What is Income Tax Return (ITR) Filing?
Income Tax Return (ITR) filing is the annual process where individuals and entities report their earnings and claim deductions to the Income Tax Department of India. This declaration involves submitting a specific ITR form that details all income sources (like salary, business profits, or capital gains) and claims eligible tax-saving deductions.
Why is Filing Your Income Tax Return Important?
Filing your income tax return offers significant benefits that go beyond just legal compliance:
- Avoid Penalties: Failing to file or late filing can lead to significant penalties.
- Claim Refunds: If you've paid excess tax (TDS), filing allows you to claim your income tax refund.
- Proof of Income: It serves as a legitimate proof of your income for loans, visas, and credit card applications.
- Carry Forward Losses: You can carry forward losses from business or capital gains to future years only if you file ITR on time.
Old vs. New Tax Regime
India offers two tax regimes. The New Tax Regime (default) offers lower tax rates but fewer deductions. The Old Tax Regime allows various deductions (like 80C, HRA) but has higher slab rates.
New Tax Regime Slabs (FY 2024-25):
- 0 - 3 Lakhs: Nil
- 3 - 7 Lakhs: 5%
- 7 - 10 Lakhs: 10%
- 10 - 12 Lakhs: 15%
- 12 - 15 Lakhs: 20%
- Above 15 Lakhs: 30%
Under the New Regime, income up to Rs. 7 Lakhs is effectively tax-free due to Section 87A rebate.
Types of ITR Forms
The ITR form depends on your income source:
- ITR-1 (Sahaj): For resident individuals with income up to Rs. 50 Lakhs from salary, one house property, and other sources.
- ITR-2: For individuals/HUFs with income from capital gains, foreign assets, or more than one house property.
- ITR-3: For individuals/HUFs with income from business or profession.
- ITR-4 (Sugam): For presumptive taxation (Section 44AD, 44ADA, 44AE).
- ITR-5: For firms, LLPs, AOPs, and BOIs.
- ITR-6: For companies (other than Section 11).
- ITR-7: For trusts and charitable institutions.
Documents Required for ITR Filing
Having these documents ready will speed up your filing process:
- PAN & Aadhaar: Mandatory for filing.
- Form 16: Issued by employer for salaried individuals.
- Form 26AS / AIS / TIS: To verify TDS and other income details.
- Bank Statements: For interest income and other transactions.
- Investment Proofs: LIC receipts, PPF passbook, ELSS statements, etc. (for Old Regime).
- Home Loan Certificate: For interest and principal repayment deduction.
- Capital Gains Statements: From brokers for share trading.
Key Tax Deductions (Old Regime)
- Section 80C: Up to Rs. 1.5 Lakhs (PPF, EPF, LIC, ELSS, Tuition Fees).
- Section 80D: Health insurance premiums for self and parents.
- Section 24(b): Interest on home loan (up to Rs. 2 Lakhs for self-occupied).
- Section 80TTA/80TTB: Interest on savings accounts.
- Section 80E: Interest on education loans.
- Standard Deduction: Rs. 50,000 for salaried employees (available in both regimes).
How to File ITR Online?
- Gather Documents: Collect Form 16, bank statements, and investment proofs.
- Login to Portal: Access the Income Tax e-filing portal.
- Select Form: Choose the correct ITR form based on your income.
- Fill Details: Enter income details, claim deductions, and verify with Form 26AS/AIS.
- Calculate Tax: Compute tax liability and pay any self-assessment tax if due.
- Submit & Verify: Submit the return and e-verify using Aadhaar OTP or Net Banking.
