Income Tax Returns (ITRs) are forms used to report your income from various sources and pay taxes to the Income Tax Department. The ITR contains information about the income and tax-saving investments made by an individual during a particular fiscal year. According to the tax department, there are seven types of ITR forms: ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, ITR 7 for filing income tax returns (Forms are relevant for individuals, companies, and firms).
What is the importance of filing a tax return in India?
Certain eligible persons are required to file their income tax returns every year under the Income Tax Act 1961. A filed income tax return legitimizes your earnings and investments, whereas not filing one means that you haven’t disclosed your eligible income, which is required to be disclosed as per law, which becomes your black money. Moreover, if you have overpaid taxes to the government, you may be eligible for an income tax refund. Additionally, your Income Tax Return is crucial when applying for loans, credit cards, etc.
How does eFiling of income tax returns work?
Filing your Income-tax return online is known as E-filing. In India, you can file your Income-tax return in two ways:
The traditional method is offline in paper format, where the return is physically submitted to the IT department. In addition,
In addition, you can submit your return electronically through the income tax website. In accordance with the latest announcement by the Income Tax Department, income tax returns can only be filed online. Super senior citizens, however, may use the offline paper mode.
Does everyone have to file an income tax return?
If an individual’s total income exceeds Rs. 2,50,000; Rs. 3,00,000 for a senior citizen; and Rs. 5,00,000 for a super senior citizen, he or she must file an income tax return. Total income includes income from all sources, such as salary, house property, business income, capital gains, or any other taxable income.
Deductions like 80C, 80D, 80DDB, etc. can only be given if this limit is met. No matter whether you have paid tax or not, you must file a return. You must still file an income tax return even if your employer has deducted TDS in full.
New IT Rule 12AB now requires Compulsory Return Filing in all circumstances where the following limitations in the previous financial year were exceeded:
- A turnover of Rs. 60 lacs,
- A professional receipt for Rs. 10 lacs,
- 25,000 TDS & TCS, or
- An amount of at least 50 lacs is deposited in a savings bank account
Residents of India are required to file their returns regardless of income criteria in the following situations:-
- Any asset located outside India belongs to you as a beneficial owner.
- Have any financial interest in entities located outside of India.
- An asset whose beneficiary is located outside of India.
- You must file your ITR by the due date if you have any foreign income.