Income Tax Returns

Overview

Income Tax Return (ITR) is a form for reporting gross taxable income from different sources, claiming tax deductions and declaring net tax liability to the income tax authority. Income Tax Return is a form which is used to file the income tax with the Income Tax Department. Income tax is a tax imposed by the Central Government on income of a person. ITR is filed to the income tax department by a salaried or self-employed individual, Hindu Undivided Family (HUF), companies or firms. The process of filing the ITR is referred to as income tax filing.

Income-Tax-Returns

A taxpayer can file the ITR online on the e-portal of the income tax department. The process of filing ITR online is referred to as e-filing. The following article will explain important aspects of e-filing Income Tax Returns.

Filing income tax is every citizen’s responsibility. The IT department verifies these declarations of income and if any amount has been paid in excess, the department refunds the amount to the assessee’s bank account. All entities are required to file the taxes on time to avoid penalty.

The form that contains information of income and tax paid of an assessee is called Income Tax Return. The Income Tax Department of India has various forms for it such as ITR 1, ITR 2, ITR 3, ITR 4S, ITR 5, ITR 6 and ITR 7.

Benefits of filing for IT returns

Loans

Bank loans like education loans, vehicle loans, personal loans, can be availed easily as they require last three year’s IT returns.

Visa

 As Immigration centres scrutinize many documents and IT returns proofs is a mandatory document for visa applicants.

Avoid penalties

Hefty amounts would be charged for non-filing of income tax returns and hence it is always better to file it to avoid legal repercussions.

Compensate losses

As per the income tax law, individuals are not allowed to carry forward losses and set them off against future years’ income if the ITR is not filed within the due date.

ITR receipt is a very important document

You need to preserve ITR receipts carefully as they are very important proof of your income and of payment of your taxes. It is much more detailed than Form 16. It contains your total income details and has details of your income from other sources.

Who has to file the Income tax returns?

The Income Tax Act states that any person whose age is currently less than 60 years and their annual income is more than Rs 2.5 lakhs they have to file their income tax returns. Those persons who are senior citizens – for them the cut-off is Rs 3 lakhs. And Rs 5 lakh is cut-off for those whose age is more than 80 years. 

Other different criteria for a company or an individual to file their income tax returns are as follows: 

  • Suppose if you have a property or financial interest outside the country and you are currently residing in Indian as its resident – then you are supposed to file IT returns.
  • The above mentioned rule holds true even if an Indian authority has a signing authority in foreign account.
  • Under the Annual Information Return, if a person has entered any transaction, then she has to file the IT returns.
  • In case you want a refund, the Income tax return filing is compulsory.  
  • If it happens that a company has faced loss or income in a given financial year, it is compulsory for them to file the returns. 
  • If a person is getting any income from a property registered under religious purpose, charitable trust, political party or research, hospital, medical institution or any such property.
For Individual tax return filing

Individuals who are receiving income from mutual funds, bonds, stocks, fixed deposits, income from interest, house property, property under charitable trusts, religious trusts or income from voluntary contributions, foreign income, foreign assets, NRI’s and tech professionals on onsite deputation. Individuals who want to claim tax refunds. Salaried persons whose gross income before deductions under section 80C to 80U exceeding the exemption limit. 

Proprietorship Tax Return Filing

A proprietorship firm is run by a single person called the proprietor. Proprietorship is not a separate legal entity. Due to this, ITR filing for proprietorship is the same as that of the proprietor. Proprietors within 60 years of age and whose income exceeds Rs.2.5 lakhs are required to file proprietorship tax returns. Proprietors above 60 years but less than 80 years of age and whose total income exceeds Rs 3 lakhs are required to file returns. Proprietors above 80 years must file their IT returns if their total income exceeds Rs 5 lakhs.

For business tax return filing

The IT Department of India has rules for all businesses operating throughout the country to file income taxes each and every year. If need be, TDS return can also be filed and advance taxes can be paid to ensure that the business complies with the IT rules and regulations.

Partnership Firm Tax Return Filing

As per the Income Tax Act, all partnership firms are treated as separate legal entities and are applicable for tax rates that are on par with LLP’s and companies registered in India. Irrespective of income or loss, partnership firms are required to do IT filing. If the firm has been commercially inactive with no registered income, a NIL income tax return should be filed within the stipulated date.

LLP Tax Return Filing

All Limited Liability Partnerships are separate legal entities and their income tax rate is similar to that of all companies registered in India. The Income Tax Act declares that all LLP’s must file their tax returns irrespective of the loss or gain they have incurred in that year. If the LLP has seen no business activity or registered income, then a NIL income tax must be promptly filed.

Company Tax Return Filing

All types of business structures like Private Limited Company, Limited Company, One Person Company are registered under the Ministry of Corporate Affairs. All such companies are mandatorily required to file IT returns as prescribed by the Income Tax Act. Any company that is registered with the Government of India and operating on in India is required to submit it’s filed IT returns. This is equally applicable for those companies that have been dormant with no business transactions and no registered income or expenses.

Due dates for filing IT return

July 31: A firm or individuals who are not liable for audit.

September 30: A company or other who is liable to audit.

March 31: All individuals and companies filing belated returns.

Note: These dates may be further in case of unforeseen circumstances

Documents required

  • Pan card
  • Bank statements
  • D.S. Certificates in Form 16 or 16A as applicable
  • Documents on purchase and sale of investments/assets
  • Challan of tax paid such as advance tax or self-assessment tax
  • If PAN is applied but not received, a copy of filed PAN application and its acknowledgment
  • In case not applied for PAN, a PAN application form duly filled in and two passport size photographs
  • For businesses – a copy each of the audit report, balance sheet, trading, profit and loss account, personal account of proprietor or partners, Statement of accounts
  • Statement of receipts and payments when no regular books are maintained
  • Receipts of payment of insurance premium, provident purchase of NSCs, new equity shares, mutual fund, NSS, donations, etc. to support claimed deductions