As per Income tax rules and regulations in India, all Indian citizens have to pay tax to the Indian Government. Individuals, associations, firms, LLPs, all pay income tax in accordance with the Income Tax laws. It is therefore imperative that you file your Income Tax Return (ITR) annually.

This is a subject that intrigues most of us, and therefore, we have compiled all the important information regarding the ITR in this article. Here is what we shall learn:

What is ITR?
How to file ITR?
What are ITR forms?
Types of ITR forms
Which ITR is applicable to you for filing?
Is it mandatory to file ITR?
Documents you need to file the ITR
How can you check the ITR status electronically?
Ways to download the ITR-V (Income Tax Returns-Verification)
Advantages of e-filing the ITR
Importance of ITR

What is ITR?

The Income Tax Return or the ITR is the form that comprises the entire information about your income and requires you to file the tax to the income tax department.

Tax liabilities are calculated based on the income of taxpayers. Taxes that were overpaid by an individual during a year will be refunded by the Income Tax Department. Individuals or businesses that earn income during a fiscal year are required to file an income tax return, per the income tax laws. A person's income can come from a salary, from a business, from a house, or from dividends, capital gains, interest, or any other source.

Each person or business must file a tax return by a specified date. A taxpayer is liable for a penalty if he or she fails to meet the deadline.

Tax laws in India are drafted by the Government. Every person who possesses taxable income, whether an individual, Hindu Undivided Family (HUF), a company, firm, LLP, an association of individuals, a body of individuals, a local authority, etc. pays taxes. This law states that a person's residency status determines whether he will be taxed. The income earned by every resident in India is subject to taxation. When filing for tax purposes every year, taxpayers must comply with certain rules.

How to File e-ITR?

The internet connectivity empowers you to file the ITR electronically from the comfort of your home. Income Tax Department-approved software allows for easy e-filing. You can file the income tax return in two ways: Offline and Online.

OFFLINE PROCESS

For this, download the ITR that is applicable to you, fill the form offline. The XML file that you generate here should be uploaded back to the portal.

For e-filing the ITR through the XML method, the user needs to download one of these ITR utilities:

Excel Utility
Java Utility

Here are the steps to download the Java or Excel utility (for generating and uploading the XML file).

Visit the income tax filing portal: www.incometaxindiaefiling.gov.in

Download the applicable ITR utility following this path: Downloads> IT Return Preparation Software

Once the ZIP folder downloads, extract and open the utility in a folder.

Note: Refer to the ‘Read Me’ document on the page in case you require more information.

Enter all the details in the ITR form. At this stage, you may use the pre-filled XML for entering the form. Here’s the path: My Account>Download Pre-Filled XML.

Calculate the tax by validating all the tabs of the ITR form.

Make sure the XML file is generated and saved.

By entering your user ID (PAN), your password, and the captcha code, you can log in to the e-Filing portal.

Choosing 'Income Tax Return' from the 'e-File' menu will allow you to file your tax return electronically.

On Income Tax Return Page:

PAN will be auto-populated
Select 'Assessment Year'
Select 'ITR form Number'
Select 'Filing Type' as 'Original/Revised Return'
Select 'Submission Mode' as 'Upload XML'

You May Choose any one of the following options to verify the Income Tax Return:

Digital Signature Certificate (DSC).
Aadhaar OTP.
EVC using Prevalidated Bank Account Details.
EVC using Prevalidated Demat Account Details.
Already generated EVC through My Account Generate EVC Option or Bank ATM. You must remember that the validity of this EVC is 72 hours from the time it was generated.
I would like to e-Verify later. Please remind me.
I don’t want to e-verify this Income Tax Return and would like to send signed ITR-V through normal or speed post to "Centralized Processing Center, Income Tax Department, Bengaluru – 560500"

Next, click Continue.

In this step, Attach the ITR XML file.

If you choose DSC as a verification option, you should then attach the signature generated by the DSC management utility.

If you choose Aadhaar OTP as a verification option, enter the Aadhaar OTP you received on the mobile number you registered with UIDAI.

If you choose EVC through a Bank account, Demat account, or Bank ATM as a verification option, then enter the EVC received in the mobile number registered with Bank or Demat Account respectively.

You may choose the other two verification options to submit the ITR. However, the process of filing the ITRs is not complete unless its verification is done. This submitted ITR needs to be e-Verified later, using the path 'My Account > e-Verify Return'. Alternatively, ITR-V can be signed and sent to CPC, Bengaluru.

Submit the ITR.

View the uploaded ITRs.

ONLINE PROCESS

Directly fill out the necessary data electronically for e-filing and submit it.

Visit the Income Tax e-Filing portal, www.incometaxindiaefiling.gov.in

Enter your User ID (PAN), Password, and Captcha code and click 'Login'.

Choose 'e-File' from the menu and then 'Income Tax Return' from the drop-down list.

On Income Tax Return Page:

PAN will be auto-populated
Select 'Assessment Year'
Select 'ITR Form Number'
Select 'Filing Type' as 'Original/Revised Return'
Select 'Submission Mode': 'Prepare and Submit Online'

Click ‘Continue’.

Fill in all the required fields of the ITR Form by reading the instructions carefully

In the 'Taxes Paid and Verification' tab, select the appropriate Verification option.

There are three options available to verify the income tax return:

I would like to e-Verify
I would like to e-Verify later within 120 days from the date of filing.
I don't want to e-Verify and would like to send signed ITR-V through normal or speed post to "Centralized Processing Center, Income Tax Department, Bengaluru - 560 500" within 120 days from the date of filing.

Verify all the information entered into the ITR by clicking on the 'Preview and Submit' button.

'Submit' the ITR.

If you select ‘I would like to e-verify’, you might use the following methods to verify your identity by entering the EVC/OTP.

EVC generated through bank ATM or Generate EVC option under ‘My Account’

Aadhaar OTP
Prevalidated Bank Account
Prevalidated Demat Account

Note:

If you select the other two options, the ITR will be submitted, but the process is not complete until it is verified. The submitted ITR needs to be e-Verified later by using 'My Account > e-Verify Return' option or the signed ITR-V should be sent to CPC, Bengaluru.

If the EVC/OTP is not entered within 60 seconds, the Income Tax Return (ITR) will be automatically submitted. By using the 'My Account > e-Verify Return' option and/or by sending a signed ITR-V to CPC, you can verify the submitted ITR later on.

View the uploaded ITRs.

What are ITR Forms?

Taxpayers need to submit ITR forms to the Income Tax Department to report their income and pay any tax that applies to that income. There are various factors that determine the type of tax return form the taxpayer will file. These factors are:

Total Income
Category of the taxpayer
Sources of income

What are the Types of ITR Forms?

There are 7 different types of ITR forms that need to be filled based on the criteria fulfilled by the taxpayer - ITR1, ITR2, ITR3, ITR4, ITR5, ITR6, and ITR7.

ITR1 Form

Also known as the Sahaj form, this form will be filled by people who:

Earn through salary or pension
Earn from a housing property
Do have an income from capital gains
Do not own any property outside India
Earn income only domestically
Earn an agricultural income that up to INR 5,000
Have an income from investments like the Fixed Deposits
Do not earn through lotteries or horse racing.

Click Here to visit our complete guide on ITR1

ITR2 Form

This form is to be filed by individuals or HUFs who have an income from selling a property or any other asset.
Earnings from salary or pension
Earnings from other sources such as lotteries, horse racing, etc.

The income from the above-mentioned factors should be more than INR 50 lakhs.

It also applies to:

An individual who has an International income or from foreign sources
An individual who is Director in an organization
Income from capital gains
Being RNOR- Resident Not Ordinarily Resident and non-resident.
Having income from agriculture that is more than INR 5,000.
Also, if the individual has made investments in any unlisted equity during the fiscal year.

Click Here to visit our complete guide on ITR2

ITR3 Form

The form applies when:

If an individual or HUF earns their income from gains and profits from their profession or business, they need to file the ITR2 form.
Individuals having incomes from house property, salary, or pension.
If the individual has an income from a partnership in a firm.
Individual having income from unlisted equity during the fiscal year

Click Here to visit our complete guide on ITR3

ITR4 Form/ Sugam Form

ITR4 form applies to individuals, HUFs, or partnership enterprises who earn income from the following:

Professional income in accordance with section 44ADA
Business income in accordance with the section 44AD and 44AE
Salary or pension up to INR 50 lakhs.
Income from a single house property that is not more than INR 50 lakhs (except in case the loss is brought forward).
Earnings from other sources that are not more than INR 50 Lakhs (does not include income from horse race earnings or lotteries)

Click Here to visit our complete guide on ITR4

ITR5 Form

ITR5 form is to be filed by the enterprises, co-operative societies, LLPs (Limited Liability Partnership), Body of Individuals (BOI), Artificial Juridical Persons (AJP).

Click Here to visit our complete guide on ITR5

ITR6

The ITR6 is to be filed by all organizations except the ones that claim exemptions under section 11 of the Income Tax Act of 1961.

Click Here to visit our complete guide on ITR6

ITR7

ITR7 is to be filed by people and companies who need to file returns under section 139(4A) or section 139(4C) or section 139(4D) or section 139(4E) or section 139(4F).

Section 139(4A): This must be filed by people who have income from their property that is under a trust or other legal obligation for charitable for religious purposes.
Section 139(4B): This must be filed by political parties whose income is more than the non-taxable income.
Section 139(4C): This is to be filed by scientific research associations, news agencies, universities, medical institutions. It also includes institutions referred to in section 10(23A), institutions referred to in section 10(23B).

Click Here to visit our complete guide on ITR7

Which ITR to File?

Now that you know what an income tax return is and how to file it electronically, understand that there is no one tax form that fits all situations. Depending on how much income you generate, the Income Tax Department will issue a different form to you. Here are the details:

ITR 1

ITR 2

ITR 3

ITR 4

Also called Sahaj Form.

This is required to be filled in by the individuals whose earnings do not exceed Rupees 50 Lakh.

This form applies to individuals and Hindu Undivided Families (HUF) in case of no profits in their business or occupation.

This form is to be submitted by individuals, partner in firm, or HUFs who have reported profits in their profession.

Also called Sugam Form.

This is to be filled by individuals, HUF, or companies whose business qualifies for Presumptive taxation based on the Income Tax guidelines.

ITR5

ITR6

ITR7

This form applies to Partnership/LLP, House property income, business, capital gains, other sources.

This form applies to companies except the companies claiing exemption under section 11.

ITR6 can be filed electronically ONLY.

This form applies to persons including companies required to furnish returns in accordance with sections - 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E), or 139(4F).

Is it Mandatory to File ITR?

In the case of income exceeding the limits that are exempt from being taxed, you are mandatorily required to file a tax return according to the tax slabs in effect at the time. Moreover, filing an ITR after the due date could result in a penalty or even prevent you from getting a loan or visa approved.

Who Should File the ITR?

Following the definition of an income tax return, let's see what individuals and entities need to submit one. This includes:

Any person under 59 years of age with an income exceeding Rs 2.5 lakhs a year. For seniors between the ages of 60 and 79, the exemption limit is Rs 3 lakh, and for super seniors (80 years and older), it is Rs 5 lakh. In accordance with Section 10 of the Income Tax Act, income must be calculated without regard to deductions.
Registered company with a yearly income, whether or not profits were made over the year.
Individuals seeking a refund of excess income tax or tax deducted from their taxable income.
Anyone with a financial interest or asset outside of the country.
Company based in India that enjoys treaty benefits on transactions within the country.
Those NRIs whose income is in excess of the basic exemption limit of Rs 2.5 lakh.

Documents Required to File ITR

Apart from a salary slip, bank savings account passbook, Aadhar card, and PAN card, you will also require the following additional documents to complete your income tax return:

Form 16: You will receive this form from your employer. It includes details of your salary and the taxes deducted by your employer (TDS).
Form 16A: This form includes information on tax deducted on interest received from fixed or recurring bank deposits.
Form 16B: When you sell a property, TDS is charged on the amount received by you from the buyer. The details of this transaction are displayed on this form.
Form 16C: Here you record the amount of rent your tenant has paid you.
Form 26AS: With this form, you provide your detailed statement of taxes against your PAN number. Any payment you receive from your employer, bank, or another organization is subject to TDS. A list of taxes paid in advance or self-assessment taxes, proof of tax-saving investments, such as deductions under sections 80C to 80U including life insurance policies or term plans, is also provided.

How to Check ITR Status Electronically/ Online?

On the e-filing website of the Government of India, you can check the status of your tax return after you have submitted it. You may check your ITR status based on whether or not you have logged in to the website:

WITHOUT LOGIN DETAILS	WITH LOGIN DETAILS
On the left of the website, click the ITR status link without logging in. On the next page, you will be asked to enter your PAN and ITR acknowledgment number along with a captcha code. Once you have keyed in your tax information, you will see your tax status.	Enter your user name and password for access to the website. Choose 'view returns or forms' from the drop-down menu. Select the assessment year and income tax returns from the menu. Then you'll be able to see whether or not your ITR was verified.

How to Download ITR-V?

Once your taxes have been duly filed, the Income Tax Department generates a verification form that allows you to verify the e-filing of your taxes. This option is only available to those who do not use digital signatures when filing their tax returns. The form is called as ITR-V, i.e. ITR-Verification.

Taxpayers can use this to verify their e-filing account's legitimacy from the IT department by requesting Income Tax Return Verification. ITR-Vs can now be obtained at home or at the office and at any time.

Here is how you can download ITR-V online:

Then, select 'View Returns/ Forms' to view e-filed returns.

To download your ITR-V, simply click the acknowledgment number. You can also choose to verify it electronically. Click the e-verification link below to see your pending returns for e-verification.

To begin the download, select 'ITR-V/Acknowledgement'.

After you have downloaded the document, open it by entering the password. Passwords are your PAN number in lower case letters along with your date of birth.

The document must be printed, signed, and sent to CPC Bangalore within 120 days of e-filing.

Once you have accessed the document, you will require to take a printed copy of it and signing it. You will then have to post it to the CPC Bangalore within the 120 days since you e-filed your return.

Alternatively, you can generate Aadhar OTP through the ATM or net banking. This shall complete the e-verification process of ITR.

Advantages of e-Filing ITR (Filing Online)

Having been through the comprehensive procedure involving the ITR, it is now time to learn about the advantages of e-filing of ITR.

Privacy

Your data is safer in the electronic format than paper filing, as the chances of someone being able to access it are negligible.

Increased accuracy

Integrating validations with electronic connectivity and e-filing software minimizes errors to a great extent. On the other hand, paper-based filing can be susceptible to errors. In addition, when converting the paperwork to an electronic format, mistakes in data entry may get introduced.

Availability of historical data

Data from previous years can be accessed easily when filing returns.

User-friendliness

Filing online does not have time or place restrictions. It is possible to file electronic documents 24/7, from any computer in the world.

Evidence of receipt

As soon as the filing is complete, you receive a confirmation email on the registered email address you entered during the filing process.

E-banking facility

Filing now, paying later is a convenience feature that allows you to decide when your bank account will be debited for your tax payment. Direct deposit of tax refunds and direct debit for tax payments offers convenience.

Simple to use

E-filing is friendly, and there are detailed instructions that make it easy for even the least tech-savvy individuals to use.

Fast processing

Tax Returns (ITR) are acknowledged quickly. Additionally, refunds, if any, will take less time to process online than paper-based returns.

Importance of Filing ITR

While filing one’s ITR voluntarily is a mark of responsibility and all Indians must file ITR in accordance with the rules; there are numerous other ways in which filing ITR holds significance. Online tax filing is becoming increasingly popular, for a host of reasons, including:

Claiming refund or adjustments

The filing of an ITR can help you claim adjustments against any loss that your business or you suffer in the short or long term, even if your income is not adequate to qualify for filing one.

To Revise the returns

A revised return cannot be filed if the original return hasn't been filed. This is probably the most important reason why you must file your ITR.

Verification proof

To determine your eligibility for a loan, your yearly income is taken into consideration. By providing details of your previous income on your ITR form, you provide a clear picture of your previous income, giving your application more credibility. Additionally, Tax returns are the most commonly accepted documents for proving income when submitting visa applications.

Proof of Income

Your insurer may require your ITR when you buy a term plan to determine what compensation your nominees will receive in the case of your death. As a result, the ITR is an official form of proof of income.

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Deskera People simplifies the process of filing an ITR. The integrated tax software can help you file your taxes in no time. Business owners with any type of tax filing requirement can rely on the system. Employees can declare their proposed investments and anticipated expenses through the IT declaration. You can simply auto - calculate the Income Tax based on the type and amount of each investment.

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Key Takeaways

Here are some key points to be noted from the article:

The Income Tax Return or the ITR is the form that comprises the entire information about your income and requires you to file the tax to the income tax department.
Each person or business must file a tax return by a specified date. A taxpayer is liable for a penalty if he or she fails to meet the deadline.
Tax laws in India are drafted by the Government. Every person who possesses taxable income, whether an individual, Hindu Undivided Family (HUF), a company, firm, LLP, an association of individuals, a body of individuals, a local authority, etc. pays taxes.
You can file the income tax return in two ways: Offline and Online.
In the case of income exceeding the limits that are exempt from being taxed, you are mandatorily required to file a tax return according to the tax slabs in effect at the time.
Depending on how much income you generate, the Income Tax Department will issue a different form to you: ITR1, ITR2, ITR3, ITR4, ITR5, ITR6, and ITR7.
You may check your ITR status based on whether or not you have logged in to the website; with or without the login details.
Taxpayers can use this to verify their e-filing account's legitimacy from the IT department by requesting Income Tax Return Verification.

Do not forget to check out our articles on running payroll for India and best practices in HR.