The procedure to assess income begins with filing a return for income as per the Income Tax Act, 1961. Accordingly, as per section 139(1) of this act, every person:
- whether a company or firm
- any person other than a company or firm
needs to file a return of his income on or before the due date. Provided if his total income or total income of any other person in respect of which he is assessable under the Act exceeds the threshold limit of income not chargeable to tax. Furthermore, such a return should be furnished in the prescribed ITR form. The type of Income Tax Return (ITR) form to be filed depends upon:
- amount of income earned by the taxpayer
- category of the taxpayer i.e. individual, company or HUF
- sources through which the taxpayer earns income
What is Income Tax Return?
Income Tax Return (ITR) is a form in which an assessee furnishes information regarding his income earned during the previous year. It also mentions the tax calculated thereupon to the income tax department. There are various types of ITR forms. These include ITR1, ITR2 ITR3, ITR4, ITR5, ITR6 and ITR7.
As per the Income Tax Act, 1961, the taxpayer needs to file returns with the income tax department on or before the specified dates.
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Who is Required to File Income Tax Returns?
- Government mandates individuals earning a specified amount of income to file income tax returns. These persons include:
|Type of Individual/HUF||Taxable Income|
|Individuals/ HUF below 60 years||Income exceeding Rs. 2,50,000|
|Individuals/ HUF above 60 (Senior Citizens) years but below 80 years||Income exceeding Rs. 3,00,000|
|Individuals/HUF above 80 years (Super Senior Citizens)||Income exceeding Rs. 5,00,000|
Firms Or Companies
Filing of income tax returns is compulsory in case you want to claim income tax refund.
Persons Who Need To Claim Tax Refund
Firms or companies irrespective for earning profits or incurring losses during the previous financial year must necessarily file an income tax return.
Persons Who Need To Carry Forward Losses
In order to carry forward losses under any head of income, it is necessary to file an income tax return.
A Resident Having Any Asset Outside India
A resident individual having an asset or financial interest in any entity located outside India must file ITR. This is not applicable to Resident but Not Ordinary Residents (RNORs)
A Resident Having Signing Authority In a Foreign Account
In cases where an individual is a resident and has a signing authority in a foreign account is also required to necessarily file ITR. This is again not applicable to Residents but Not Ordinary Residents (RNORs)
Persons Earning Income Through Following Sources
You need to necessarily file an income tax return in cases where you earn income from the following sources:
- property held under a Trust for charitable or religious purposes
- income derived from a political party
- research association, news agency, educational or medical institution
- trade union
- a non for profit university or educational institution
- infrastructure debt fund
- any authority, body or trust
Persons Applying For Loan Or Visa
In case you are applying for a loan or visa, you must have ITRs. This is because these ITRs act as a proof of your income while applying for such a loan or visa
Persons or Individuals Filing ITR In the Previous Years
Persons or individuals filing ITR during previous years need to preferably file ITR for the current financial year as well. This is despite the fact whether such individuals are liable for income tax or not. Further, such persons need to file ITR to avoid any notice from IT department.
Persons Involved in Transactions That Come Under Annual Information Return
If you engage in any transactions that come under Annual Information Return, then you must file ITR. This is to avoid any notice from IT department as they already have information about your involvement in such transactions. Few of the transactions listed under Annual Information Return include:
- purchase or sale of immovable property exceeding Rs. 30,00,000
- payment made through credit card exceeding Rs. 2,00,000 during a given financial year etc.
Persons Getting TDS Deducted
In case tax is deducted from your income, then you must file ITR with the income tax department. This is to prevent any notice from the IT department as they already have information about your income
Types of Income Tax Returns (ITRs)
|Who Needs to File|
|ITR 1 (Sahaj)||Individuals who are resident other than not ordinarily residents having income from:|
|ITR 2||Individuals and HUFs not having income from profits and gains of business or profession|
|ITR 3||Individuals and HUFs having income from profits and gains of business or profession|
|ITR 4 (Sugam)||For Presumptive Income from business or profession|
|ITR 5||For persons other than:|
|ITR 6||For Companies other than companies claiming exemption under section 11|
|ITR 7||For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)|