Comprehensive Guide to Filing Your Income Tax Returns in India

Individuals, HUFs, Companies, AOP/BOI, etc., who earn more income than the basic exemption limit must file an income tax return ITR. You can also file returns even when you do not have income higher than the basic exemption limit. ITR filing is advantageous as it allows filers to easily access loans, set a clear record with tax authorities, quick visa processing, easy refunds, presumptive taxation scheme, meet legal compliance, and avoid penalties. Taxpayers can process to file the ITR on the Income Tax Department online portal or delegate the filing responsibilities to a tax expert. Here is a comprehensive guide to filing your income tax returns in India. 

Benefits of ITR Filing 

• Easy loan approval is possible when you file the ITR, as it serves as income proof, allowing banks to approve your loans 
• In processing via application, ITR makes the process of applying for a visa easier, as it gives income proof to the embassies
• In case of excess taxes paid to the authorities, refunds are made easy and available when you file the ITR on time 
• To carry forward losses or set them off, filing an ITR is important, as businesses can carry forward losses when they have filed their income tax returns 
• Taxpayers can avail of the benefits of the presumptive taxation scheme when filing an ITR. Presumptive taxation scheme allows taxpayers to pay taxes on an estimated income after deducting expenses from revenue 
• It allows for meeting compliance and avoiding legal penalties 

Guide to Filing an Income Tax Return in India 

Step 1 

Go to the Income Tax e-filing portal and log in with valid credentials: user ID and PAN, and click on the “Income Tax Return” 

 

Step 2 

PAN details will come in auto-filled mode, and applicants have to file the Assessment Year, ITR form Number from ITR 1 to 7, Filing type (revised/original), and submission mode 

 

Step 3 

Choose the reason for filing, for example, taxable income is more than the basic exemption limit, meets specific criteria, and is mandatorily required to file ITR or others

 

Step 4

Validate the auto-filled details such as PAN, Aadhaar, Name, date of birth, contact information, and bank details. Make sure that you have disclosed all the sources of income, exemptions, and deductions 

 

Step 5 

Now comes the e-verification process, which you can do with Aadhaar OPT, electronic verification code (EVC), or net banking

Who Needs to File ITR?

If total income is more than the basic exemption limit before claiming deductions u/s 80C to 80U, ITR filing is mandatory. In the following cases, it  is also mandatory 

• If expenditure on foreign travel is more than Rs 2 lakhs 
• Electricity consumption more than Rs 1 lakh
• Deposit more than Rs 1 Cr 
• Business receipts exceeding Rs 60 lakhs 
• Professional receipts exceeding Rs 10 lakhs 
• TDS/TCS returns amount more than Rs 25,000

Documents Required for ITR Filing 

Documents differ based on the source of income, still the following documents are necessary in all sources of income 

• PAN or Aadhaar 
• Bank statement 
• Form 16
• Donation receipts, if any 
• Interest certificates 
• Aadhaar-registered mobile number for e-verification 
• Bank account information linked to the PAN card 
• Details if invested in LIC, mutual funds, or stocks 

Which ITR Form to File? 

ITR 1

• Resident individuals having income less than or equal to Rs 50 lakhs 
• salary/pension income 
• One house property 
• Other sources 

ITR 2

• Every income from ITR 1 
• Capital gains income 
• For more than one house property 
• Foreign income/assets 
• Crypto income, if reported as capital gains 
• Holding a directorship in a company 
• Have unlisted equity shares 

ITR 3

• Every income from ITR 2 
• Business and professional income 
• Crypto income, if reported as business income 
• Income as a partner in a firm 

ITR 4

• Resident individuals and HUFs’ total income less than or equal to Rs 50 lakhs 
• Every income form ITR 1 
• Salary/pension income 
• One house property
• Income from other sources 
• Presumptive income 

ITR 5

• To firms, LLPs, AOPs, and BOIs 

ITR 6

• Companies not claiming deductions under section 11

ITR 7

• Persons or companies under sections 139(4A, 4B, 4C, and 4D)

 

Filing Income Tax Returns may seem an easy task, but it requires lots of attention and is a time-consuming process. In such times, guidance from tax experts comes in handy. The experts ensure that all the sources of income are reported properly and have filed the appropriate form based on the source. Reach out to TaxDunia, and delegate your responsibilities of filing while you can focus on the business.