ITR Filing is an organized and mandatory process to be followed by the taxpayer for multiple reasons including financial and record maintenance while resulting in benefit for the future loan perspective. Get your Income Tax Return filing done by Legal Dekho, one of the leading tax consultants. Legal Dekho helps its client in identifying key drivers to ensure a concentrated approach without ambiguity.
Overview of Income Tax Return Filing
The income earned by the individuals and companies is subjected to tax liability. The tax levied on the earnings of a person is Income tax is collected and managed by the Central Government. Such tax on income earned is due in the same financial year wherein it is accrued in the form of credit tax. But the tip and calculation of the salary as well the tax liability is presented in the Assessment Year.
This implication form is known as Income Tax Return. The time limit for filing ITR is different for various taxpayers based on the guidelines. ITR Filing is mandatory for Taxpayers whose income surpasses the prescribed income limit. This process is regulated under the Income Tax Act 1961.
Who Should File an Income Tax Return?
- Individuals (Resident of India & NRI’s) – Necessary for people surpassing the prescribed income limit.
- Sole Proprietors
- LLPs and Partnership Firm
- The ITR filing is compulsory for ‘Partnerships Firm’, ‘Sole Proprietorship Firm’, ‘Companies’, and ‘LLPs’ irrespective of their turnover, income, profit ,or loss.
- Individuals getting income from mutual funds, bonds, stocks, fixed deposits, income from interest, house property, etc.
- Individuals obtaining income from property under charitable trusts, religious trusts, or income from voluntary contributions, and also who want to claim tax refunds
- Salaried persons whose gross income before deductions under section 80C to 80U exceeding the exemption limit
- All individuals with foreign income and assets, NRI’s and technology professionals on onsite projects.
- People who have opted for one job from another are also eligible
Types of Income Tax Return Filing Form
What are the Income Tax Return Forms available for Taxpayers?
Below-mentioned are the forms in which Income Tax Return has to be filed-
- ITR 1 (Sahaj) – For Individuals Earning Incomefrom Salaries, Single House Property, Interest Income, Agriculture, Other Sources,Etc.ITR 1 (Sahaj) is to be filed by individual residents (Not Ordinarily Resident) having complete annual Income upto Rs.50 lakhs, Salaried income, single House Property, Other Income Sources (Interest, Dividend, etc.), and Agricultural Income upto Rs.5 thousandNote-Not Applicable To Individual Being Director In A Company Or Has Invested In Unlisted Equity Shares.
- ITR 2: For Individuals And HUFs Having Earnings Other Than From PGBP. It May Be From Capital Gain, Lottery, Or Foreign Assets, Etc.ITR 2 is to be filed by individuals and HUFs not having income from profits and gain of business or profession.
- ITR 3: For Individuals And HUFs Having Earnings From Profits And Gains Of Business Or ProfessionITR 3 is filed by individuals and Hindu Undivided Family who have to carry on a business or profession. ITR 3 also needs to be file by the individuals having their income as a partner in a firm.
- ITR 4: Sugam For Individuals, HUFs, And Firms (Other Than LLP) Having Presumptive Business Income Tax Returns.For Individuals, HUFs, and Firms (other than LLP) being a Resident having entire Income of up to Rs.50 lakhs and business Income and Profession computed under sections 44AD, 44ADA or 44AE.Note-Not Applicable To Individual Being Director In A Company Or Has Invested In Unlisted Equity Shares.ITR 4S (Saral): This form needs to be filed for Presumptive tax, in which 8% is considered income of turnover
- ITR 5: ITR 5 Isused For All Income For Partnerships BusinessITR 5 is filed individual or persons other than Individual, HUF, Company, and Person filing Form ITR-7.
- ITR 6: ITR 6 Is For The Companies Other Than Those Claiming Exemptions Under Section 11ITR 6 is to be filed by companies incorporated under section 11, i.e., for charitable purposes that are exempted. Additionally, ITR 6 can only be filed electronically.
- ITR 7-For Persons Including Companies Required To Furnish Return Under Section 139(4A) Or 139(4B) Or 139(4C) Or 139 (4D)ITR 7 needs to be filed by companies included under section 139(4A) or section 139(4B) among several others.
What are the Benefits of Filing the Income Tax Return?
Many individuals and entities have zero tax liability and therefore they are not required to file returns mandatory. Even though they have some sort of income occurring.However, in recent years, the Govt. of India has taken some strict measures to enforce the Income Tax Law by connecting various advantages for prompt taxpayers-
- Precise Financial DocumentITR Filing certificates are evidence of financials and its records. Peculiar financial documentation is a requirement for availing loan or visa.
- Avoid Interfaces From Tax AuthorityIn the matter of late or wrong docility of ITR, a warning is served by the Income Tax authority/department.
- Sustain LossesWith ITR Filing, losses can be carried forward against house property & depreciation.
- Commercial GoodnessThe ITR registered with the Government determines the retail value of the taxpayer. The development of ITR shows the business capacity and also improves the capital foundation of a person. Therefore, the track of income and financial worth is decided by the beforehand filed ITR.
- Loan Appearances Plus ‘High-Risk’ ProtectionThe estimates and the capital base determined by the income tax return are applicable for loan processing. The More leading the financial value is, the more comfortable the loan applications will be.
What is the Procedure for Filing the Income Tax return?
The Income Tax department has made it suitable for all taxpayers to file their income tax returns online, called e-filing or electronic filing. The ITR e-filing is relatively easier as it does not connect any complicated paperwork distinct with the conventional offline filing method, which can be completed from any place at your comfort.
The Income Tax portal has exclusive software intended for filing seven Income Tax Return forms. Moreover, it accompanies ITR1 and ITR4 to be done online without installing any such software in the system. An individual/ entity must follow the requisite steps online by following the subsequent steps:
Step 1-Arranging and Organizing the Documents-
Before filing the ITR, the taxpayers will have to arrange and organize all the requisite documents of financial value i.e. Particulars of income, investments, assets, bank accounts detail. Also, the government documents like Permanent Account Number (PAN) and Aadhaar number.
Practically, these documents are not attached while filing ITR online but still one needs them to fill the form due to the details inscribed on the form. While filing the ITR, the documents related to income other than salary, like capital gains, rental income, and dividend income will also be needed.
Step-2 Preparing the Checklist For filing the Online ITR
Preparing the checklist is the essential thing that a taxpayer would require for filing the ITR online. The Documents thetaxpayer would need may vary depending on the type of income the taxpayer is having-
I. Taxpayer’s Details
- Id and Address Proof of the Taxpayer i.e. PAN Card and Aadhar Card.
- Particulars of Domestic assets and liabilities and foreign assets
II. Income-Related Details
- Particulars of exempt income earned during the year
- To fill the particulars of income (Form 16/16A/16B)
- Balance sheet, P&L account statement, and other audit reports, wherever applicable
- Particulars of Sales/Turnover/Gross Receipts during the year
III. Bank-Related Details
Particulars of all bank accounts held during the year (IFSC code, account number, name, and nature of account) along with the bank statements.
IV. Taxation Related Details
- Copy of last year tax return
- TDS certificate
- Saving certificate or deduction
- Form 26AS to cross-check TDS details
V. Investment And Expense Related Details
- Loan statement to claim a deduction on Principal amount and interest on a loan
- Mutual funds account statement(If any)
- Premium receipt for life insurance plans and Medical insurance premium and related receipts, etc.
VI. Other Relatable Documents.
Step-3 Creating an account for filing the ITR Return
After collecting all the requisite documents, the taxpayer must log in to its ITR e-filing account through the income tax department’s website. The particulars like user ID (your PAN), password, and captcha code will be needed for logging.
However, if a taxpayer is filing the return for the first time, then he may create an ITR e-filing account on the same website with few other particulars.
Step-4 Selecting the ITR Form
Earlier the Income Tax Filing was such a hard process, making the taxpayer standing in long lines to file an ITR. But now, with the help of digital representation, the electronic Income Tax Return (ITR) filing can be done easily. The Income Tax Department has determined 7 forms in which income tax needs to be filed. Filing the ITR FORMS depends on the group in which the business or the individual falls into.
Selecting the right ITR form is very essential. As if any taxpayer selects the wrong ITR form, the particular form is considered to be inoperative and flawed, so it is preferable to be attentive.
Step-5 Filling the requisite particulars
The next step is to file the details of the taxpayer i.e. Aadhaar number which is mandatory to file an ITR return online as the system will not allow the filing of return online without this particular.
Step-6 Verification of Returns and Uploading the final details
The last step for filing the ITR return is to verify the details and upload it on the Income Tax portal. The window will remain open for 120 days to get your return verified after uploading the documents.
What are the Documents Needed for Income Tax Return Filing?
- Necessary Documents such as’ PAN’, ‘Aadhar card number.’
- Feature/details of the current address will be needed.
- Bank account particulars will be mandatorily needed for the provided financial year.
- Additional disclosures concerning income from payroll, fixed securities, savings bank account details are also needed.
- Data regarding deduction required under section 80
- Data concerning TDS return filing and advance tax payments.
- The salaried/waged person should present the TDS Certificate, mostly known as Form 16
- You should review Form 26AS are filing your returns. It determines the amount of tax subtracted from your salary and installed with the IT department by your company.
- Interest declaration – Interest on savings accounts via 80TTA
Issuance of Income Tax Return Acknowledgment
An acknowledgment slip in duplicate is issued once ITR is filed. It consists of particulars, which are as follows:-
- PAN (Permanent Account Number)
- A note on Taxable Income – Briefed.
- Brief on Deductions
- Tax Paid
What are the due dates for Filing Income Tax Return?
- Individuals or firm who are not liable for audit: July 31
- A company or other who is responsible for audit: September 30
- All Individuals and Companies filing delayed returns: March 31
Entities and Establishments Income Tax Return Filling
Brief on Entities Income Tax Return Filing
The Income Tax Department of India has rules for all businesses working right through the country to file income taxes every financial year. Even if needed, TDS returns can also be filed, and advance taxes can be paid to ensure that the business complies with the Income Tax Rules and Regulations.
Income Tax Return Filing for Proprietorship Business
The proprietor is the person who runs the proprietorship firmsingle-handed. Both the proprietors (the business owner) and the business are the same as it is known that the proprietorship is not recognized as a separate legal entity.
Due to this, ITR filing for a proprietorship is considered the same as that of the firm’s proprietor. Moreover, Proprietors are obliged to file IT returns each year, as the course of action is no different from that of individual ITR filing.Requirements for Filing Proprietorship Tax Returns
Proprietors within 60 years of age and whose Income goes beyond Rs.2.5 lacs are required to file proprietorship tax returns. Proprietors more than 60 years but less than 80 years of age and whose total incomes go beyond Rs 3 lacs are entitled to file the Income Tax Return Filing. If their total income goes beyond Rs 5 lacs, then Proprietors above 80 years should file their IT returns.
Income Tax Return Filing for Partnership Firm business
It is noteworthy that all partnership firms are dedicated as separate legal entities according to the Income Tax Act. Moreover, those are also applicable for tax rates that are on par with Limited Liability Partnership and companies registered/ incorporated in India.The Requirement for Filing Partnership Firm Tax Return
According to the Indian Taxation, the partnership firms must do Income Tax filing without considering it is of Income or loss. A “NIL Income Tax Return” must be filed within the predetermined date if the firm has been commercially NOT active with any registered income.
Income Tax Return Filing for LLP business
All LLPs (Limited Liability Partnerships) are deemed to be a separate legalentity, and their slabs for an income tax rate are similar to that of all companies registered in India. The Income Tax Act declares that all LLPs must file their tax returns irrespective of the loss or gain they have incurred in that year. If the LLP has seen no business activity or registered Income, then a NIL income tax must be promptly filed.
Income Tax Return Filing for Company
All types of business structures like Limited Company, Private Limited Company, Limited Liability Partnership Company, One Person Company are registered under the MCA (Ministry of Corporate Affairs). All such companies are mandatorily needed to file IT returns as arranged by the Income Tax Act.The Requirement for Filing Company Tax Returns
Any incorporated company operating on Indian soil and registered with the Government of India and is required to submit its filed Income Tax returns. This is also equally applicable to those companies that have been dormant and inactive with no business transactions and getting no income or registered expenses.
Tax Slab Rate for Domestic Company for FY 2020-2021
According to the Latest Tax Regime, a domestic company is taxable at the rate of 30%. On the other hand, the tax rate is 25% if turnover or gross receipt of the company does not go beyond Rs. 400 Cr. in the previous year.
|Limits Of The Particulars||Latest Tax Rate Slab|
|When the turnover or gross receipt of the company does not go beyond Rs. 400 crores in the previous year 2018-19||25% Tax|
|In case the company opted for section 115BA||25% Tax|
|In case the company opted for section 115BAA||22% Tax|
|If company opted for section 115BAB||15% Tax|
|Occupies in any other Domestic Company||30% Tax|
Income Tax Slab for Co-operative Society
|Taxable Income||Existing Tax Rate Scheme||Existing Tax Rate Scheme|
|Income Up to Rs. 10,000||10%||–|
|Income from Rs. 10,001 to Rs. 20,000||20%||22%|
|Income above Rs. 20,000||30%|
Limits of Surcharge
- 12% of Income tax will be applied when the total income exceeds Rs. 1 crore
- The surcharge rate is 10% in the case of Concessional scheme
- Education Cess rate will be 4% of Income-tax plus surcharge.
Income Tax Return Filing deadline for FY 2020 has been Extended till Dec 31
The income tax return filing deadline for second time the tax filing deadline for for Financial Year 2019-20 has been further extended to December 31, 2020, from the earlier deadline of November 30, 2020 for most individual taxpayers.
In order to offer more time to taxpayers for furnishing of their ITR as per the government’s press release issued on October 24, 2020, it has been decided to further extend the due date for providing of Income-Tax Returns as under :-
- The last date for furnishing of income tax returns for whom the due date i.e. before the extension by the said notification dated June 24, 2020 as per the Act was 31st July, 2020 for these individual taxpayers has been extended till 31st December, 2020.
- The last date for furnishing of Income Tax Returns for the taxpayers (including their partners) [for whom the due date (i.e. before the extension by the said notification dated June 24, 2020) who are required to get their accounts audited as per the Act is 31st October, 2020] has been extended till 31st January, 2021.
- The last date for furnishing of Income Tax Returns for the taxpayers who are required to furnish report [for whom the due date (i.e. before the extension by the said notification dated June 24, 2020) in respect of international/specified domestic transactions as per the Act is 30th November, 2020] has been extended till 31st January, 2021.
- Accordingly, the date for furnishing of various audit reports in respect of international/specified domestic transaction under the Act including tax audit report and report has also been extended till 31st December, 2020, as per the government in a press release.
- Further, relief is provided to small and middle class taxpayers, the due date for payment of self-assessment tax date is hereby again being extended in the matter of payment of self-assessment tax. For that reason, the due date for payment of self-assessment tax has been extended to 31st January, 2021 for taxpayers whose self-assessment tax liability is up to Rs 1 lakh. And, for the taxpayers whose accounts are required to be audited and to 31st December, 2020 for the taxpayers whose accounts are not obligatory to be audited.”
Key Highlights and Amendments in Income Tax Return
Changes in Tax Rate
The Government of India has recently introduced some changes in the income tax rules with the motive to financially combat the spread of coronavirus. Here are the changes that will be implemented in the year 2020:
- As per the new tax rate, no taxable amount is payable for income up to 2.5 lakhs.
- 5% is payable for income between Rs2.5lakh and up to 5 lakhs.
- 10% of income is imposed on those who are earning between 5lakh and up to 7.5 lakhs.
- Those who earn between Rs7.5lakh to 10lakh are liable to pay 15%
- 20% for income between 10 lakh and up to 12.5 lakhs.
- Earners between 12.5 lakh to 15 lakhs are liable to pay 25%
- For income above 15lakh 30% is imposed.
Changes in ITR Forms
- You are not authorized to file an ITR-1 formif you have dividend as taxable income from domestic companies.
- Those who are a member of joint ownership of house property cannot file ITR-1 or ITR-4.
- Taxpayers need to answer the following questions about deposits in current accounts, foreign travel, and electricity bills in all the ITR forms:“Have you deposited an amount or aggregate of the amounts exceeding Rs. 1 Crore in one or more current account during the previous year?”“Have you incurred expenditure of an amount or aggregate of amount exceeding Rs. 2 lakhs for travel to a foreign country for yourself or any other person?”“Have you incurred expenditure of amount or aggregate of the amount exceeding Rs. 1 lakh on the consumption of electricity during the previous year?”
What are the Changes that happened in Income Tax Rules?
- Generally, the last date for Income Tax Return for the salaried class is July 31st. However, the deadline has now been postponed till November 30th, 2020. According to the Income Tax Department, the returns of income required to be filed by “July 31st, 2020 and October 31st, 2020” can be filed till November 30th, 2020. As a result, the furnishing tax audit report date has also been postponed until October 31st, 2020.
- It is also noted that these extensions will help those who have not been able to make their tax investments for saving. Numerous taxpayers are looking forward to being in receipt of their Form 16 and effectively completing their ITR filing so that they can get repayments/refunds on a timely basis.
- Moreover, to provide few aids to small & middle-class taxpayers, the due date for payment of self-assessment tax in the case of a taxpayer whose ‘self-assessment’ tax liability is up to Rs. 1 lac has also been postponed till November 30th, 2020. “The extension enables the taxpayers to make sure compliance amidst the pandemic. However, the waiver of interest and reduction is limited to cases where tax liability is less than ₹1 lac,”
- Moreover, the latest update also notifies the last date for linking Aadhaar with PAN has again been postponed till March 31st, 2021.
What are the Penalties involved for Negligence of Filling?
In matter, a demand notice under section 156, has to be assigned to the Taxpayer for the amount of tax. Moreover, the amount determined as per section 220(1), shall be met within 30 days of the service of the notice at the place and to the person specified in the notice. If the taxpayer errors in payment of any tax due, and in error from other penal provisions, he will be treated as an assessee in failure. Nevertheless, the penalty cannot beat the amount of arrears in tax. Before punishing, the Taxpayer is given a fair opportunity of being heard.
Delay Receiving TDS/TCS reports
- Each Taxpayer is responsible for deducting tax at source for furnishing the report of TDS, under Section 200(3). Likewise, every person is liable to collect tax at the beginning, as per Section 206C (3), has to file a budget in respect of TCS- Return.
- If it fails to deposit the TDS/TCS return on or ere the due date appointed, then he shall be responsible for paying a sum of Rs. 200 for every day of the delay, Under Section 234E.
Fine for Undisclosed Income References
The AO is authorized to levy penalty at the rate of 10% of the tax under Section 68, 69, 69A, 69B, 69C,or 69D, due if any delay is made unsatisfactorily.