Choosing the Right ITR: A Comprehensive Guide to Filing Your Taxes

Guide to Filing Your Taxes,The Income Tax Return (ITR) is an essential form that must be submitted by every taxpayer to the government. The act of disclosing one’s income and expenses has the purpose of enabling the government to determine the tax obligations of a person or organization. It is necessary to possess knowledge regarding the various types of Income Tax Return (and their respective filing deadlines to adhere to tax legislation and prevent penalties. This blog post aims to examine many types of Income Tax Return (ITR) forms and offer recommendations regarding their appropriate filing timelines.

Table of Content

Meaning of ITR

Income Tax Return is a crucial financial document that individuals and entities must submit to the Indian government’s Income Tax Department each year. Its primary purpose is to declare and report total income, including various sources of earnings, such as salaries, business profits, capital gains, and rental income, while also factoring in deductions and tax credits. ITR filing is mandatory for those whose income exceeds the taxable threshold, ensuring they contribute their rightful share to the country’s revenue. The annual deadline for filing ITR is typically July 31st, although it may vary in specific cases or for certain categories of taxpayers, and compliance is essential to avoid penalties and legal consequences. Let’s learn about types of income tax return and when to file.

What are the reasons for filing an Income Tax Return (ITR)?

The reasons for filing ITR are:

• If one desires to request a reimbursement of income tax from the relevant governmental department.
• If an individual has generated income from or made investments in overseas assets throughout the fiscal year.
• If one desires to apply for a visa or a loan
• Regardless of whether the taxpayer is a company or a business entity, regardless of their financial outcome.
• Unless the return is filed before the due date, individuals who have incurred losses from their business or profession, or under the capital gains category, will not be permitted to carry these losses forward to subsequent years.

When is filing an Income Tax Return (ITR) in India required?

The ITR need to be filed if the gross total income is more than a basic exemption limit that is 2.5 lakh is the exemption limit for people below 60 years of age, for people between 60 to 80 years of age 3 lakh is the basic exemption limit and for people above 80 years 5 lakh is the basic exemption limit. An individual must have a basic understanding of how to file ITR. ITR filing for all the states in India is mostly same as ITR filing Jaipur is mostly same as that of Bhopal.

If an individual has an income below the basic exemption limit, then to the individual must file income tax return if any of the below mentioned criteria are met:

• Tax regulations require individuals to file a tax return if they deposit Rs. 1 crore or more in one or more current bank accounts. No requirements are currently in place for post office current account deposits.
• A “savings” bank account has received more Rs 50 lakh. If they deposit Rs 50 lakh or more in savings bank accounts, individuals must file a tax return.
• If one spent above Rs 2 lakh on international travel, whether for personal or business reasons, they must file a tax return.
• The cost of electricity exceeds 100,000 rupees. A tax return is required if an individual had electricity expenses over Rs.1 lakh in the previous fiscal year.
• If TDS or TCS exceeds Rs 25,000 in the previous fiscal year. The maximum for senior adults 60 and above is Rs 50,000.
• Tax returns are required for commercial entities with sales, turnover, or gross receipts over Rs 60 lakh in the previous year.
• Professionals with a gross income over Rs 10 lakh in the previous fiscal year must file a tax return.

Types of ITR

Guide to Filing Your Taxes , The ITR forms serve as standardized templates for reporting income, deductions, and tax liabilities to the government. The specific types of ITR forms, as per the Income Tax Act, include:

• ITR-1 (Sahaj): This form is for individuals with income from salaries, one house property, and income from other sources, excluding those with business income or capital gains.
• ITR-2: Applicable to individuals and Hindu Undivided Families (HUFs) with income from various sources, including more complex financial situations like capital gains and foreign income.
• ITR-3: Designed for individuals and HUFs who have income from business or profession and require a detailed disclosure of financials.
• ITR-4 (Sugam): Suited for individuals, HUFs, and firms (other than LLPs) with presumptive income from business and profession.
• ITR-5: This form is for partnerships, LLPs (Limited Liability Partnerships), Association of Persons (AOPs), Body of Individuals (BOIs), and artificial juridical persons.
• ITR-6: It is for businesses that do not qualify for the Section 11 exemption (Income from property kept for charity or religious purposes).
• ITR-7: Sections 139(4A), 139(4B), 139(4C), and 139(4D) of the Income Tax Act apply to organizations including trusts, political parties, schools, and more. These organizations must file Form ITR-7.

The last date to file income tax return in India depends upon the type of return a person is filing.

Who is required to file ITR-1 and due date to file the return?

The provided Return Form is intended for use by resident individuals whose total income for the year includes the following:

• The primary source of revenue is derived from employment income, including salaries and pensions.
• Income derived from a single residential property, eliminating instances where a loss is carried forward from previous fiscal years.
• The revenue derived from sources other than lottery winnings and income generated from racehorses.
• The agricultural income has increased to a maximum of Rs 5000.

The ITR -1 filing last date for individualis the 31st of July in the relevant assessment year. That is last date to file ITR for FY 2023-24 is 31st July of A.Y that is 2024-2025.However, taxpayers whose accounts are subject to audit have until the 31st of October to file their return.

Who is required to file ITR-2 and due date to file the return?

Guide to Filing Your Taxes, The ITR-2 form is designated for the utilization by an individual or a Hindu Undivided Family (HUF) whose aggregate income for the year encompasses:

• The revenue derived from employment compensation or retirement benefits.
• Income derived from house property.
• The revenue derived from alternative sources, such as lottery winnings and income generated from racehorses.
• If one assumes the role of an Individual Director inside a corporate entity
• If an individual has possessed investments in unlisted equity shares at any point within the fiscal year
• As an individual classified as RNOR and non-resident,
• The revenue generated from capital gains.
• The possession of foreign income
• The agricultural revenue exceeds Rs 5,000.
• The possession of assets, which may include financial stakes in any entity, beyond the borders of India, as well as the authorization to sign on any account situated outside India.
• If tax has been deducted in accordance with the provisions of Section 194N
• If the payment or tax deduction associated with an Employee Stock Ownership Plan (ESOP) has been postponed.
• If there are any losses that have been carried forward or need to be carried forward under any income category
• Moreover, in situations when the earnings of an individual’s spouse, child, or other dependents are to be combined with the individual’s own income, this Return Form can be utilized if the additional income falls inside any of the categories.
• It is possible for the total income to exceed Rs 50 Lakhs.

The due date to file ITR -2 is 31st July of the relevant Assessment Year.

Who is required to file ITR-3 and due date to file the return?

Guide to Filing Your Taxes, The ITR-3 Form is designated for individuals or Hindu Undivided Families (HUFs) that generate revenue from a sole proprietorship business or engage in a professional occupation. Individuals who receive income from the below mentioned sources are qualified to file Income Tax Return-3 (ITR-3).

• Engaging in the operation of a commercial business or occupation
• If one assumes the role of an Individual Director within a corporate entity.
• If an individual has had interests in unlisted equity shares at any point within the fiscal year
• The potential components of the return may encompass revenue derived through house property ownership, salary, remuneration or pension, as well as money generated from other sources
• The financial earnings of an individual serving as a partner within a firm.

Guide to Filing Your Taxes In summary, individuals, or Hindu Undivided Families (HUFs) who do not meet the eligibility criteria for filing Income Tax Return (ITR) forms 1, 2, and 4, are required to file ITR-3.

The deadline for individuals to submit their Income Tax Return 3 is the 31st of July in the relevant assessment year. However, taxpayers whose accounts are subject to audit have until the 31st of October to file their return.

Who is required to file ITR-4 and due date to file the return?

The Income Tax Return Form 4 (ITR-4) is applicable to individuals and Hindu Undivided Families (HUFs), as well as partnership firms (excluding Limited Liability Partnerships or LLPs). These entities must be residents and have a total income that incorporates:

• The business revenue under the presumptive income scheme as outlined in sections 44AD or 44AE.
• The professional income in accordance with the presumptive income structure under Section 44ADA.
• The income derived from employment or retirement benefits is limited to a maximum of 50 lakh rupees.
• The income derived from a single residential property should not exceed Rs 50 lakh, disregarding any amount of previously incurred losses or losses to be carried forward.
• Revenue derived from sources other than salary, which does not exceed Rs 50 Lakh (excluding revenue obtained from lottery winnings and racehorses).
• It should be noted that individuals who generate money as freelancers from the sources have the option to choose a presumptive plan if their gross revenues do not exceed Rs 50 lakhs.
• The concept of a presumptive income scheme, as outlined in sections 44AD, 44AE, and 44ADA, involves individuals or entities choosing to calculate their income based on presumptive rates. This means that the income is assumed to be at a minimum rate, which is determined by a percentage of gross receipts or gross turnover, or by the ownership of commercial vehicles. If the firm turnover above Rs 2 crore, the taxpayer will be obligated to submit ITR-3.

The deadline for individuals to submit their Income Tax Return 4 is the 31st of July in the relevant assessment year. However, taxpayers whose accounts are subject to audit have until the 31st of October to file their return.

Who is required to file ITR-5 and due date to file the return?

The ITR-5 form is designated for entities such as businesses, Limited Liability Partnerships (LLPs), Associations of Persons (AOPs), Bodies of Individuals (BOIs), Artificial Juridical Persons (AJPs), Estates of deceased individuals, Estates of bankrupt individuals, Business trusts, and investment funds.

The deadline for submitting the ITR-5 form is the 30th of November in the respective assessment year. In certain instances, specifically for taxpayers whose accounts are not subject to audit as per the provisions of the Income-Tax Act, the deadline for submitting the ITR-5 form is the 31st of July in the assessment year.

Who is required to file ITR-6 and due date to file the return?

ITR -6 is for entities other than those claiming exemption under section 11 (pertaining to income from property kept for charity or religious purposes), the submission of this return is required to be done only through electronic means.

The deadline for individuals to submit their Income Tax Return – 6 is the 31st of July in the relevant assessment year. However, taxpayers whose accounts are subject to audit have until the 31st of October to file their return.

Who is required to file ITR-7 and due date to file the return?

The ITR-7 form is a designated Income Tax Return form in India that is intended for entities like charity trusts, political parties, educational institutions, and medical institutions. These entities are mandated by parts of the Income Tax Act to file income tax reports. The purpose of utilizing this tool is to disclose their earnings, outlays, and fiscal particulars to uphold transparency and adhere to tax requirements.

The due date for submitting the ITR-7 form is October 31.

Final words

Finally, sending in your income tax returns is not only the law, but also the right thing to do as a citizen. The several types of Income Tax Return are designed to accommodate the various financial situations of people and businesses. This makes sure that everyone can correctly report their income and pay their taxes. By learning about the different types of ITR and when they need to be filed, taxpayers can confidently manage the complicated world of taxes and help their country’s fiscal system run smoothly. So, whether you’re a person, a business owner, or a corporation, remember that filing your ITR on time and correctly is a crucial step toward being honest about your finances and following the law.