It is simply a Form to be filed with the Income Tax Department. A Form to be filed as a statement of income earned. It is arranged in such a way that calculating tax liability, scheduling tax payments or requesting refunds for the overpayment of taxes has been made convenient for the taxpayers. They must, first, determine the type of Income Tax Return (ITR) Form they need to fill before actually filing their Returns. Which Form is to be filled, depends on the income that the taxpayer earns. Its purpose is to report our income and taxes paid thereon to the government.
ITR Forms for Individuals ITR Forms for Non-Individuals
| ITR – 1 (Sahaj) – For individuals earning income from salaries, one house property, interest income, agriculture, other sources, etc. | ITR – 5 – Entities other than,- (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7 |
| ITR – 2 – For Individuals and HUFs having income other than from profits and gains of business or profession. It may be from capital gain, lottery or foreign assets, etc. | ITR – 6 – All companies except those that claim tax exemption as per Section 11. |
| ITR – 3 – For individuals and HUF with income from profits of a business or profession. | ITR – 7 – Persons incl. companies required to furnish returns under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) only. |
| ITR – 4 (Sugam) – For Individuals, HUFs and Firms (other than LLP) having presumptive business income tax returns. This is computed under sections 44AD, 44ADA or 44AE. |
Advantages of tax filing:-
Processing of Loans & Visa: If you apply for any loans such as a home loan, car loan, etc., the eligibility and quantum of loan would depend on your income. This can be established through filed ITRs. ITR will help your lender to assess your repayment capacity.
Claiming Refund: There could be some TDS cut on some investment. And you will have to file the ITR to claim a refund of the same. Or you may have paid excess tax on your income. To get this refund, you must file ITR.
Establishing Income in Compensation Cases: Although the Motor Vehicles Act does not make it compulsory to present the ITR while calculating the compensation in case of accidental death or disability, the procedures approved by Delhi High Court mention the need for ITR for self-employed persons.
Being a Responsible Citizen: Staying on the right side of law helps. Similarly, keeping the income tax department informed about your income and taxability helps too. This is only possible when you file your ITR. Those who earn less than the prescribed slab of income can file returns voluntarily. Filing returns are a sign that you are a responsible taxpayer.
Carry-forward Losses: As per Income tax rules, losses are allowed to be carried forward and set off against capital gains. But this applies only to those individuals who file ITR in the relevant assessment year. If you have incurred losses for a year and you have earned below the exemption limit. You must file your returns to be able to carry forward the losses you have incurred. And it gets balanced against future gains and income.
Self-Employed Individual Filing for Tenders: Businessmen, consultants, and partners do not get any Form 16. For such self-employed individuals, ITR receipts become an important document. ITR is the only proof of income and tax payment for them, in all sorts of financial transactions. And if they want to take up some contract or tender, they may be asked to show their tax return receipts of the previous 3 to 5 years.
Fee for default in furnishing return of income :-
The taxpayer, who is required to furnish ITR u/s 139 failed to furnish return of income within due date as prescribed under section 139(1) then as per section 234F, he will be liable to pay penalty same as delayed filing.
That is:
- 5000 if ITR is filed on or before 31 December of the assessment year.
- 10,000 in any other case.
However, if the total income of the person is less than Rs. 5 lakh then the fee payable shall be Rs. 1000.
