
  • How we can file the ITR
  • Documents required to file the ITR
  • How to calculate income tax liabliity
  • Consequences of not filing the ITR
  • Conclusion

1. What is ITR Filing ?

Income tax return filing is the process by which individuals, businesses, and other entities report their income, deductions, and other financial information to the income tax department .
There are different types of income such as :

  • Income from salary
  • Income from house property
  • Income from capital gain
  • Profit & Gains from business and profession
  • Income from other sources such as interest on deposits, dividend, lottery income, etc.

Filing of Income tax return allows the government to calculate the taxpayer’s liability & determine whether they owe taxes or are eligible for  refund.

2. Who should file ITR ?

In India, the Income Tax Act mandates that individuals, businesses and other entities meeting certain criteria must file an Income Tax Return (ITR). The obligation to file an ITR depends on various factors which includes total income earned, the source of income, and the taxpayer’s age, etc. Here are some general guidelines on who should file an ITR:

  1. Individuals :
  • Individuals below the age of 60 should file an ITR if their total income exceeds the basic exemption limit (i.e. Rs 2.5 lakhs annually).
  • Individuals aged 60 and above but below 80 (senior citizens) should file if their income exceeds ₹3 lakhs annually.
  • Individuals aged 80 and above (super senior citizens) should file if their income exceeds ₹5 lakhs annually.
  1. Hindu Undivided Family (HUF) : HUFs are required to file an ITR if their total income exceeds the basic exemption limit (i.e. 2.5 lakhs).
  1. Companies & Partnership Firms : All the Companies & Partnership Firms should file an ITR, regardless of whether they have earned profit or losses.
  1. Individual with Foreign Income : Individuals who are Resident or Ordinary Residents (ROR) in India and have foreign income are required to file an ITR.
  1. Individual with Foreign Asset : Individuals holding assets or having financial interests in any entity outside India such as equity shares , bonds, etc. are required to file an ITR.
  1. Individual Claiming Tax Refund : Individuals who want to claim a refund of excess taxes paid through TDS or advance tax should file an ITR.
  1. Non – Resident of India : If any NRI earning income in India required to file ITR irrespective of the amount. The income source can be from salary, property, capital gain, business or profession or any other taxable source.

3. Due Dates of ITR Filing

The due dates for filing Income Tax Returns (ITR) are given as follows:

Category of TaxpayerDue Dates for Tax Filing
Individual / HUF / Partnership Firm (books of accounts not required to be audited)31st July
Individual / HUF / Partnership Firm (books of accounts required to be audited)

 

31st October

Companies

 

31st October

Taxpayers are encouraged to file their returns well before the due dates to avoid any last-minute hassles or technical glitches. Filing within the due date is important to avoid penalties and interest.

4. How we can file the ITR 

  • Online process : Any taxpayer can file the ITR by directly filing the ITR Form on the official website https://incometaxindia.gov.in/ which is established by the Income Tax Department.
  • By uploading the e-filing utility : E-filing utility(i.e. software) facility is provided by the Income Tax Department which is very easy to use. It can be downloaded from the official website https://incometaxindia.gov.in/ and taxpayer can upload the tax computation in this utility and can easily upload it in the form of JSON file on the official website of Income Tax Department

5. Documents required to file the ITR

Filing an Income Tax Return (ITR) in India involves providing accurate and comprehensive information about your income, deductions, and other financial details. The documents required for filing ITR may vary based on the nature of your income and the deductions you plan to claim. Below is the list of documents that any taxpayer need to gather for filing the ITR :

  1. Personal Documents or Information :
    • PAN (Permanent Account Number) Card.
    • Aadhar Card.
    • Mobile Number.
    • Email ID
  2. Income Documents :
    • Form 16 : This form required by a salaried individual which is provided by his/her employer and this document contains details of salary, TDS (Tax Deducted at Source) and deductions.
    • Salary slips: Monthly or annual salary slips showing detailed breakup of salary components.
    • Rental agreements and detail of rental income.
    • Bank statements, interest certificates, dividend, etc.
  3. Investment and Deduction Proofs:
    • Investment proofs for deductions under Section 80C (e.g., LIC premium receipts, PPF statement, NSC certificates, etc.).
    • Deduction under Section 80D (Health insurance premium receipts).
    • Deduction under Section 80G (Donation receipts).
    • Details of other eligible deductions under various sections.
  4. For Business and Professional Income :
    • Bank statements for all savings and current accounts.
    • Documents related to business income, receipts, expenses, and profit and loss statements.
    • GST & VAT turnover need to consider while filing the ITR.
  5. Property Details :
    • Details of owned properties, including address, share of ownership, and other relevant information.
    • Details of capital gains due to sale of property.
  6. Form 26AS :

    This form is consolidate statement related to :

      • TDS deducted by the bank.
      • TDS deducted by the employer on salary.
      • TCS deposited.

    This form can be downloaded from the income tax department’s official website.

  7. AIS / TIS :
    Annual Information Statement (AIS) facilitate a complete information about a taxpayer such as :
    • TDS or TCS
    • Payment of Taxes
    • Demand & Refund
    • Financial Transactions
    • Other Info.

    Taxpayer Information Statement (TIS) is a category-wise summary of above information .

    The above two statements can easily download by login to official website of Income Tax Department.


6. How to calculate income tax liability

Step 1 : Gather all the documents which reflect your income for filing the ITR such as Form 16, business receipts, bank statement ( saving & current) , interest certificates, commission, cap gain, etc. and analysis the total income.

Step 2 : Analysis the Form 26AS & AIS / TIS where you can see details of income earned, TDS/TCS information and many other information related to financial transactions such as :

  • TDS deducted
    1. by bank on saving bank interest u/s 194A
    2. by an employer on salary u/s 192
    3. by any person on commission u/s 194H
    4. by any organization on business income [u/s 194O (on e-commerce), 194J(on professional or technical services), 194C(on contracts), etc.]
    5. by any person u/s (194A – 194Q).
  • Business receipts, GST turnover & GST purchase amount.
  • Sale and purchase of securities.
  • Sale and purchase of property.
  • Foreign Travels (TCS on purchase of overseas tour package u/s 206CO).
  • TCS collected on purchase of vehicle u/s 206CL, purchase amount of vehicle.
  • Advance tax paid.
  • Other financial transactions.


Step 3 :
After analysis the above steps one can compute the taxable income & tax liability easily and accurately. 

Below an illustration is given for basic understanding :

Illustration
Let us say Mr. X (salaried individual)

      • Total salary Rs 15,00,000
      • Saving bank interest Rs 15,000
      • Dividend Income Rs 12,000
      • TDS deducted by employer Rs 15,000

Computation of Income Tax Liability of Mr. X

ParticularsRs.
Income from Salary15,00,000

Income from other source

Saving bank interest Rs 15,000

Add: Dividend Rs 12,000

27,000
Gross total income15,27,000
Total Income (i.e. Taxable Income)15,27,000
Tax on Rs. 11,14,0001,95,600
Add: Health and Education cess @ 4%7,824
Tax liability2,03,424
Less : TDS on salary15,000
Balance tax liability1,88,424


As per above computation Mr. X is liable to pay Rs 1,88,424 in the form of tax.

7. Consequences of not filing the ITR

Not filing your Income Tax Return (ITR) within the specified deadlines can leads to various consequences given as follows :

  1. Penalties : The Income Tax Department may impose penalties for late filing. The penalty amount can vary depending on the delay and the taxpayer’s total income.
  2. Interest : If an individual is liable to pay tax but neither he paid it to the government nor he file ITR then interest will also be charged on unpaid tax along with penalties.
  3. Loss of Refunds : If you are eligible for a tax refund but not filing your return means you won’t receive the refund. Filing a return is necessary to claim any excess tax paid through TDS (Tax Deducted at Source) or advance tax.
  4. Future Complications : Non-filing of ITR may create complications for future financial transactions and dealings. It can impact your financial reputation and may lead to difficulties in various financial activities.
  5. Scrutiny and Assessment : If you haven’t filed your return, the department may conduct a scrutiny & estimate your income and assess taxes accordingly, which could lead to additional tax liabilities.
  6. Losses will not be carry forward : If you don’t file your ITR on time, you might lose the opportunity to carry forward losses. This could result in a higher tax liability in future years, as you won’t be able to offset those losses against income.


8. Conclusion:

It’s important for individuals and businesses to fulfill their income tax filing obligations within the specified deadlines and adhere to the regulations set by the tax authorities. Non-compliance can result in penalties and legal consequences. It’s not only a means of fulfilling one’s civic duty but also allows taxpayers to avail themselves of any tax refunds and benefits they may be entitled to.

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