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Income Tax Return

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INCOME TAX RETURNS

Any citizen's first income tax payment is a significant event in their life. For someone new, however, the procedure may appear overly difficult and time-consuming, and some of the terminology may be completely unfamiliar. This doesn't have to be the case. Making your initial entry into the realm of income tax? I've got your back, so don't worry. Although it may seem a little daunting at first, income tax is essentially about determining how much of your hard-earned money is sent to the government. It's how we all work together to maintain public services like roads, schools, and others. Knowing the fundamentals will help you remain on top of your money and prevent any shocks when tax season arrives, regardless of whether you're a new earner or just wondering. Different forms are used for different income groups and for different sorts of income, such as freelance or salaried labor. Think of it as updating your financial status with the tax authorities, despite the fact that it sounds complicated.

Income Tax return

Income Tax Return is referred to as ITR. All ITR forms are released by the central board of direct taxes (CBDT), which also outlines the procedures that must be followed to. (ITR) is a form that taxpayers submit to the income tax department detailing their earnings and any necessary taxes. Seven different income tax return forms—ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7—have been announced by the income tax department. All taxpayers must submit their ITRs by the deadline, which is July 31 of the assessment year, at the latest. Depending on the taxpayer's category (individuals, HUF, corporations, etc.), income sources, and income amount, different ITR forms are applicable.

Reason for filing ITR

• If you wish to ask the department for a refund of your income taxes.
• If, during the financial year, you made money from or invested in overseas assets.
• If you want to submit an application for a loan or visa.
• Regardless of profit or loss, if the taxpayer is a business or firm.
• Unless you file the return before the deadline, you will not be able to carry forward any losses from your business or profession or under the capital gains head to the next year.

When is filing income tax returns (ITRs) in India required?

If your gross total income exceeds the basic exemption ceiling, which was as follows under the old tax system:
• The exemption threshold for people under 60 is Rs 2.5 lakh.
• The exemption limit for people over 60 but under 80 is Rs 3.0 lakh.
• The exemption threshold for people over 80 is Rs 5.0 lakh.
• Under the new tax regime, the basic exemption level is Rs. 3 lakh, regardless of age. If you match any of the following criteria, you will still need to file your tax return even if your income is below the basic exemption limit:
• More than Rs 1 crore was deposited into the "current" bank account. If you have deposited a total of Rs. 1 crore or more in one or more bank current accounts, you are required to file a tax return. However, deposits placed into the post office current account are exempt from this requirement.
• More than Rs 50 lakh was deposited into the "savings" bank account: If you have deposited a total of Rs 50 lakh or more in one or more of your savings bank accounts, you are required to file a tax return.
• Over Rs 2 lakh was spent on a trip abroad: If you have spent more than Rs 2 lakh on travel abroad, either for yourself or another person, you must electronically file a tax return.
• The cost of electricity exceeds Rs 1 lakh. In the event that your power expenses for the preceding year exceeded Rs. 1 lakh, you are required to file a tax return.
• TDS or TCS exceeds Rs 25,000. if the previous year's tax collected at source (TCS) or tax deducted at source (TDS) exceeded Rs 25,000. The limit is Rs 50,000 for elderly citizens (those over 60).
• Over Rs 60 lakh is the business's turnover. You must file a tax return if you are a business owner and your total sales, turnover, or gross receipts for the preceding year exceeded Rs 60 lakh.
• Over Rs 10 lakh is earned by professionals: If you work in a profession and your gross receipts for the previous year are above Rs 10 lakh, you are required to file a tax return.

Exemption from filing Income Tax Return

In addition to the current exempt individuals, such as those whose total income is less than the basic tax exemption limit or non-residents whose income does not accrue or originate from India, the central government has the authority to exempt a specific class or classes of people from filing income tax returns.

What ITR Should I File?

It can be a little confusing at first to figure out which Income Tax Return (ITR) form to file, but we can help! If you are a salaried person or have income from interest, pensions, or even a tiny side business, you may want to apply for the ITR-1, often called Sahaj. ITR-3 or ITR-4, however, might be more your style if you have capital gains income or are profitable from your business or occupation. ITR-5 or ITR-6 may be necessary if you are a business or partnership. It all comes down to aligning the form with your revenue-generating strategy. Let's see in detail which ITR form is suitable for you.

ITR 1 OR SAHAJ

This return form is for a resident who earned the following income during the assessment year: income from a pension or salary; income from a single residence (except from situations in which losses from the previous year are carried forward); or revenue from Other sources (apart from Lottery winnings and race Horse Revenue) income from agriculture up to Rs 5000.

Person exempted from filing ITR 1:
• A person earning more than Rs 50 lakh.
• A person who has held any unlisted equity shares at any point during the fiscal year or who serves as a director of a corporation.
• Non-residents and residents not normally resident (RNOR).
• People who have made money using the following methods:
a) Multiple residential properties.
b) Legal gambling, racehorses, lotteries, etc.
c) Capital gains that are subject to taxes, both short- and long-term.
d) Income from agriculture exceeding Rs 5,000.
e) Professional and business.
• A resident who is a signing authority on any account located outside of India or who possesses assets (including a financial stake in any organization) outside of India.
• People claiming section 90/90A/91 exemption from double taxation or relief from foreign taxes paid.
• Received from a qualifying start-up, deferred income tax on an ESOP.
• Profits from Virtual Digital Assets (Crypto currency) People for whom section 194N deducts TDS.

Major changes in ITR 1

People must specify their preferred tax regime on their ITR 1 income return. According to the changes made by the Finance Act 2023 in Section 115BAC, the New Tax Regime will be the default tax regime starting this year. By default, people, HUFs, AOPs, BOIs, and AJPs will be subject to the new tax regime. Those who choose the previous tax system, however, must specifically decide not to use Section 115BAC (6). According to Section 139(1), anybody having income—aside from income from a business or profession—must indicate their preferred tax regime on their income tax return for the applicable assessment year.
It is possible for anyone who earns money from a business or profession to choose to leave the new tax system and return to the previous one. They must file Form No. 10-IEA by the deadline for submitting the income tax return under Section 139(1) in order to exercise this option.
Section 80CCH is a new section that was included by the Finance Act of 2023. Individuals who sign up for the Agnipath Scheme and subscribe to the Agniveer Corpus Fund on or after 01-11-2022 are eligible to receive a tax deduction for the whole amount deposited in the Agniveer Corpus Fund, according to this provision.
In order to account for this modification, a new column has been added to ITR form 1 that enables taxpayers to provide pertinent information about the amount that qualifies for a deduction under Section 80CCH.

ITR 2

When an individual or Hindu Undivided Family (HUF) does not have a business or profession that generates money, they use ITR-2 to file their income tax returns. People who receive income from capital gains, pensions, salaries, and other sources usually use it.

Who is qualified to submit an ITR-2?

Individuals and HUFs who receive income other than "Profits and Gains from Business or Profession" must file an ITR-2 form. Therefore, those who earn money from the following sources can submit Form ITR-2:
• Salary or pension income
• Income from residential real estate (this might come from more than one residential property)
• Profits or losses from the sale of investments or real estate, both short- and long-term.
• Other sources of income (such as lottery winnings, horse racing wagers, and other lawful gambling activities).
• Income from agriculture over Rs 5,000.
• A non-resident and a resident who is not typically a resident.
• The combined revenue from all of these sources could surpass Rs 50 lakh.

Additionally, you must file returns in ITR-2 if you are a director of any company and an individual who has purchased unlisted equity shares of a firm.

Major changes in ITR 2

The ITR-2 form now includes the following modifications.

• Schedule VDA: Virtual Digital Asset Transfer Revenue To calculate revenue from crypto currencies or other virtual digital assets, a new schedule has been added.
• Relief under Section 89A: A new provision pertaining to relief for residents who receive income from foreign retirement benefits accounts has been added.
• Point No.1(e)4: Income subject to taxes in the year prior to which relief under Section 89A was requested in any prior year.
• Section 10(12C): Sec. 10(12C) adds a new exemption to other exempt income: any payment made by the Agniveer Corpus Fund to an Agnipath Scheme participant or his nominee.
• Schedule SI: A new point has been added. Revenue from the transfer of virtual digital assets (115BBH).
• Section 80 CCH: A new provision was inserted under Chapter VI A deduction: All contributions made to the Agniveer Corpus Fund by applicants who work for the Central Government are tax deductible.
• ARN: Additional details are needed for the ARN (donor reference number) under schedule 80G clause D.

ITR 3

Individuals and Hindu Undivided Families (HUFs) who are involved in business or profession and who must keep thorough books of accounts are intended target for the ITR-3 form. Professionals whose remuneration is determined by actual profits, such as chartered accountants, physicians, attorneys, engineers, etc., fall under this category. Additionally, the ITR-3 form can be used to file income tax returns for those who earn from both salaried jobs and other sources, such as freelancing or part-time business ventures.
Individuals and HUFs with income from business or professional profits and gains are subject to the ITR-3. Since this is the only form on which a person or HUF can declare all potential profits, it can be referred to as a master form.

Can anyone submit an ITR-3 form?

Pursuing a profession or business (both tax audit and non-audit instances) The return may contain capital gains, salary/pension, income from other sources, and income from real estate.

Remuneration obtained from a partnership firm.

Who is not allowed to submit an ITR-3 form?

Individuals and HUF are the only people that can file an ITR-3 Form.
HUFs and individuals without income from a business, profession, or partnership firm are not permitted to file the ITR-3 Form.

Major changes in ITR 3

To report your crypto currency and other VDA income separately, a new schedule VDA has been added. A quarterly breakdown must be provided under the Capital Gains Schedule if you treat income from VDAs as capital gains. Every VDA transaction, together with the dates of sale and purchase, must be documented in the new ITR-3. To ascertain whether you previously chose to opt out of the New Tax Regime, a few new questions have been added to the ITR 3 form.
As an extra disclosure requirement, foreign institutional investors (FII/FPI) are required to submit their SEBI registration number.
The reporting of balance sheets has undergone a minor modification. Advances from those listed in Section 40A(2)(b) of the Income Tax Act and others must be disclosed under the "Advances" category in the Source of Funds section of the new ITR-3 form.
The recently added "Trading Account" area is where turnover and income from intraday trading must be disclosed.

ITR 4

Individuals, HUFs, partnership firms (except from LLPs), and residents whose total income consists of the following are covered by the current ITR-4:

• Revenue from a business under section 44AD or 44AE's presumptive income scheme.
• Professional income under Section 44ADA's presumptive income scheme.
• Salary or pension income up to Rs 50 lakh.
• Income from a single residence that does not exceed Rs 50 lakh (not including brought-forward or carry-forward losses).
• Income from other sources, excluding lottery and racehorse earnings, that does not exceed Rs 50 lakh.

Who Must Submit an ITR-4?

Individuals, HUFs, and partnership firms whose total income for FY 2023–2024 comprises the following must file an ITR-4:

• Business revenue computed in accordance with Section 44AD or 44AE.
• Professional income as determined by Section 44ADA.
• Income reported on ITR1 should not exceed Rs. 50 lakhs from all sources combined.

Who is exempt from filing an ITR-4?

• A person whose entire income surpasses fifty lakh rupees.
• A person who serves as a director of a business.
• This form cannot be used by a person who has invested in unlisted equity shares.
• The Income-tax Act of 1961 mandates that an individual, HUF, or partnership entity keep the books of accounts.
• Non-residents and residents who are not ordinarily residents (RNOR).
• People who have made money using the following methods: Legal gambling, racehorses, lotteries, etc.
• A person with many residential properties.
• Capital gains that are subject to taxes, both short- and long-term.
• Income from agriculture exceeding Rs 5,000.
• A resident who is a signing authority on any account located outside of India or who possesses assets (including a financial stake in any organization) outside of India.
• People claiming section 90/90A/91 exemption from double taxation or relief from foreign taxes paid.
• Profits from Digital Assets (Crypto currency).
• People for whom Section 194N has been used to deduct TDS.

Major changes in ITR 4

A column for revealing the amount available for deduction under Section 80CCH has been added to ITR forms 4. With the introduction of Section 80CCH by the Finance Act 2023, anyone who subscribes to the Agniveer Corpus Fund and is registered in the Agnipath Scheme on or after 01-11-2022 can claim a tax deduction for the entire amount put in the Agniveer Corpus Fund.

The turnover threshold limit for choosing to use the presumptive taxation scheme under Section 44AD was raised from Rs. 2 crores to Rs. 3 crores by the Finance Act 2023, as long as cash receipts do not surpass 5% of the total turnover or gross receipts for the prior year. Additionally, as cash receipts do not surpass 5% of total gross receipts for the preceding year, Section 44ADA was revised to enhance the threshold level of gross receipts from Rs. 50 lakhs to Rs. 75 lakhs. ITR-4 has been amended to incorporate a new column for declaring "receipts in cash" under Schedule BP in order to reflect these modifications. Checks and bank drafts that are not account payees are included in the definition of cash.

ITR 5

Businesses, limited liability partnerships (LLPs), associations of persons (AOPs) and bodies of individuals (BOIs), artificial judicial persons (AJPs), estates of the deceased and insolvent, business trusts, and investment funds are all eligible to file this income tax return.

To whom is the ITR-5 Form applicable?

The following people can utilize this form:

Limited Liability Partnership (LLP), Association of Persons (AOP), Body of Individuals (BOI), Artificial Juridical Person (AJP) mentioned in clause (vii) of Section 2(31), Local Authority mentioned in clause (vi) of Section 2(31), Representative Assessee mentioned in Section 160(1)(iii), or (iv) Cooperative Society Society registered under the Societies Registration Act, 1860, or under any other State law Trust other than Trusts eligible to file Form ITR-7, Estate of a Deceased Person, Estate of an Insolvent Business Trust mentioned in Section 139(4E), and Investments Fund mentioned in Section 139(4F).

Major changes in ITR 5

• Give the Audit Report and UDIN acknowledgement number.
• Display the amount that must be paid to MSME after the specified time frame.
• Detailed information about the capital gains accounts scheme's use.
• Details on contributions to political parties are required under Schedule 80GGC.
• Schedule OS contained information on dividend receipts from IFSC units as well as the declaration of bonus payments under LIC policies.
• The schedule for startups under Section 80-IAC requests information on the date of incorporation, the type of business, the certificate number obtained from the Inter-Ministerial Board, the first academic year (AY) at which the deduction was claimed, and the amount of the deduction taken for the current AY.
• MSME details are required, including the assigned MSME's registration number and status.

ITR 6

Companies other than those claiming an exemption under section 11 are required to file their income tax returns using the ITR-6 form, which is the income tax return filing form.

Businesses that hold their property profits for religious or charitable purposes are claiming under section 11 .

Who Must Submit an ITR 6?

ITR 6 Forms must be filed by all businesses incorporated under the Companies Act of 2013 or the previous Companies Act of 1956. However, the corporation is exempt from filing the ITR 6 Form if its revenue is derived from property held for charity or religious reasons.

Major changes in ITR 6

• Details of the Legal Entity Identifier (LEI).
• 'Schedule 115TD' was established to report the tax due on accrued income.
• Information on the Capital Gains Accounts Scheme is disclosed.
• The new Schedule 80GGC requests information on political party donations.
• Details regarding qualifying start-ups are sought by the new Schedule 80-IAC.
• The new Schedule 80LA requests information on the IFSC or offshore banking unit.
• Disclosure of the sum owed to MSME after the specified time limit.
• Disclosure of internet gaming winnings is required by Section 115BBJ.
• Reporting dividend income received from an IFSC company unit in order to specify the return filing deadline.
• Providing the Audit Report's acknowledgement number and the UDIN for the company that is classified as a micro or small business.
• Providing the justification for the tax audit.

  • FAQ
1. What is Income Tax Return (ITR)?

To report their income, tax payments, deductions, and other information, people, businesses, and other entities submit a **Income Tax Return (ITR)** to the Income Tax Department. Anyone whose income above the taxable limit is required by law to file an ITR.

• Legal Requirement: If your income over the basic exemption limit, you must file an ITR.
• Requesting Tax Refund: You are entitled to a refund if too much tax is withheld or paid.
• Applications for loans and visas: ITRs are used as evidence of income for these purposes.
• Carry Forward Losses: You can deduct losses (such as business or capital losses) against future income by filing an ITR.

Individuals earning more than ₹2.5 lakh (₹3 lakh for senior citizens and ₹5 lakh for super senior persons) in total. Regardless of their income, businesses and firms must file an ITR. Individuals who work for themselves or as freelancers and make more than ₹2.5 lakh. Individuals who claim tax deductions for investments or expenses that surpass the basic exemption level; those who have overseas assets or income.

There are various ITR forms based on the taxpayer's category and income sources. The most common ones are:
• ITR-1 (Sahaj): For individuals earning income from salary, pension, or other sources (like interest) with total income up to ₹50 lakh.
• ITR-2: For individuals and HUFs who have income from salary/pension, capital gains, foreign assets, etc. (but no business income).

Depending on the taxpayer's categorization and sources of income, there are different ITR forms. The most popular ones are:
• ITR-1 (Sahaj): For people with total incomes up to ₹50 lakh who receive their income from salaries, pensions, or other sources (such as interest).
• ITR-2: For individuals and HUFs with capital gains, overseas assets, salary/pension income, etc. (but no business income).
• ITR-3: For people and HUFs who make money from their jobs or businesses.
• ITR-4 (Sugam): For citizens who earn money under Sections 44AD, 44ADA, or 44AE from a presumed business or occupation.
• ITR-5: For LLPs, partnership firms, and other like organizations.
• ITR-6: For businesses that aren't charitable or religious organizations, which are exempt from paying taxes under Section 11.
• ITR-7: For organizations that must file returns in accordance with Section 139(4), such as trusts, charity organizations, and political parties.

Unless the government extends it, people typically have until July 31 of the assessment year to file their ITRs. The deadline for businesses is often September 30. You can file a belated return by December 31 of the assessment year, but there will be a penalty if you miss the deadline.

The year that the money is earned is known as the Financial Year (FY). For instance, the time frame from April 1, 2024, to March 31, 2025, is referred to as FY 2024-25. The year in which income is evaluated and taxes are paid is known as the Assessment Year (AY). For instance, the assessment year that corresponds to your income received in FY 2024–2025 will be 2025–2026.

The documents required depend on your income sources, but generally, you will need:
• PAN card details.
• Aadhaar card details. • Form 16 (for salaried individuals).
• Bank statements for interest income.
• Proof of tax deductions (e.g., 80C, 80D investments).
• TDS certificates (Form 16A/16B/16C).
• Details of capital gains, rental income, etc.

Step 1: Create an account on the Income Tax e-Filing Portal or log in.
Step 2: Depending on your income, choose the correct ITR form.
Step 3: Complete the form by entering all pertinent information, such as income, taxes paid, and deductions.
Step 4: Use techniques like Aadhaar OTP, Net Banking, or EVC (Electronic Verification Code) to validate and e-verify the form.
Step 5: After submitting the form, an ITR-V (Acknowledgment) will be sent to you.

After filing your ITR online, you must e-verify the return to complete the process. You can e-verify via:
• Aadhaar OTP.
• Net banking.
• Bank ATM.
• Digital Signature Certificate (DSC).
• Sending ITR-V to CPC, Bangalore (if you don’t use electronic verification methods).

Yes, even after the deadline, you can submit a belated return. Normally, the deadline for filing a belated return is December 31 of the assessment year; however, as previously mentioned, there will be a late filing fee (penalty).

Any errors or omissions in the first filed return are fixed in a revised return. You have up to 12 months from the end of the assessment year or before the assessment is finished (whichever comes first) to file a revised return if you discover that you missed out on some revenue or that you made a mistake in the deductions.

If excess tax has been paid or TDS has been deducted more than your liability, you can claim a refund by filing your ITR. Refunds are processed by the Income Tax Department, and you can track the status via the e-filing portal.

If there’s an error in your filed ITR, you can file a revised return within the stipulated time frame. If you have missed out on any details, you can correct them in the revised return.