How to Start a Income Tax Return Filing
Income Tax Return Filing
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Income Tax Return Filing is the process of reporting your income and expenses to the Income Tax Department. This helps in calculating how much tax you need to pay. It is mandatory for people whose income is above the specified limit.
Package Inclusion : -
- Computing tax payable
- Filing returns
- Rebates and Deductions
- Professional services in accounting procedures
Income Tax Return Filing- Overview
Income Tax Return (ITR) Filing is the process of reporting your income, expenses, and tax payments to the government. It helps the Income Tax Department determine whether you owe additional taxes or are eligible for a refund. Filing an ITR is mandatory if your income exceeds a certain limit or if you meet specific criteria set by tax laws.
Requirements for Filing an Income Tax Return (ITR):
Income Threshold
Filing an ITR is mandatory if your total income exceeds the basic exemption limit:- Below 60 years: ₹2.5 lakh
- 60-80 years: ₹3 lakh
- Above 80 years: ₹5 lakh
Professional or Business Income
If you earn income from a business or profession, regardless of the income amount, you may need to file an ITR.Tax Deducted at Source (TDS) Refund Claim
File ITR to claim a refund if excess tax has been deducted from your income.Foreign Income or Assets
If you have income or assets outside India, ITR filing is compulsory, even if your total income is below the exemption limit.Carry Forward Losses
To carry forward losses (business, capital gains) for future tax benefits, you must file an ITR.Investment in Foreign Assets
Owning foreign investments or having financial interest in foreign accounts makes ITR filing mandatory.Payment of Tax Liabilities
If you have any tax liability after TDS and advance tax, you are required to file an ITR.Specific Financial Transactions
Filing is needed if you meet criteria such as:- Spending over ₹2 lakh on foreign travel.
- Depositing more than ₹1 crore in a bank account.
- Spending over ₹1 lakh on electricity bills annually.
Resident Indians with Specified Income
- Directors in a company.
- Individuals holding unlisted company shares.
Government Mandate
Certain categories of taxpayers, like companies, partnerships, and LLPs, must file returns regardless of income.
Filing on time helps avoid penalties and ensures smooth financial compliance.
Expert Opinion on Filing Income Tax Returns (ITR):
Legal Compliance
Filing ITR is not just a legal obligation but also a key aspect of financial discipline. Experts emphasize that timely filing helps you stay compliant with tax laws and avoid penalties.Income Proof and Financial Documentation
Tax consultants suggest that an ITR acts as proof of income, which is essential when applying for loans, credit cards, or even visas. It demonstrates your financial stability and reliability.Carry Forward of Losses
Financial advisors highlight that filing returns allows you to carry forward losses, especially in business and capital gains, which can be offset against future income, reducing tax liabilities.Claiming Deductions and Refunds
Filing an ITR helps claim deductions under sections like 80C, 80D, and others, thereby reducing taxable income. Moreover, if excess tax is deducted, filing ensures a timely refund.Avoiding Notices and Penalties
Tax experts warn that non-filing or late filing can lead to notices from the Income Tax Department, penalties, and even prosecution in severe cases. Regular filing ensures peace of mind.For Future Financial Planning
ITRs serve as a comprehensive record of your income and expenses. Chartered accountants often recommend them as a tool for long-term financial planning and wealth management.Global Compliance
If you have foreign income or assets, experts stress that filing an ITR ensures you meet global reporting obligations, avoiding legal complications both in India and abroad.
Conclusion
Experts unanimously agree that filing your ITR on time offers multiple benefits, from legal compliance to financial growth. It is a crucial step in maintaining a transparent and well-managed financial profile.
Frequently Asked Questions
ITR Filing is the process of submitting a declaration of your income, expenses, and tax payments to the Income Tax Department. It determines whether you owe additional taxes or are eligible for a refund.
You must file an ITR if:
- Your income exceeds the basic exemption limit.
- You have foreign income or assets.
- You want to claim a tax refund.
- You have income from business or profession.
- You meet certain financial transaction thresholds (e.g., high-value deposits, foreign travel).
- Below 60 years: ₹2.5 lakh
- 60-80 years (Senior Citizen): ₹3 lakh
- Above 80 years (Super Senior Citizen): ₹5 lakh
Individual/Non-Audit Cases: Usually July 31 of the assessment year.
Businesses requiring Audit: October 31 of the assessment year.
- Late filing fees under Section 234F.
- Interest on unpaid tax under Section 234A.
- Losses cannot be carried forward.
- Possible penalties or legal notices.
Yes, you can file a belated return up to December 31 of the assessment year. However, late fees and penalties may apply.
Online: Through the Income Tax Department’s e-filing portal.
Offline: By submitting a paper form (for certain taxpayers).
You can also seek help from a Chartered Accountant or tax professional.
- PAN Card
- Form 16 (for salaried individuals)
- Bank statements
- Investment proofs (for tax-saving deductions)
- Form 26AS (tax credit statement)
- Business income records (if applicable)
The form depends on your income source:
- ITR-1 (Sahaj): For individuals with salary, pension, or interest income.
- ITR-2: For individuals with capital gains or foreign assets.
- ITR-3: For business/professional income.
- ITR-4 (Sugam): For presumptive income scheme.
Yes, if you find an error, you can file a revised return before December 31 of the assessment year or completion of assessment, whichever is earlier.
Form 26AS is a tax credit statement showing all taxes deducted (TDS), advance tax payments, and refunds issued to you by the Income Tax Department.
No, unless you meet specific criteria like:
- Having foreign assets.
- Making high-value financial transactions.
- Being a company director or holding unlisted shares.
You can check your ITR status online on the Income Tax Department’s e-filing portal using your PAN and acknowledgment number.
A tax refund occurs when you’ve paid more tax than your actual liability. You can claim a refund by filing your ITR.
Up to ₹5,000 for late filing if the return is filed by December 31. ₹10,000 for filing after December 31.
If income is below ₹5 lakh, the maximum penalty is ₹1,000.