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How to file Income Tax returns? Which form should I use? There are several questions running on the mind of the taxpayer while filing ITR. In this guide, we explain all that you need to know about income tax returns.

Indians are required to pay income tax on any income they earn during a financial year. The Income Tax Act, 1961 has laid out clear cut rules on the amount of tax to be paid, the rebates they can claim and various other surcharges and cess to be collected.

This collected income tax amount is used in various nation development schemes and activities. Hence, paying your income tax is your foremost duty as a citizen of this country.

What are income tax returns?

An Income Tax Return (ITR) is a form used by individuals to file details about your salary and tax to the Department of Income Tax. A taxpayer's tax liability is calculated according to his or her earnings. Unless the return indicates that excess tax was charged during a year, then the taxpayer would be entitled to seek an income tax refund from the Department of Income Tax.

According to the income tax laws, the return must be filed by a person or company who receives some income within a financial year each year. The revenue may be in the form of a wage, company earnings, household income or gained by dividends, capital gains, interest or other sources.

A person or a company must file tax returns before a specified date. If a taxpayer fails to file returns before the deadline, he or she will be required to pay a fine.

Who is required to file income tax returns?

According to the Income Tax Act, income tax only has to be paid by individuals or companies falling within certain income brackets. These are the entities or companies which are needed to file their ITRs in India compulsorily:

  • All people, up to age 59, whose total income exceeds Rs. 2.5 lakhs for a financial year. The cap rises to Rs. 3 lakhs for senior citizens (aged 60-79), and Rs. 5 lakhs for super senior citizens (aged 80 and above). It is necessary to remember that the sum of income should be calculated after the deductions permitted under Sections 80C to 80U and other exemptions under Section 10 before factoring in.
  • All licensed companies that produce revenue, regardless of whether or not they have made any profit over the year.
  • All those who wish to claim a refund on the tax deducted/income tax they have paid in excess.
  • Individuals with properties or companies of financial interest located outside India.
  • Global companies that enjoy the advantages of the treaty on transactions made in India.
  • NRIs who gain or accrue more than Rs. 2.5 lakh in a single financial year in India.

Is it mandatory to file income tax returns?

As per the Income Tax Act & Laws, if your income is more than the minimum exemption limit, it is compulsory to file your income tax returns. For taxpayers, the income tax rate is pre-decided. A delay in filing returns does not only draw late filing penalties but also hamper the chances of getting a loan or travel visa.

What are the benefits of filing my return of income?

​​​​Return filing is your responsibility and gives you the distinction of actively contributing to the nation's growth. In addition, your income-tax returns confirm your credit worthiness to financial institutions and allow you to access other financial benefits, such as bank loans, etc.

E-filing of Income Tax Returns

E-filing of returns or electronic filing of Income Tax returns was introduced in 2004. Initially, it was introduced on an optional basis for Corporate firms. Individuals used to manually file their returns at their nearest Income Tax offices. Last minute filing used to result in a huge rush in the last week of the deadline.

However, since 2012-13, e-filing has been made mandatory for all income tax payers. Taxpayers can conveniently calculate their tax liability, pay tax, claim refunds and file their Income Tax Returns from the comfort of their home. The Government e-filing website for Income Tax is very user friendly and self-explanatory.

ITR-Forms Explained

The Income Tax Department's official web site lists many forms that allows taxpayers to fill out based on their income. Although some of these forms are simple to fill in, some include additional reporting such as the statements of income and loss. The below list gives the name of the ITR form and their applicability:

  • ITR-1: Sahaj or ITR-1 shall be used by resident Indians / individuals (not ordinarily residents) with total income of up to Rs.50 lakhs, income from wages, one housing property, other sources (Interest etc.), and agricultural income of up to Rs.5 thousand.
  • ITR-2: Individuals and HUFs who do not have income from sales and profits of industry or occupation will file this form.
  • ITR-3: This form refers to individuals and HUFs with income and company or occupational benefits.
  • ITR-4 Sugam: If your company is earning presumptive profits, you need to fill out this form. This form is to be submitted by persons, HUFs and companies (other than LLP) who are residents with total income up to Rs.50 lakhs and with company and occupation income measured under sections 44AD, 44ADA or 44AE.
  • ITR-5: A person being a Company, LLP, AOP, BOI, Artificial Juridical person referred to in section 2(31)(vii), cooperative society and local authority may use this form. A person who is required to file income returns under section 139(4A) or 139(4B) or 139(4C) or 139(4D) shall not use this form (i.e., trusts, political parties, organisations, colleges)
  • ITR-6: It applies to a company other than a company claiming an exemption under section 11 (exemption may be claimed by charitable / religious trust under section 11).
  • ITR-7: This applies to persons including companies that are required to make a return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) (i.e. trusts, political parties, institutions, colleges).
  • ITR-V: It is the acknowledgment of filing income returns.

Documents Required to file Income Tax Returns

In order to fill the relevant ITR forms, you need other business and personal documents. Here is a list of the common documents one requires while filing their Income Tax Returns:

  • Interest certificates from banks and post office – to calculate the total interest earned
  • Salary slips
  • Aadhaar Card
  • PAN card
  • TDS Forms – Many incomes have tax deducted at the source. The taxpayer is then given a TDS Form that details the income and the corresponding tax deducted for it. Some of the TDS Forms are:
    • Form-16-  TDS certificate issued to you by your employer to provide details of the salary paid to you and TDS deducted on it, if any
    • Form-16A, if TDS is deducted on payments other than salaries such as interest received from fixed deposits, recurring deposits etc. over the specified limits as per the current tax laws
    • Form-16B from the buyer if you have sold a property, showing the TDS deducted on the amount paid to you
    • Form-16C from your tenant, for providing the details of TDS deducted on the rent received by you, if any
    • Form 26AS - your consolidated annual tax statement. It has all the information about the taxes deposited against your PAN
      • TDS deducted by your employer
      • TDS deducted by banks
      • TDS deducted by any other organisations from payments made to you
      • Advance taxes deposited by you
      • Self-assessment taxes paid by you
  • Tax saving investment proofs
  • Proofs to claim deductions under section 80D to 80U (health insurance premium for self and family, interest on education loan)
  • Home loan statement from bank

FAQs on Income Tax Returns

1. What are the different modes of filing the return of income?

​The Return Form can be filed with the Income-tax Department in one of the following ways:

  • (i) by furnishing the return in a paper form;
  • (ii) by furnishing the return electronically under digital signature;
  • (iii) by transmitting the data in the return electronically under electronic verification code;
  • (iv) by transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR-V;

2. Is it necessary to attach any documents along with the return of income?

ITR return forms are annexes with fewer forms and thus the taxpayer is not required to add any document (such as investment proof, TDS certificates, etc.) along with tax returns (whether submitted manually or electronically). These documents, however, should be retained by the taxpayer and produced before the tax authorities when requested in situations such as assessment, enquiry, etc.

3. Who cannot use ITR – 2?

Type ITR-2 cannot be used by individuals and HUFs whose overall annual income includes income from sales and earnings from companies or occupations and also income in the form of interest, salaries, incentives, commissions or remuneration, whatever the name they call or earn from a partner organization.

4. Is it necessary to file a return of income when I do not have any positive income?

When you have suffered a loss in the financial year that you are planning to carry forward to the next year for adjustment against positive profits from subsequent years, you should make a claim for loss by filing your return before the due date.

5. Will I be penalized on late filing of ITR even if I am not liable to file it?

No, late filing fee under section 234F cannot be imposed if you are not allowed to file ITR pursuant to section 139 but voluntarily send it after the due date.

End Note:

As responsible citizens of the country, every individual, who earns income in the country should pay income tax for the progress and development of the country. At the end of every financial year, it is their responsibility to file their income tax return.

Latest & Update Income Tax Returns News

Last Date for Filing ITR Extended to 31st December 2021 16 Sep 2021

If you have still not prepared your income tax returns, you can breathe easy. The government has once again extended the last date to file ITR for FY 20-21 to 31st December 2021. This move comes due to the various glitches faced by taxpayers while us...

Read more

If you have still not prepared your income tax returns, you can breathe easy. The government has once again extended the last date to file ITR for FY 20-21 to 31st December 2021. This move comes due to the various glitches faced by taxpayers while using the new income tax portal. Note that this is the second time the deadline has been extended this year. Earlier the last date was set at 30th September instead of the usual 31st July deadline.

Last Date for Filing Income Tax Returns Extended to 30th September 2021 3 Jul 2021

To provide taxpayers with some relief during the ongoing pandemic, the Income Tax department has extended the last date for filing tax returns for individuals to 30th September 2021. For companies, the last date has been extended to 30th November 202...

Read more

To provide taxpayers with some relief during the ongoing pandemic, the Income Tax department has extended the last date for filing tax returns for individuals to 30th September 2021. For companies, the last date has been extended to 30th November 2021. The extension hopes to provide some breathing time for taxpayers affected by the pandemic.

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