An Income Tax Return form is required to be filed with the Income Tax Department. Income tax for salaried individuals is calculated on a percentage of income earned by an individual. According to the rules, there are different tax slabs, based on income, ranging from 10 % to as high as 30%.
Income tax return services commence after your Chartered Accountant has done all deductions and made deposits to the Income Tax Department. The tax laws can be a bit complicated, this is why companies outsource filing of income tax returns to companies like Vakilsearch.
Filing an income tax return is legally mandatory for individuals, and failure to do so can levy a fine of Rs 10,000 if your annual income is more than Rs. 5 Lakh.
Receipts from ITR filing serve as proof for your income and tax payments.
When approaching banks for loans, most ask for income tax return receipts for the last three years, as they serve as reliable proof of a person’s income.
When securing VISA for countries like the United States, United Kingdom, Canada, and Australia ask to furnish past ITR receipts, as they are very particular about your tax compliance. ITR receipts help in assessing an individual's income and ensure to meet his/her travel and accommodation expenses.
An ITR or Income Tax Return is essentially a form that taxpayers file to the Income Tax Department which contains information regarding the income earned and tax applicable. The IT department has issued several ITR forms such as ITR 1 through ITR 7, and every citizen should file the form that is applicable to them before the specified due date. The applicability of the form largely depends on the income source, the amount earned, and the category under which it falls. However, it is mandatory to file the appropriate ITR in India, as per the following conditions:
This form must be filed by individuals whose income include the following:
In case, agricultural income exceeds Rs 5000, or total gross income exceeds Rs 50 lakhs, then IT returns cannot be filed via Form-1. Furthermore, if income is from taxable capital gains, businesses or multiple properties, they will have to be entered in other forms. Third, directors of companies and people with unlisted equity shares or foreign assets cannot file SAHAJ.
ITR 2 may be used by individuals or Hindu Undivided Families whose income includes:
However, people whose income comes from a business or Profession cannot use this form to file their returns.
The ITR3 Form may be used by individuals or HUFs whose income comes from a business or profession. Therefore, it includes incomes from the following sources:
The ITR4 Form may be used by individuals, HUFs and Partnership Firms, excluding LLPs whose income comes from a business or profession. This also includes those people who have opted for the presumptive income scheme as mentioned under Section 44AD and 44AE of the Income Tax Act. However, if total turnover exceeds Rs 2 crore, they must go for ITR-3. Also, if your individual income exceeds Rs 50 lakh, you have incomes from multiple properties or you own a foreign asset, you cannot file your returns via this form.
ITR 5 is used by LLPs, AOPs, BOIs, AJPs, Estate of deceased and insolvent, Business trusts and investment funds to file their returns.
Companies claiming exemption under section 11, can file their returns using Form 6.
This form may be used by individuals and companies which come under the following Sections of the Income Tax Act:
E-filing of income tax can be executed online through the IT Department’s website. The steps are pretty simple, but calculations can be a bit taxing. You need to follow the below-mentioned steps for e-filing of income tax.
In case, companies fail to file the ITR returns of their employees by 31st July, they can still file a “belated return” by the 31st of March. However, that results in the following consequences.
If the payment is made between August and December, then individuals whose total income falls below INR 5 lakhs have to pay a penalty of INR 1000, while those whose total income exceeds INR 5 lakhs, must pay INR 5000. Further delay, results in a fine of INR 1000 for people with total income less than INR 5 lakhs, while those exceeding that amount will have to pay a penalty of INR 10,000.
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