Income Tax Return Filing

Income Tax Return Filing in India

Income tax return filing is an important obligation for every taxpayer in India. The process involves the submission of a statement of one's income and taxes paid during a financial year to the Income Tax Department. Income tax return filing is an important responsibility that every taxpayer in India must fulfill.

By filing income tax returns, taxpayers not only comply with the law but also enjoy various benefits such as claiming refunds, carrying forward losses, and easy access to loans. Therefore, it is essential to understand the process of income tax return filing and file returns within the due date to avoid any consequences.

Who needs to file Income Tax Return?

Individuals, Hindu Undivided Families (HUFs), companies, firms, and any other entity that earns an income in India are required to file income tax returns. However, the threshold limit for filing income tax returns varies for different categories of taxpayers. For instance, individuals below 60 years of age with a gross income of less than Rs. 2.5 lakh in a financial year are not required to file income tax returns. Similarly, senior citizens and super senior citizens have different threshold limits for filing income tax returns. If you wish to save time, type income tax return preparer near me online to find the team Valcus in India

Types of Income Tax Return Forms

Income Tax Return Filing is essential for individuals and businesses. Here we have taken the assessment year 2018-19 as an example. Seven types of forms can be used to file Income Tax returns by individuals and firms having different business structures.

1. ITR-1

This Return Form is to be used by an individual whose total income for the assessment year 2018-19 includes:-

• Income from Salary/Pension or
• Income from One House Property(excluding cases where the loss is brought forward from previous years) or
• Income from Other Sources (Excluding Winning from Lottery and Income from Race Horses)
  

2. ITR-2

This is to be used by an individual or a Hindu Undivided Family whose total income for theAY 2018-19 includes:

• Income from Salary/Pension; or
• Income from House Property; or
• Income from Other Sources (including Winnings from Lottery and Income from Race Horses)

(Total income from the above should be more than Rs. 50 Lakhs)

1. Income from Capital Gains; or
2. Income of a person as a Partner in the Firm
3. Foreign Assets/Foreign Income
4. Agricultural income of more than Rs. 5,000

Further, in a case where the income of another person like one's spouse, child, etc. is to be clubbed with the income of the assessee. This Return Form can be used where such income falls in any of the above categories.

3. ITR-3

The Current ITR 3 Form is to be used by an individual or a Hindu Undivided Family who have income from a proprietary business or are carrying on the profession.

The persons having income from the following sources are eligible to file ITR 3:

• Carrying on a business or profession
• The return may include income from House property, Salary/Pension, and Income from other sources

4. ITR-4

The current ITR4 applies to individuals and HUFs having income from a business or profession and who have opted for the presumptive income scheme as per section 44AD, Section 44ADA and Section 44AE of the Income Tax Act. However, if the turnover of the business exceeds Rs. 2 cores, the taxpayer will have to file ITR-3.

5. ITR-5

ITR 5 is for firms, LLPs (Limited Liability Partnerships), AOPs (Association of Persons) and BOIs (Body of Individuals).

6. ITR-6

For Companies other than companies claiming exemption under section 11 (Income from property held for charitable or religious purposes). This return has to be filed electronically only.

7. ITR-7

ITR-7 Form can be used to file Income Tax Return by Firms, Companies, Local Authorities, Associations of Persons (AOP) and Artificial Judiciary Persons claiming exemption as one of the following categories:

1. Return under section 139 (4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
2. Return under section 139 (4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount which is not chargeable to income tax.
3. Return under section 139 (4C) is required to be filed by every
   • Scientific research association
   • News agency
   • Association or institution referred to in section 10 (23A)
   • Institution referred to in section 10 (23B)
   • Fund or institution or university or other educational institution or any hospital or other medical institution.
4. Return under section 139 (4D) is required to be filed by every university, college or other institution, which is not required to furnish the return of income or loss under any other provision of this section.

How to File an Income Tax Return?

Filing an Income Tax Return requires you to follow a predefined process. You can simply follow a few simple steps for it.

Below are the steps involved in filing an income tax return:

• Step 1: Collect necessary documents such as Form 16, bank statements, and investment proofs.
• Step 2: Choosing the relevant ITR form.
• Step 3: Fill in personal and income details in the form.
• Step 4: Calculate the tax payable or refund due.
• Step 5: Verifying the return and submitting it online.

What are the Consequences of Non-Filing?

Failing to file income tax returns can result in several consequences such as penalty, interest, and prosecution. A penalty of Rs. 5,000 may be levied for non-filing of income tax returns within the due date. Moreover, interest on unpaid taxes may also be charged. In severe cases, non-filing of income tax returns may also lead to prosecution under the Income Tax Act.

What are the advantages to businesses for on-time income tax return filing?

Filing income tax returns on time is not only a legal requirement but also a beneficial practice for businesses in India. You can learn about the ten key advantages of filing income tax returns on time for businesses.

Below are the 10 advantages of on-time income tax return filing in India:

1. Avoid penalties and legal consequences

Filing income tax returns on time helps businesses avoid penalties and legal consequences such as interest charges, fines, and prosecution by the Income Tax Department.

2. Easy access to credit

Banks and financial institutions consider income tax returns as proof of income for businesses. Filing tax returns on time makes it easy for businesses to obtain credit facilities and loans from banks and financial institutions.

3. Faster processing of refund claims

Businesses are entitled to a refund of excess taxes paid during the year. Filing tax returns on time ensures faster processing of refund claims by the Income Tax Department.

4. Enhances credibility

Timely filing of tax returns enhances the credibility of a business. It demonstrates the business's commitment to complying with the law and also reflects the financial stability and soundness of the business.

5. Reduced chances of tax scrutiny

Businesses that file tax returns on time have reduced chances of being selected for tax scrutiny by the Income Tax Department. This helps in reducing the time and effort spent on responding to tax notices and assessments.

6. Avoids interest charges

Filing tax returns on time helps businesses avoid interest charges on unpaid taxes. Late filing of tax returns attracts interest charges at the rate of 1% per month, which can add up to a significant amount over time.

7. Helps in tax planning

Timely filing of tax returns helps businesses plan their taxes effectively for the next financial year. By analyzing the tax liability for the current year, businesses can plan their finances accordingly and optimize tax savings.

8. Easy compliance with GST

Businesses that file tax returns on time find it easy to comply with the Goods and Services Tax (GST) regulations. GST requires businesses to file monthly and annual returns, and timely filing of income tax returns helps in maintaining compliance with GST regulations.

9. Demonstrates responsible citizenship

Timely filing of tax returns is not only a legal obligation but also a social responsibility. It demonstrates responsible citizenship and helps in building a positive reputation for the business.

10. Reduces stress and anxiety

Filing tax returns on time reduces the stress and anxiety associated with the process of filing taxes. It eliminates the last-minute rush and ensures a smooth and hassle-free tax filing experience.

How to file an income tax return online in India?

Filing income tax returns online is a convenient and hassle-free process in India. It not only saves time and effort but also provides instant verification and acknowledgement of the filed return. The term file my tax return is in trend because of a lack of ITR filing knowledge.

You can follow the below steps to file your Income Tax Return Online:

• Step 1: Register on the Income Tax Department's e-filing website

To file income tax returns online, the taxpayer needs to register on the Income Tax Department's e-filing website. The registration process is simple and involves providing basic details such as PAN, name, date of birth, and contact details.

• Step 2: Download Form 26AS and gather other necessary documents

Form 26AS is a statement of the taxpayer's income, tax deducted, and tax deposited with the government during the financial year. It can be downloaded from the Income Tax Department's website. The taxpayer should also gather other necessary documents such as Form 16, bank statements, and investment proofs.

• Step 3: Choose the relevant ITR form

The taxpayer needs to choose the relevant ITR form based on their income sources and eligibility. The Income Tax Department offers different forms such as ITR-1, ITR-2, ITR-3, and so on, to cater to different types of taxpayers. Today the team Valcus is the answer to ITR filing agents near me because of professional solutions.

• Step 4: Fill in the ITR form and compute the tax payable

The taxpayer needs to fill in the ITR form with personal and income details, such as salary income, income from house property, capital gains, and so on. The ITR form will automatically compute the tax payable or refund due.

• Step 5: Verify the return and submit it online

The taxpayer needs to verify the return using one of the following methods: Aadhaar-based OTP, Net banking, or Digital Signature Certificate (DSC). After verification, the taxpayer needs to submit the return online.

• Step 6: Acknowledgment of filed return