PERSONAL OR INDIVIDUAL INCOME TAX FILING
Income tax return is a form used to report your income and the taxes due to the Income Tax Department for the fiscal year. Firms or companies, Hindu Undivided Families (HUFs), and self-employed or salaried individuals must file ITR to the Income Tax Department of India.
Every year, taxpayers must file the applicable Income Tax Return (ITR) and provide information about their earnings and taxes paid during the previous financial year to the Income Tax Department. The information included in an ITR must be relevant for a fiscal year from April 1st to March 31st of the following year.
Documents Required to File ITR of Individual:
- PAN.
- FORM 26 AS.
- FORM 16.
- Bank statements.
- TDS Certificates.
- Interest Certificates.
- Proof of tax saving investments.
- Salary pay slips.
- Annual Information Statement (AIS)
Importance of filling ITR
- Mandatory document if applying for visa.
- Mandatory document if applying for loan as ITR makes loan applications easier.
- If an NRI derives any or all of his/her income through sources in India, that income is liable to be taxable in India.
- It helps you claim TDS refunds.
Precaution to take in filling ITR
- Linkage of PAN & Aadhar.
- Pre-validation of bank account where you want to receive your refund.
- Choose the correct ITR before filing it; else filed return will be treated as defective.
- File the return within the specified timelines.
- Verify your return and you complete e-Verification.
- File the responses for the notices received (if any) from the ITD within the specified timelines.
Forms for Individual ITR
- ITR-1 or Sahaj: used by individuals who make an annual income of less than Rs.50 lakh via pension or salary and from only one house property.
ITR-1 Eligibility
- Total income does not exceed ₹ 50 lakh during the FY.
-
Income is from salary, one house property, family pension income, agricultural income (up to ₹5000/-), and other sources, which include:
- Interest from Savings Accounts
- Interest from Deposits (Bank / Post Office / Cooperative Society)
- Interest from Income Tax Refund
- Interest received on Enhanced Compensation
- Any other Interest Income
- Family Pension
- Income from agriculture activities up to ₹5000.
- However, income from One House Property, in this form, the loss brought forward from previous years or carried forward of losses are not eligible.
- Income from other sources, excluding income from winning a lottery or income from owning and maintaining race horses, income taxable under section 115BBDA or section 115E.
ITR-3: used by individuals who run a proprietorship or are professionals in India.
ITR-3 ELIGIBILITY:
This form is to be used by either an individual or a Hindu Undivided Family who are carrying on a profession or a business. The following persons are eligible to fill this form:
- If a person is the director of the company.
- Persons who had investments in unlisted equity shares at any time during the entire financial year.
- Income from other sources.
- Income of a person who is a partner in a firm.
- Income from salary or Pension.
- Income from House Property (one or more).
- Total income can exceed 50 lakhs in this case.
- Income earned from capital gains or foreign assets/foreign income.
- Who has income under the head profits or gains of business or profession and who is not eligible to file Form ITR-1 (Sahaj), ITR-2, or ITR-4 (Sugam).
How to rectify the defective return or revise ITR form?
Complications of filling wrong or defective return
- Rejection of ITR: The Income Tax Department might reject your return if it's filed in an incorrect form. This can cause delays in processing and potential penalties for late filing (if the deadline has passed).
- Scrutiny or Assessment: Even if your return isn't rejected, using the wrong form could trigger additional scrutiny from the tax authorities. They might ask you to re-file using the correct form.
You can correct the defective return by below ways:
- Revised Return: If you catch the mistake before the ITR filing deadline you can file a revised return using the correct form. There's no limit on the number of revised returns you can submit within the year.
- Defective Return Notice: If the department identifies the incorrect form after the deadline, they might issue a "defective return notice" under Section 139(9) of the Income Tax Act. This notice gives you 15 days to rectify the mistake by filing a revised return. You can also request an extension for filing the revised return.
FREQUENTLY ASKED QUESTION (FAQ's)
What is Income tax Return?
Income tax return is a form used to report your income and the taxes due to the Income Tax Department for the fiscal year. Firms or companies, Hindu Undivided Families (HUFs), and self-employed or salaried individuals must file ITR to the Income Tax Department of India.
What is NIL ITR?
NIL-ITR can be filed when your total salary is less than the exemption limit, yet you want to go ahead and file an income tax return.
Can Income Tax Return be filed after Due Date?
Yes, you can file your Income Tax Return after the due date. However, a penalty of Rs. 1000 (for Income <5 Lakh) and Rs. 5000 (for Income >50 Lakhs) will be levied in case the ITR is filed after the due date.
In case you miss filing the ITR within the due date u/s 139(1), you can still file your Income Tax Return, but you may be required to pay a late filing fee of up to ₹5000/-. Additionally, you will also be required to pay interest on the tax liability (if any).
In which month do ITR forms become available?
ITR forms are available throughout the year, and every year updated ITR forms are released after the end of the relevant financial year. There is no fixed specified date in this regard.
Is it mandatory for salaried employees to file the ITR?
Salaried employees who fall under the tax bracket must file the ITR.
If advance taxes have been paid and there are no dues or refunds, can income tax return filing be skipped?
No, it is mandatory to file your ITR. The government gets a complete record of how your income is distributed with the help of the ITR.
What is Rebate u/s 87 A as per new Tax Regime (Default) and Old tax regime?
Currently, section 87A allows individuals to claim a rebate of Rs 12,500 under the old tax regime and Rs 25,000 under the new tax regime.
Till March 31, 2023 (FY 2022-23), section 87A tax rebate under the old and new tax regime was available for taxable income up to Rs 5 lakh. Hence, opting for old or new tax regime made no difference for an individual having taxable income up to Rs 5 lakh. However, to make the new tax regime more attractive, the tax rebate was increased to Rs 25,000 for the New Tax regime only. This made zero tax payable for taxable income up to Rs 7 lakh in the new tax regime for FY 2023-24 (from April 1, 2023).
What precautions should be taken to avoid issues while filing ITR?
To avoid issues in filing your return and getting your refund, ensure you do the following:
- Link Aadhaar and PAN.
- Pre-validate your bank account where you want to receive your refund.
- Choose the correct ITR before filing it; else filed return will be treated as defective.
- File the return within the specified timelines.
- Verify your return and you can opt for e-Verification (recommended option – e-Verify Now) as the easiest way to verify your ITR.
- File the responses for the notices received from the ITD within the specified timelines.
What is Advance Tax?
For salaried individuals, advance tax is mostly taken care of through TDS by employers. But other forms of income such as interest on savings bank accounts, fixed deposits, rental income, bonds, or capital gains increase the tax liability. Tax liability needs to be estimated beforehand. If tax amounts to more than ₹10,000/- per year, taxpayers need to pay advance tax in quarterly installments (June, September, December, and March).
Will I get a refund if I have paid excess tax?
Yes, any excess tax paid by you can be claimed as refund by filing your Income Tax Return. After your return is processed, ITD checks and accordingly accepts your refund claim, and then the amount is credited to your bank account. You will also get a message on your email ID registered on the e-Filing portal.
Do I need to file any form if I am claiming deduction u/s 80 DD and 80 U?
From AY 2024-25 new schedules have been added regarding deduction u/s 80 DD and 80 U. If you want to claim deduction u/s 80DD and 80U then you have to mandatorily file form 10 IA before filing the return of Income and enter the details (Date of filing form and acknowledgement no.) of Form 10 IA in Schedule 80 DD and 80 U while filing the return of Income.
What is the difference between allowance and perquisite? Are these considered as income?
Allowances are fixed periodic amounts, apart from salary, which are paid by an employer, e.g., conveyance allowance, travelling allowance, uniform allowance, etc. Allowances are considered income and will increase your gross total income on which you will be taxed. Allowances can be taxable, partially exempted, and fully exempted.
Perquisites are benefits you receive because of your official position, and are over and above your salary or wage income. These perquisites can be taxable or non-taxable depending upon their nature.
