What is Income Tax Return
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Sharanya Radhakrishnan Nair

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What is Income Tax Return (ITR)? A Comprehensive Overview

An Income Tax Return (ITR) is a document you file with the government every year to disclose your income earned during the previous financial year (April 1st to March 31st) and determine your tax liability. It essentially serves as a communication channel between you and the tax authorities, providing details about your finances and allowing them to assess the taxes you owe.

 

Here’s a breakdown of its key aspects:

What it comprises:

  • Income details: You detail your income from various sources such as salary, business income, rent from property, capital gains, interest income, and other sources.
  • Deductions and exemptions: You claim deductions and exemptions allowed under the Income Tax Act to reduce your taxable income. This can include expenses like investments in tax-saving schemes, medical expenses, educational expenses, home loan interest, etc.
  • Tax Calculation: Based on your reported income and claimed deductions, your tax liability is calculated as per the applicable tax slabs and rates.
  • Tax payment: You either pay the balance tax due after adjusting any advance tax paid throughout the year, or receive a refund if you’ve overpaid during the year.

Who Needs to File an ITR:

The need to file an ITR depends on your income level and financial activities. Some general guidelines include:

 

  • Salaried individuals exceeding a specific income threshold (vary depending on age and tax slabs).
  • Individuals with income from sources other than salary, regardless of the amount.
  • Businesses or professionals with income exceeding a certain limit.
  • Individuals claiming tax refunds.
  • Individuals seeking certain government benefits may require filing an ITR.

Different ITR Forms:

To cater to diverse financial situations, there are different ITR forms available, each with specific eligibility criteria and filing requirements. Some common forms include:

 

  • ITR-1: For salaried individuals with income from other sources below a certain limit.
  • ITR-2: For salaried individuals with income from other sources or individuals with income from capital gains.
  • ITR-3: For individuals with complex income from business or profession.
  • ITR-4: For presumptive income from businesses or professions.
  • ITR-6: For companies and limited liability partnerships.

Filing Procedure:

You can file your ITR electronically through the government’s e-filing portal or offline using paper forms. Online filing is encouraged for its convenience and accuracy.

Benefits of Filing ITR:

Filing your ITR offers several benefits beyond just complying with tax regulations. It can:

 

  • Help you secure loans and credit cards.
  • Prove your income for visa applications.
  • Claim tax refunds if due.
  • Track your financial progress year-on-year.
  • Maintain transparency with the government.

Documents Required for ITR filing :

  • PAN Card: Your PAN card is your tax identity and a mandatory requirement for filing any ITR form.
  • Aadhaar Card: Linking your Aadhaar card to your PAN helps in e-verification of your ITR, speeding up the processing and reducing the chances of scrutiny.
  • Bank Account Details: Provide details of your bank accounts, including account number, bank name, and IFSC code, to facilitate any potential refunds or adjustments.
  • Form 16/16A/16B/16C: If you’re a salaried individual, your employer will issue you one of these forms reflecting your salary income and tax deducted at source (TDS).
  • Salary Slips: Keep your salary slips throughout the year as they support your salary income details reported in Form 16.
  • Interest Certificates: Gather bank and post office interest certificates for any interest earned on your savings accounts, fixed deposits, and recurring deposits.
  • Rental Income Documents: If you receive rental income from property, have rental agreements, receipts of rent payments, and property tax receipts readily available.
  • Investment Proofs: Proof of investments in tax-saving schemes like PPF, ELSS, ULIPs, etc., along with purchase receipts and certificates are crucial for claiming deductions.
  • Capital Gains Documents: If you sold any assets like property, shares, or mutual funds, obtain capital gains statements and sale purchase agreements for calculating and reporting capital gains tax.
  • Medical Bills: For claiming medical expense deductions, keep bills for hospitalizations, doctor consultations, medicines, and health insurance premiums.
  • Educational Receipts: Claiming educational expenses for yourself or your dependents requires tuition fee receipts, hostel fee receipts, and scholarship certificates.

Filing your Income Tax Return (ITR) may seem like a bureaucratic mountain to climb, but with the right information and preparation, it becomes a manageable and even empowering journey. By understanding the process, gathering necessary documents, and approaching it with organization and patience, you can conquer the ITR maze and emerge victorious.

 

Remember, filing your ITR is not just about complying with regulations; it’s about taking control of your finances and understanding where your money goes. It’s an opportunity to claim your rightful deductions and exemptions, potentially maximizing your refunds and achieving better financial planning in the future

FAQ on ITR filing :

The certificate of eligible business is valid for three consecutive assessment years out of ten years, beginning from the year in which the certificate is granted.

No, an eligible startup can only avail itself of the tax benefit under Section 80IAC for three consecutive assessment years out of ten years.

  • The documents required to apply for a certificate of eligible business include:
  1. DPIIT recognition certificate.
  2. Business Profile.
  3. Financial statements.
  4. Details of innovation or development activities.
  5. Employment generation potential.

Yes, a startup that has already received its certificate of eligible business can apply for a refund of taxes paid in previous years for which the startup was eligible for deduction under Section 80IAC.

If a startup loses its certificate of eligible business, it will no longer be entitled to the tax benefits under Section 80IAC. The startup will be required to pay the taxes that it would have otherwise been entitled to deduct.

You can check the status of your tax exemption application by going to the Startup India Portal. Simply log in to your account and select ‘Dashboard’.

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