What is Income Tax Return (ITR)?

With the e-filing services provided by the government of India, you can now file an online income tax return from anywhere in India. 

Let’s learn all about the Income tax Return and the filing of Online Income Tax Return in this post.

What is ITR Filing?

An income tax return (ITR) is a document that reports your earnings as well as your income tax liability as per the Income Tax Slabs to the Income Tax Department. A taxpayer’s tax liability is determined by their income.

If the return shows that excess tax was paid during the financial year, the person is eligible for an income tax return on the excess taxes paid, from the Income Tax Department in the assessment year. Thus the name, Income Tax Return.

Why Should You File ITR?

The following reasons should clear your doubts as to whether you should file your ITR or not:

• An ITR acts as a legal document
• Important document when applying for loans, especially personal loan

• You can easily reclaim TDS refunds

• Helps with credit card and visa applications

• Those with zero tax liability must file NIL ITR – aid with successful credit card applications

How to File ITR for AY 2022-23

For salaried employees and HUFs whose, accounts do not need to be audited, the due date for filing Income Tax Return for Assessment Year 2022-23 was July 31, 2022. 

Step-by-Step Guide on How to File Online Income Tax Return

To file Income Tax Return, one can choose to go online at the Income Tax E-Portal and sign in using their PAN or Aadhaar. Another option is to go the traditional path – offline mode. Many people take services of Chartered Accountants as they can provide with professional advice on how to save maximum taxes.

Before Filing an Income Tax Return

1. Take note of Form 16/16A

If applicable, your employer will give you Form 16 (and Form 16A). These contain the salary, allowances and TDS deducted during the financial year. 

2. Update bank account details

Before filing your online income tax return, ensure that all bank account details are in sync with your employer’s records and PAN card. 

3. Keep track of medical insurance premium payments

Many taxpayers miss out on claiming deductions under section 80D by not keeping track of their medical insurance premium payments. Ensure you keep all documents related to payments made towards health insurance premiums, in case you need them while filing taxes next year. 

4. Include deductions

For filing online income tax return, note that a salaried individual can claim exemption on HRA, medical insurance premium paid by the employer, the house property tax paid and interest on home loan as a deduction.

Types of Income Tax Returns

Here is a glimpse into the 7 types of ITR forms. Understand the requirements and file your ITR form accordingly:

Form ITR -1 or SAHAJ
This form can be files by Indians residents who satisfy any of the following conditions:

• Income created from pension or salary
• Total income less than Rs 50 lakhs per annum
• Income created from single house property
• Agricultural income

This is not an exhaustive list.

Form ITR-2 
If your income comes from ANY of the following sources, Form ITR 2 is for you:

• Income more than Rs 50 lakhs
• Source of income is: salary, house property (more than one), pension, lottery or horse races
• Agricultural income more than Rs 5,000
• If the assessee (taxpayer) is a company’s director
• Revenue from capital gains
• Income from investments made in equity
• Income from foreign assets or foreign income

Form ITR-3

Individual taxpayers and HUFs who make an income from a profession or from owning a business are required to file ITR Form -3.

Form ITR-4 (Sugam)
The following persons are required to file ITR 3:

• Individuals, HUFs and partnership firms (except for LLPs) earning:

Income from speculative business under scheme as per Sec 44 AD or 44 AE

Professional earnings (speculative) under scheme as per Sec 44 ADA

Salary/ pension not exceeding Rs 50 lakhs

• Freelancers, if their income does not exceed Rs 50 lakhs in a financial year from the sources stated above

Form ITR-5
Only the following entities may use the ITR-5 form to file income tax return:

• Firms
• Partnerships with Limited Liability (LLPs)
• Body of Individuals (BOIs)
• Association of People (AOPs)
• Societies or Trusts
• Artificial Judicial Persons (AJP)
• Business Trust
• Investment Fund
• Estate of a deceased person

Form ITR-6
This is for the companies claiming income tax exemption under Section 11 of the IT Act, 1961 (Income from property used by charitable or religious institutes/trusts).

Form ITR-7

ITR Form 7 is for persons covered under the following sections of the Income Tax Act, 1961:

• Section 139 (4A)
• Section 139 (4B)
• Section 139 (4C)
• Section 139 (4D)
• Section 139 (4E)
• Section 139 (4F)

Documents Required to File ITR

The following listed documents are usually required when filing Income Tax Return:

• PAN Card
• Aadhaar
• Form 16
• Form 16 A/ Form 16 B/ form 16 C
• Form 26A
• Bank Statement or Passbook
• Proof of Rental Income, if any
• Investment Proofs (for claiming deductions under Section 80C, 80D, etc.)

Note: This is not an exhaustive list.

Professional Tax

Professional Tax or commonly known as P Tax is a type of direct tax. This tax is applicable on the income of a person, just like income tax. The only notable difference between income tax and professional tax is that income tax is collected by the Central Government, Professional Tax is collected by the State Government.

States where Professional Tax is Applicable:

• Andhra Pradesh
• Assam
• Bihar
• Gujarat
• Jharkhand
• Karnataka
• Kerala
• Madhya Pradesh
• Maharashtra
• Meghalaya
• Mizoram
• Odisha
• Sikkim
• Tamil Nadu
• Telangana
• Tripura
• West Bengal

Did You Know?
Delhi NCR and Haryana do not have professional tax. Residents of these regions are only required to pay income tax as per their tax liability.

Penalty for Late Filing of ITR

Taxpayers who fail to file their income tax returns on time may be penalised and charged interest on the unpaid income tax. In addition to the late payment penalty and interest, the taxpayer might have to face the following consequences:

• The taxpayer won’t be unable to claim interest on the refund delay for the period of delay in filing income tax returns.
• Taxpayers who file their income tax returns after the due date cannot correct any errors on their returns.
• Some income tax deductions are not allowed under Chapter VI-A of the Act if the taxpayer files a late return.
• The taxpayer cannot deduct losses incurred (apart from house property loss).

Income Tax Return: FAQs

Also, read about Calculations of TDS on Investment Simplified.