Complete Guide on Income Tax Returns

Filing Income Tax Returns is an important annual exercise for individuals and businesses to comply with their tax obligations. The ITR involves reporting all your financial activities during a fiscal year like your income, investments, deductions and taxes paid.

This process can seem intimidating, but this blog will be your complete guide on Income Tax Returns and provide you with all the steps broken down to help you on your tax filing journey.

Income Tax Returns

An Income Tax Return (ITR) is a document through which taxpayers provide details about their earned income and the corresponding tax obligations to the income tax department.

Who should file Income Tax Returns ITR

Salaried Individuals: If your gross income exceeds the exemption level, before considering the deductions under Section 80C to 80U, you are required to file Income Tax Returns.

Firms: Entities like LLPs, private limited companies, and partnerships must file their It returns whether they are in a profit or loss.

Directors & Partners: Individuals with the position of directors in Private Limited Companies or partners in LLPs must file income tax return.

Dividend Earners: Individuals earning from dividends across various sources such as mutual funds, bonds, equities, fixed deposits, and interest, must file an income tax return.

Charity and Religious Trusts: Individuals receiving income from charity or religious trusts and from voluntary contributions are also required to file an income tax return.

Tax Refunds: The individuals and businesses eligible for tax refunds must file an income tax return to claim their rightful returns.

NRIs and Tech Professionals: NRIs and technology professionals are also individuals who should file income tax returns based on their circumstances and income.

ITR Forms

Based on the type of income earned by a taxpayer, the form that must be submitted will be different. Taxpayers must choose the right form for ITR filing depending on the category they belong to. The different types of ITR forms are:

1. ITR-1 or Sahaj

The ITR-1 or Sahaj form is for individuals who make an annual income of less than Rs.50 lakh via pension or salary and from only one house property.

2. ITR-2

The ITR-2 form is to be used by shareholders of private companies, Directors of Companies, Non-Resident Indians (NRIs), or individuals who make an income via capital gains, from two or more house properties, and from foreign sources. Also, the income of the individual must be more than Rs.50 lakh.

3. ITR-3

This form must be used by individuals who run a proprietorship or are professionals in India.

4. ITR-4 or Sugam

The Individuals under the presumptive taxation scheme should use ITR-4 form. For individuals to use this scheme, they must earn less than Rs.50 lakh from professional income or less than Rs.2 crore from business.

5. ITR-5

Partnership firms, LLPs, associations, and bodies of individuals, must file under this form.

6. ITR-6

Companies that are registered in India should use ITR-6 form.

7. ITR-7

Applicable to entities like charitable/religious trusts, political parties, scientific research institutions, and colleges/universities.

If you need help in choosing the right ITR form you can use the “Help me decide which ITR Form” on the e-filing portal.

Documents Required for ITR

Permanent Account Number (PAN)
Form 26AS and other relevant statements
Bank statements
Salary Pay slips
Interest certificates
Form 16: This form is mandatory for salaried taxpayers. It contains the details of your income from salary and the Tax Deducted at Source (TDS). Know the difference between TDS and ITR

Benefits of ITR Filing

Proof of Income: Submitting your ITR is a legitimate proof of your income. This document can be valuable in multiple scenarios, from financial transactions to legal matters.

Facilitates Future Loan Applications: Financial institutions often require ITR as an essential document when seeking loans in the future. A filed IncomeTax Return demonstrates your financial stability and repayment capacity.

Essential for Credit Card Applications: Applying for credit cards from banks requires the submission of your ITR. This practice helps banks evaluate your creditworthiness and credit limit eligibility.

Crucial for VISA Applications: ITR holds importance in applying for visas, especially for foreign travel. Authorities often use ITR to prove your financial standing and ties to your home country.

Guide to using the Income Tax Portal for E-Filing ITR

Calculate total income and Tax
Gather all the required documents
Go to the e-filing portal
Select the right ITR form
Download ITR form from Income Tax Portal
Fill in your details in the Downloaded File
Validate the Information Entered
Convert the file to XML Format
Upload the XML file on the Income Tax Portal to file the ITR
Download the copy of the filed ITR

Filing ITR for Previous years

If you want to file ITR for previous years you can use the ITR-U form, but there are several conditions and limitations regarding eligibility and time at which the ITR-U can be used.

Filing income tax returns can be a complex process, but we hope this complete guide helps you in your tax filing process.

By following these steps, you can ensure a smooth and hassle-free income tax return filing experience. But if this still sounds too complicated for you, our team of experts at Filings First can help you and your business with your entire tax filing process.

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