Individuals and businesses receive income that is subject to taxation, thus they must file an income tax return with the IRS in accordance with the rules of the Income Tax Act of 1961. The central government oversees collecting the income tax.

There are about 9 different sorts of ITR forms that a taxpayer might use to file his taxes. Individuals must, however, consider only the following forms while submitting returns, according to the Central Board of Direct Taxes in India:

    • ITR-1: This income tax return form, also known as the Sahaj form, is to be filed only by an individual taxpayer. Any other assesses who is required to pay tax is ineligible to use this form to file their returns. This form is for the following individuals:

    1. A person who earns money through a wage or other sources such as a pension.

    2. A person who makes a living from a single rental property.

    3. An individual who does not have any other source of income or who does not receive any money from the sale of any assets (i.e. capital gains)

    4. Individuals who have no assets or property in any country other than India

    • ITR-2: The ITR-2 Form is a type of ITR that is typically utilized by those who have earned money from the sale of assets or property. This form is also important for people who earn money from countries other than India. Individuals or Hindu Undivided Families (HUF) can use this form to file their IT returns in most circumstances. This form is for the following individuals:

    1. People who make a living via a wage or other sources of income, such as a pension

    2. A person who earns money from the sale of assets or real estate in India (capital gains).

    3. A person who earns money from more than one rental property.

    • ITR-2A: The ITR-2A form is a new income tax return form that was introduced in the 2015-16 assessment year. A Hindu Undivided Family (HUF) or an individual taxpayer can utilize this form. The ITR-2A form is for the following individuals:

    1. People who earn a living through a wage or other methods such as a pension

    2. People who make a living from more than one rental property.

    3. A person who does not have any other source of income or who does not receive any income from the sale of any assets (capital gains).

    • ITR-3: Individual taxpayers or Hindu Undivided Families who solely operate as a partner in a firm but do not conduct any business under the firm should utilize the ITR-3 Form. This also applies to individuals who do not benefit financially from the firm's operations.

    • ITR-4: Individuals who own a business or earn a living through a vocation will benefit from this type of ITR form. This form can be used for any type of business, endeavor, or profession, and there is no limit to the amount of money that can be earned. Taxpayers can also combine whatever money they obtain from windfalls, speculation, salaries, lotteries, real estate, and other sources with their business income.

    • ITR-4S: The ITR-4S form, also known as the Sugam form, can be used to file income tax returns by any person or Hindu Undivided Family (HUF). This form is for the following individuals:

    1. Individuals who make a living through any type of business

    2. Individuals who make a living from a single rental property

    3. Individuals who do not earn money from the sale of assets or real estate in India (capital gains).

The following income tax return forms are only for businesses and corporations:

    • ITR-5 

    • ITR-6 

    • ITR-7

Before submitting an ITR, you must have the following:

    • PAN (Personal Identification Number) card

    • Aadhaar Card which is issued by the government of India is required.

    • Form 16 contains information about your bank account (issued by the employer)

    • e-filing profile for income taxes (profile on ITR e-filing portal)

    • If you have any investments, mention about that.

    • If you have a loan, mention about that also.

You can file your income tax return using the aforementioned information by logging into the portal and filling in the required fields. This procedure is straightforward and can be completed in a short period of time.

    • It qualifies a taxpayer for loan processing.

    • It aids in obtaining a TDS refund or any other overpayment of tax.

    • Losses can be easily carried forwarded.

    • It transforms a person into a responsible citizen.

    • It aids in the avoidance of penalty requirements.

    • When applying for a loan or a visa, it is used as a kind of financial proof.

    • Aids the government in keeping track of taxpayer revenue.

Who is obligated to file tax returns?

If you meet any of the following requirements, you must file an income tax return:

    • If you are under the age of 60 and have a total yearly gross income of more than Rs 2,50,000.

    • If you are a senior citizen, defined as someone who is 60 years old or older but not yet 80 years old, and your total yearly gross income exceeds Rs 3,000,000.

    • If you are a super senior person (80 years or older) with a total annual gross income of more than Rs 5,00,000.

    • If you own a company or a firm, you must file an ITR for the fiscal year, regardless of whether you made a profit or not.

    • If you want to seek a tax refund for the current fiscal year.

    • If you sold equity shares in a firm, an equity-oriented mutual fund unit, or a unit of a business trust for more than Rs 2,50,000 and received tax-free long-term capital gains.

    • If you get money from the sale of a property held by a charitable trust, religious trust, political party, educational institution, or any other authority, body, or trust.

    • If you are a foreign corporation that has benefited from a treaty on a deal in India.

    • If your total yearly gross income generated or accrued in India exceeds Rs 2,50,000 and you are an NRI (non-resident Indian).

Below mentioned procedures must be followed for ITR filing:

    • To file returns online, go to the Income Tax Department's website (www.incometaxindiaefiling.gov.in). Your Permanent Account Number (PAN) will serve as your user ID when you register.

    • Select appropriate Income Tax Return (ITR) form under e-filing for the relevant assessment year under 'Download'. If you are a salaried individual, download ITR-1's (Sahaj) return preparation software.

    • Follow the directions in the downloadable Return Preparation Software (excel utility) and input all the data from your Form 16.

    • Calculate the tax payable, pay the tax, and include the information from the relevant challan in the tax return. If you don't owe any money in taxes, you can skip this step.

    • Confirm the information you submitted and create an XML file that is stored to your computer automatically.

    • In the 'Submit Return' area, upload the XML file.

    • Sign the file digitally when you are said. You can skip this step if you don't have a digital signature.

    • A notification confirming successful e-filing shows on your screen. The ITR-Verification acknowledgement form is generated and can be downloaded. You will also receive it in your registered mail id.

    • You can e-verify your return using any of the six methods listed below: 1) Net banking, 2) Bank ATM, 3) Aadhaar OTP, 4) Bank Account Number, 5) Demat Account Number, and 6) Registered Mobile Number and E-mail Id The necessity to provide a physical copy of the ITR-5 acknowledgement to CPC, Bengaluru is eliminated with e-verification.

Consequences of failing to file an ITR

Now that you're aware of the benefits of completing an income tax return, consider the following drawbacks if they fail to do so:

    • If a person falls into the taxable bracket, he or she will receive an income tax notification.

    • The authorization body will accept a thorough letter and supporting papers if a person is unable to file IT returns for a legitimate cause. In this instance, he may be eligible for a pardon.

    • If an individual fails to file an ITR on time, the IT Department will impose penalty. If one's income exceeds Rs. 5 lakhs, a penalty of Rs. 10,000 is imposed. If your income is less than this, you will be fined Rs 1,000.

    • Assesses may face harsh prison sentences in extreme cases such as tax evasion.

There are, however, some people who are not required to file a tax return. According to the Finance Minister's announcement in the Union Budget 2021, senior individuals over the age of 75 can enjoy a full exemption from filing ITRs.

After reading this complete tutorial on the advantages of submitting ITR, you will be able to recognize the benefits of e-filing tax returns and applying for them without delay.

    1. What is the method for filing an ITR offline by hand?

The taxpayer wishes to select and download the appropriate tax form. Fill in all required information and save the file in XML format. Choose one of the available verification modes: Aadhaar OTP, EVC, or submitting a manually signed copy of ITR V to CPC after uploading the XML file to the IT site.

    2. What are the various tax forms available under the Income Tax Act?

ITR1, ITR2, ITR3, ITR4, ITR5, ITR6, ITR7, and ITR-V are the many forms accessible under the Income Tax Law.

    3. What's the difference between electronic payment and electronic filing?

E-filing is the procedure of electronically submitting tax returns. E-payment refers to paying taxes online with a State Bank of India debit or credit card or through net banking.

    4. What are the benefits of submitting tax returns?

    • It qualifies a taxpayer for loan processing.

    • It aids in obtaining a TDS refund or any other overpayment of tax.

    • Looses can be easily carried ahead.

    • It transforms a person into a responsible citizen.

    5. Will I be prosecuted if I fail to file tax returns for my taxable income?

Yes, if you do not pay the tax, you may be subject to additional interest, penalties, or prosecution. The severity of the prosecution will vary depending on the amount of tax that must be paid.

    6. Who is obligated to submit an ITR?

An ITR must be filed by every Indian citizen whose gross total income exceeds the taxable limit. Individuals and Hindu Undivided Families (HUFs) having total annual income surpassing Rs 250,000 lakh must file income tax forms, according to the law. The barrier for senior citizens is Rs 300,000, and for extremely senior individuals (over 80 years old), it is Rs 500,000.

    7. Is it necessary to submit a return if an apparent decrease in business income has occurred?

Yes, completing ITR in the event of a loss is in your business. You can transfer forward the damages/losses to a specified predicted financial year using online ITR filing to set off losses against future profits.

    8. Is it necessary to submit an income tax return if my annual income is less than Rs 250,000?

If your yearly income is less than Rs 250,000, you are not required to file an income tax return. Even people who are not subject to taxes might consider submitting a 'Nil Return' to keep track of their finances. Income tax returns can be used as proof of employment in a variety of situations.