Income Tax Return Filing (ITR)
What is an Income Tax Return (ITR)?
An Income Tax Return (ITR) is a form that require to submit to the Income Tax Department of India every year. It details your income for a specific financial year (April 1st to March 31st of the following year) and the taxes you require to pay to the government.
Who Needs to File an ITR?
ITR required to file if your annual income exceeds certain limits set by the Income Tax Department of India. These limits vary depending on your age and filing status. Here’s a quick breakdown:
- Basic Exemption Limit:For individuals below 60 years old, the basic exemption limit is Rs. 2.5 lakhs. This means if your total income for the financial year is Rs. 2.5 lakhs or less, you generally don’t need to file an ITR.
- Senior Citizens (60 years and older but below 80 years):The basic exemption limit for senior citizens is Rs. 3 lakhs.
- Super Senior Citizens (80 years and above):The basic exemption limit for super senior citizens is Rs. 5 lakhs.
However, there are other situations where you might be required to file an ITR even if your income falls below the basic exemption limit. These include:
- If the total amount of Tax Deducted at Source (TDS) deducted on your income exceeds tax payable.
- If you have earned Foreign Income
- If you are claiming a tax refund.
- If you want to carry forward certain losses to offset your income in future years.
It's important to note that TDS deduction doesn't negate the need to file an ITR. Even if your employer deducts TDS on your salary, you may still be required to file an ITR, especially if your income exceeds the basic exemption limit or if you want to claim deductions and benefits.
Benefits of Filing an ITR
Filing an ITR offers a multitude of advantages, including tax savings, smoother loan approvals, and simplified visa applications.
Reduced Tax Liability
Filing an ITR allows you to claim deductions for various expenses and investments, significantly reducing your tax burden. Here are some common deductions you can claim:
- Investments in Various Instruments: Investments in Public Provident Fund (PPF), Employee Provident Fund (EPF), National Pension System (NPS), Health Insurance Premiums (Mediclaim), and education expenses for yourself and your dependents.
- House Rent Allowance (HRA): If you pay rent, you can claim a deduction for HRA received from your employer.
- Interest on Home Loan: If you have taken a home loan to purchase a property, you can claim a deduction for the interest paid on the loan.
- Business Expenses: If you are self-employed or run a business, you can deduct various business expenses from your income for tax purposes. These expenses can include travel costs, rent for your office space, depreciation on business assets, and professional fees.
Faster Loan Approvals
Having a filed ITR can streamline the loan application process and improve your chances of getting approved for loans, especially for larger loans like mortgages or business loans. Banks and other financial institutions often require Last 3 Years ITR as proof of income when processing loan applications.
Simplified Visa Applications
An ITR can be helpful documentation when applying for visas to Foreign Countries. It can demonstrate your financial stability and ability to support yourself during your stay in the foreign country. Visa authorities may require proof of sufficient funds to cover your living expenses while abroad. An ITR can serve as evidence that you have a steady income source and can financially support yourself during your visit.
Ease Fund access to your Startup
Filing ITRs demonstrates a track record of financial compliance. This can be crucial for startups seeking future investments or loans. Investors often evaluate a startup's financial discipline, and timely ITR filing showcases responsible financial management. The Indian government offers tax benefits to eligible startups under the Startup India program. To claim these benefits (like tax holiday for 3 years), filing ITRs is mandatory.
Obtaining Government Tenders
Government tenders often involve substantial contracts and financial commitments. By requiring ITRs, the government assesses your business's financial health and tax compliance. A well-maintained ITR history demonstrates your credibility and ability to handle large projects. Government tenders have specific eligibility criteria, including a minimum annual turnover. ITRs serve as proof of your business's past income, helping you qualify for tenders with higher financial requirements. Filing ITRs is not just a tax obligation; it's a gateway to lucrative government tenders.
Documents required for Income Tax Filing
Documents required
- Copy of Aadhar & PAN card
- Form 16 & Payslips (if salary income)
- Investment Proofs (For claiming deductions)
- Bank Statements for income verification
- Financial Statements (if Business income)
- Capital Gain Report (in case of gain on stocks)
Important Dates
The due date for filing your ITR varies depending on your income and tax filing category which is as below:
Category of Taxpayer | Due Date for Tax Filing |
Individual/HUF | 31st July |
Businesses (Requiring Audit) | 31st October |
Revised/Belated Return | 31st December |
It's generally recommended to file your ITR well before the deadline to avoid any late filing penalties.