Income Tax Return in India: Know about ITR Forms, Filing Process

Income Tax Return in India

Income Tax Return (ITR) in India is a form that individuals and businesses in India are required to submit to the Income Tax Department. It provides information about their income and the taxes they are liable to pay for a specific financial year, which starts on April 1 and ends on March 31 of the following year. The types of income that should be included in an ITR form include salary, profits and gains from business or profession, income from house property, income from capital gains, and income from other sources such as dividends, interest, and lottery winnings. The Income Tax Department has specified different types of ITR forms, such as ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7, depending on the nature of income and the type of taxpayer. Some benefits of filing an income tax return include easy loan approval, claiming tax refunds, serving as income and address proof, quick visa processing, carrying forward of losses, and avoiding penalties for non-filing.

Income Tax Return in India

Income Tax Return (ITR) is a crucial process under which an assessee has to submit the information to the Income Tax Authorities of income earned by him during the financial year. The information is supplied through the income tax forms developed by Income Tax department for type of various assesses like Individual, HUF, Company, Trusts, BOI & AOP etc. It contains essential information about the taxpayer’s income, sources of income, deductions, tax liabilities, and other related details for a specific financial year.

The Income Tax Act, 1961, governs the process of income taxation in India, and filing ITR is a legal obligation for individuals, Hindu Undivided Families (HUFs), companies, and other entities. The purpose of filing ITR is to report the taxpayer’s income accurately, pay the applicable taxes, and claim any eligible deductions or exemptions.

Income Tax Return Overview
DepartmentIncome Tax Department
Parent DepartmentGovernment of India
FormIncome Tax Return (ITR)
Type of ITR FormsITR-1, ITR-Sahaj, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, ITR-7
Partnership Firm,
Association of Persons (AOP)
Body of Individuals (BOI)
InformationEducation about ITR

Who is Assessee and Assesement?

Now you know about the Income Tax Return but it is also equally important to have information about meaning of Assessee and Assesement in the context of Income Tax Act, 1961. Let’s understand the meaning about these words

Meaning of Assessee: An assessee is any person who is liable to pay taxes (Taxpayer) or any sum of money under the provisions of the Income Tax Act, 1961. According to Section 2(7) of the Income Tax Act, an Assessee is someone who is required to pay taxes on their earned income or incurred losses in a single assessment year. An Assessee can be an individual, Hindu Undivided Family (HUF), partnership firm, company, Association of Persons (AOP), Body of Individuals (BOI), local authority, or artificial judicial body.

Meaning of Assessement: Assessment, on the other hand, refers to the process of determining the taxable income of an assessee and calculating the tax liability based on the provisions of the Income Tax Act. It involves examining the income, deductions, exemptions, and losses incurred by the assessee during a particular financial year. The assessing officer reviews the income tax return filed by the assessee and may request additional information or conduct an assessment in order to determine the correct tax liability

Types of Taxpayers

There are different types of taxpayers based on their legal status and the nature of their income. The common types of taxpayers include:

  1. Individual taxpayers: These are individuals who earn income from sources such as salary, business, profession, capital gains, or other sources. They file their income tax returns as individuals.
  2. Hindu Undivided Family (HUF): HUF is a separate tax entity in India. It comprises a group of individuals who are related by blood and are living together in a joint family. The income earned by the HUF is taxed separately from the income of its members.
  3. Partnership firms: A partnership firm is a business entity in which two or more individuals come together to carry out a business with the intention of sharing profits or losses. The income earned by the partnership firm is taxable separately.
  4. Companies: Companies are separate legal entities from their shareholders. They are taxed based on the profits earned by the company. The income tax rates for companies are different from those for individuals.
  5. Association of Persons (AOP) and Body of Individuals (BOI): AOP and BOI are associations of individuals or groups of individuals who come together for a common purpose other than making a profit. The income earned by AOP and BOI is taxed separately.
  6. Trusts: Trusts are legal arrangements in which a person, known as the settlor, transfers assets to a trustee to hold and manage them for the benefit of the beneficiaries. The income earned by trusts is taxed separately.

Type of Income Tax Return Form

Income tax return forms, also known as ITR forms, are used by taxpayers to file their income tax returns with the Income Tax Department. The ITR forms vary depending on the sources of income, total income, and category of the taxpayer (individual, HUF, company, etc.) 3. Here is a detailed overview of the ITR forms for FY 2023-24 (AY 2024-25):

ITR FormApplicabilityKey Points
ITR-1 or SAHAJResident individuals (excluding NRIs) with income from salary, one house property, other sources (up to Rs 50,000), and agricultural income up to Rs 5,000Cannot be used if total income exceeds Rs 50 lakh, agricultural income exceeds Rs 5,000, taxable capital gains, income from business or profession, more than one house property, unlisted equity shares, foreign asset ownership, or brought forward losses 3
ITR-2Individuals and HUFs with income from salary/pension, house property, capital gains, foreign income/assets, and income from other sourcesCannot be used if the individual has income from business/profession, more than one house property, unlisted equity shares, foreign asset ownership, or brought forward losses 3
ITR-3Individuals and HUFs with income from a proprietary business or professionRequires maintenance of books of accounts and possible audit, may include income from salary/pension, house property, and other sources 3
ITR-4 or SugamIndividuals, HUFs, and firms (excluding LLPs) with income from a presumptive business or profession, salary/pension up to Rs 50 lakh, income from one house property up to Rs 50 lakh, and income from other sources up to Rs 50 lakh (excluding winnings from lottery/horse races)Cannot be used if the individual has income from more than one house property, foreign asset ownership, unlisted equity shares, or foreign income 3
ITR-5Partnership firms, LLPs, AOPs, BOIs, artificial juridical persons, etc.Includes LLPs, partnership firms, AOPs, BOIs, business trusts, investment funds, etc.; cannot be used by individuals, HUFs, or companies 3
ITR-6Companies (excluding those claiming exemption under section 11)Filed electronically only 3
ITR-7Persons including companies required to furnish returns under specific sections (139(4A), 139(4B), 139(4C), 139(4D), 139(4E), or 139(4F))Includes trusts, political parties, scientific research associations, universities, colleges, etc. 

Why is Filing Income Tax Return (ITR) important?

Filing ITR holds several significant benefits for taxpayers. Let’s understand why it is important:

  • Legal Requirement: Filing ITR is a legal obligation for individuals and companies whose income exceeds the specified threshold. Failure to file ITR on time can result in penalties, fines, and legal consequences.
  • Compliance: Filing ITR is essential for complying with the tax laws of the country. It is a way to demonstrate financial transparency and uphold one’s responsibilities as a taxpayer.
  • Documentation: ITR serves as a comprehensive documentation of an individual’s or entity’s income and tax liabilities for a particular year. It helps maintain accurate financial records and facilitates transparency with the government.
  • Loan and Visa Applications: ITR is a required document for various purposes, such as applying for loans, credit cards, and visas. It serves as proof of income and financial stability, strengthening one’s loan or visa application.
  • Tax Benefits: Regularly filing ITR enables taxpayers to avail tax benefits under the Income Tax Act. It allows individuals to reduce their taxable income by claiming deductions for investments, expenses, and other eligible items made during the financial year.

What is Income Tax

Income tax is a direct tax levied by the government on the income earned by individuals, companies, and other entities within its jurisdiction. It is a key source of revenue for the government and is used to fund various public services and infrastructure development. The income tax laws and regulations vary from country to country, but they generally require individuals and entities to pay a certain percentage of their income as tax to the government.

How Income Tax is calculated

The calculation of income tax is based on the income earned by an individual or entity during a specified period, usually a financial year. The income is categorized into different heads such as salary income, business income, capital gains, etc., and taxed accordingly.

To calculate income tax, various deductions, exemptions, and tax credits are taken into consideration. These include deductions for expenses such as medical bills, education expenses, home loan interest, etc., as well as exemptions for certain types of income, such as agricultural income. The taxable income is then subjected to the applicable income tax rates based on the income tax slabs set by the government.

Income Tax Slabs and Rates

Income tax slabs and rates determine the amount of income tax to be paid based on the taxable income. The slabs and rates are fixed by the government for each financial year. Here are the income tax slabs and rates for AY 2024-25:

New Tax Regime (FY 2023-24)

Income RangeTax Rate
Up to Rs. 2.5 lakhExempt
Rs. 2.5 lakh – Rs. 3 lakh5%
Rs. 3 lakh – Rs. 5 lakh5%
Rs. 5 lakh – Rs. 6 lakh10%
Rs. 6 lakh – Rs. 9 lakh15%
Rs. 9 lakh – Rs. 12 lakh20%
Rs. 12 lakh and above25%

Old Tax Regime (AY 2024-25)

ncome RangeTax Rate
Up to Rs. 2.5 lakhExempt
Rs. 2.5 lakh – Rs. 5 lakh5%
Rs. 5 lakh – Rs. 10 lakh20%
Rs. 10 lakh and above30%

It’s important to note that the above rates are applicable to individual taxpayers. Different rates may apply to senior citizens, super senior citizens, Hindu Undivided Families (HUFs), and companies. Additionally, there may be changes in the tax slabs and rates in subsequent financial years, subject to government amendments.

Deductions and Exemptions

To reduce the taxable income and lower the tax liability, taxpayers can claim deductions and exemptions under various sections of the Income Tax Act. Here are some common deductions available to taxpayers:

  • Section 80C: Deduction for investment in specified instruments (e.g., Provident Fund, Public Provident Fund, National Savings Certificates, Tuition Fees, Life Insurance Premiums)
  • Section 80D: Deduction for health insurance premium paid for self, family, and parents
  • Section 80G: Deduction for donations made to specified charitable institutions
  • Section 80E: Deduction for interest paid on education loans
  • Section 80TTA/80TTB: Deduction for interest earned on savings accounts/senior citizen savings accounts
  • Section 80GGA: Deduction for donations made for scientific research or rural development

These are just a few examples of the deductions available under the Income Tax Act. Taxpayers should refer to the specific sections and eligibility criteria to claim the applicable deductions based on their financial situations.

Process of Filing ITR Online

Filing ITR has become increasingly convenient with the availability of online platforms. The process of filing ITR online involves the following steps:

Step 1: Register or Log in to the Income Tax e-filing website

  • Go to the official Income Tax e-filing website.
  • If you are a new user, register yourself by providing your PAN (Permanent Account Number), email address, and mobile number.
  • If you are an existing user, log in using your user ID or PAN, password, and captcha code.

Step 2: Enter the Required Details

  • Enter the required details such as Assessment Year, ITR Form Number, Filing Type, and Submission Mode.
  • The Assessment Year is the financial year following the year in which the income is earned.
  • Select the appropriate ITR Form based on your income sources and category.
  • Provide other required details such as personal information, income details, deductions, and tax payments.

Step 3: Select the Appropriate ITR Form

  • There are different Income Tax Return forms available for various categories of taxpayers, such as individuals, HUFs, companies, and more.
  • The selection of the appropriate Income Tax Return form depends on the nature and sources of income.
  • The most commonly used ITR forms for individual taxpayers are ITR-1 (Sahaj) and ITR-4 (Sugam).

Step 4: Fill in the Required Sections

  • Fill in the necessary sections of the selected Income Tax Return form.
  • Provide personal information, such as name, address, PAN, Aadhaar number, contact details, and bank account details.
  • Mention the sources of income, including salary, house property, capital gains, business or profession, and other income sources.
  • Claim deductions under various sections of the Income Tax Act, such as 80C, 80D, 80G, and more.
  • Provide details of tax payments made during the financial year, such as TDS (Tax Deducted at Source), advance tax, and self-assessment tax.

Step 5: Calculate the Tax Liability and Claim Deductions

  • Calculate the total taxable income by deducting eligible deductions from the total income.
  • Compute the tax liability based on the applicable income tax slabs and rates for the Assessment Year.
  • Ensure that all eligible deductions and exemptions are claimed to reduce the tax liability.
  • Verify the calculations and cross-check the details for accuracy.

Step 6: Validate and Submit the Income Tax Return

  • Validate the filled ITR form to ensure there are no errors or missing information.
  • Review the form thoroughly and make any necessary corrections before submission.
  • Generate an XML file of the validated ITR form, which will be used for online submission.

Step 7: Verify the ITR

  • Choose a verification option to verify your Income Tax Return. Options include electronic verification (EVC) through Aadhaar OTP, net banking, or generating an EVC through a bank’s ATM.
  • Alternatively, you can choose to print the ITR-V (Acknowledgement) form, sign it, and send it to the Centralized Processing Center (CPC) in Bangalore within 120 days of e-filing.
  • After successful verification, the process of filing ITR is considered complete.

Documents Required for ITR Filing

While filing Income Tax Return, taxpayers are required to submit certain documents as proof of income, deductions, and tax payments. The specific documents may vary based on various factors, including sources of income and financial transactions. Here is a list of common documents required for Income Tax Return filing:

  • Permanent Account Number (PAN) Card
  • Form 16/16A/16B/16C (for TDS on income)
  • Bank Statements (Savings, Current accounts)
  • Investment Proofs (e.g., Provident Fund, Public Provident Fund, Life Insurance Premium, Health Insurance Premium, Fixed Deposits)
  • Property Documents (if applicable)
  • Capital Gain Statements (from stocks, mutual funds, etc.)
  • Proof of Tax Payments (e.g., Challan or Receipt)
  • Form 26AS (consolidated tax statement)

These are some of the commonly required documents, and taxpayers should gather the relevant documents based on their specific income sources and financial transactions.

Methods to Verify your Income Tax Return (ITR)

Once you have filed your Income Tax Return, it is mandatory to verify it within a specified time limit. The verification process ensures that your ITR is considered valid and processed by the income tax department. There are several methods available for verifying your ITR:

  1. Generate Aadhaar OTP: If you have an Aadhaar card linked to your mobile number, you can choose to verify your ITR using the Aadhaar OTP method. This method requires you to log in to your Income Tax e-filing account, select the e-verify return option, and generate an OTP on your registered mobile number.
  2. Existing Aadhaar OTP: If you have already received an Aadhaar OTP, you can select the option to verify using the existing OTP. Enter the OTP and continue with the verification process.
  3. Existing EVC: If you have an existing Electronic Verification Code (EVC), you can choose to verify your ITR using it. Enter the EVC and complete the verification process.
  4. Digital Signature Certificate (DSC): If your books of accounts are audited, you must e-verify your ITR using a Digital Signature Certificate. This method requires you to download and install the emsigner utility, provide the necessary details, and sign the ITR using your DSC.
  5. Generate EVC through Bank Account: If your bank account is pre-validated and EVC-enabled, you can generate an EVC through your bank account. Choose the option to verify through the bank account, select your bank, and follow the instructions to generate the EVC.
  6. Generate EVC through Net Banking: If you have an active net banking facility, you can e-verify your ITR using net banking. Select the option to verify through net banking, choose your bank, log in to your net banking account, and follow the process to generate the EVC.
  7. Generate EVC through Demat Account: Similar to the bank account method, if your demat account is pre-validated and EVC-enabled, you can generate an EVC through your demat account. Select the option to verify through the demat account, choose your demat account provider, and follow the instructions to generate the EVC.
  8. Generate EVC through Bank ATM option (offline): Some banks offer the option to generate an EVC through their ATMs. Visit your bank’s ATM, swipe your card, enter your ATM PIN, and select the option to generate an EVC for income tax filing. The EVC will be sent to your registered mobile number and email ID.

What to Do After Filing your Income Tax Return

After filing your Income Tax Return, there are a few important steps to take:

  1. Verify your Income Tax Return (ITR): As mentioned earlier, it is mandatory to verify your ITR within a specified time limit. Choose one of the methods mentioned above to verify your ITR.
  2. Keep Proof of Filing: It is essential to keep a copy of your filed ITR and all supporting documents as proof of filing. This includes Form 16, Form 12B, tax paid challans, and other relevant documents.
  3. Track ITR-V Status: If you have chosen to verify your ITR by sending a physical copy of the ITR-V to the Centralized Processing Centre (CPC) in Bangalore, you should continuously track the receipt status of ITR-V. You can do this by visiting the Income Tax e-Filing portal and entering your PAN and e-Filing acknowledgment number.
  4. Check for Intimations/Notices: The Income Tax Department may send intimation or notice regarding your Income Tax Return. It is important to regularly check your registered email address and e-Filing portal for any communications from the department. Pay attention to any intimation under Section 143(1) that specifies your tax liabilities, deductions, or refunds.
  5. Secure Income Tax Documents: Keep all your income tax-related documents securely for future reference. This includes Form 16, tax deducted at source (TDS) certificates, bank statements, investment proofs, and any other relevant documents.
  6. File Advance Tax (if applicable): If you have a net income of more than Rs. 3 lakhs and tax is not deducted at source, you may need to pay advance tax to avoid interest penalties. Consult a tax expert or use an online tax calculator to determine the amount of advance tax you need to pay.
  7. Optimize your Taxes: Consider consulting a tax expert to ensure you are maximizing your tax savings. They can help you identify eligible deductions and exemptions, plan your tax-saving investments, and ensure compliance with tax laws.

How to Check the Status of Filing your ITR

To check the status of your filed Income Tax Return, you can follow these steps:

  1. Visit the official Income Tax e-Filing portal.
  2. Log in to your account using your PAN, password, and captcha.
  3. Once logged in, navigate to the “My Account” section.
  4. Click on “View e-Filed Returns/Forms.”
  5. On the next page, you will see a list of all the returns filed by you. You can click on a specific return to view its details and check the status.
  6. Additionally, you can also check the status of your Income Tax Return by using the “ITR-V status” tab on the Income Tax e-Filing portal. Enter your PAN and e-Filing acknowledgment number to track the receipt status of your ITR-V.

Income Tax Return in India FAQs

Q1. What is Income Tax Return (ITR)?

Income Tax Return (ITR) is a document that taxpayers are required to file with the income tax authorities every year. It contains essential information about their income, deductions, and tax liabilities.

Q2. Why is filing ITR important?

Filing Income Tax Return is important to comply with legal requirements, maintain financial transparency, avail tax benefits, and fulfill documentation needs for various purposes like loans and visas.

Q3. What documents are required for ITR filing?

The required documents for ITR filing include PAN Card, Form 16, bank statements, investment proofs, property documents, capital gain statements, and tax payment proofs.

Q4. How can I file my ITR online?

You can file your ITR online through the official Income Tax e-filing website. Register or log in, select the appropriate ITR form, fill in the required details, upload necessary documents, and verify the ITR using available options.

Q5. Which ITR form should I choose?

The selection of the appropriate ITR form depends on your source of income, residential status, and other factors. Some common forms include ITR-1 (Sahaj) for salaried individuals and ITR-2 for individuals and HUFs without business income.

Q6. What are deductions and exemptions in ITR?

Deductions and exemptions allow taxpayers to reduce their taxable income by claiming expenses and investments made during the financial year under various sections like 80C, 80D, and 80E

Q7. How can I calculate my tax liability?

You can calculate your tax liability using the income tax slab rates for the particular year or using tax calculation tools available on the Income Tax Department’s website or other online platforms.

Q8. What is Form 26AS?

Form 26AS is a consolidated tax statement that reflects TDS deducted by employers, banks, or other deductors. It helps taxpayers verify their income and tax payments.

Q9. How do I verify my ITR?

You can verify your ITR using options such as Aadhaar OTP, Net Banking, Electronic Verification Code (EVC), or by sending a signed copy of ITR-V to the Centralized Processing Center (CPC)

Q10. What should I do if I make a mistake in my ITR?

If you make a mistake in your Income Tax Return, you can rectify it by filing a revised return within the stipulated time frame.

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