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An Income Tax Return (ITR) is a document primarily utilized for submitting information regarding your income and the corresponding tax to the Income Tax Department of India.
According to Indian income tax regulations, it is required for every individual and business that earns an income to file an IT return. This process aids in the declaration of taxable income, tax obligations, and any claims for tax deductions.
It is compulsory for firms or corporations, Hindu Undivided Families (HUFs), as well as self-employed or salaried individuals to submit their income tax returns by the specified deadline; otherwise, a penalty will be imposed for late submission. Gaining an understanding of what an Income Tax Return entails is essential for adhering to Indian tax laws.
What is Income Tax Return Filing
The process of ITR filing involves a taxpayer documenting their total income accrued throughout the fiscal year. Taxpayers have the option to submit their tax returns via the official portal of the Income Tax Department. This process has been outlined in seven distinct forms.
Types of ITRs
There are almost nine distinct types of Income Tax Return forms, known as ITR forms, that a taxpayer can utilize when submitting their taxes. However, individuals are required to use only the specified forms for filing returns, as per the guidelines set by the Central Board of Direct Taxes in India.
| ITR Form | Persons required to file |
|---|---|
| ITR 1 or Sahaj | This should be utilized by individuals whose annual income is below Rs 50 lakh, derived from salary or pension, and who possess only one house property. |
| ITR 2 | The ITR-2 Form is a specific type of income tax return form utilized by individuals who have generated income from the sale of assets or real estate. This form is also advantageous for those who earn income in countries outside of India. Typically, individuals or Hindu Undivided Families (HUF) can use this form to submit their income tax return. |
| ITR 2A | The ITR-2A form is a recently introduced income tax return form that came into effect in the 2015-16 tax year. This form can be used by a Hindu Undivided Family (HUF) or an individual taxpayer. |
| ITR 3 | The ITR-3 Form is beneficial for individual taxpayers or Hindu Undivided Families who are partners in a firm yet do not engage in any business activities through that firm. This also pertains to individuals who do not earn any income from the firm's operations. |
| ITR 4 or Sugam | This type of ITR form is beneficial for individuals who run a business or make a living through a profession. This form is suitable for all kinds of businesses, ventures, or occupations, without any income limitations. |
| ITR 4S | The ITR-4S form can be utilized by any individual or Hindu Undivided Family (HUF) to submit income tax returns. |
| ITR 5 | The ITR-5 form is specifically designated for filing income tax returns by Firms, Local authorities, Co-operative societies, Artificial Judicial persons, and Bodies of individuals. |
| ITR 6 | With the exception of firms or organizations that assert tax exemption under Section 11, all companies are required to use the ITR-6 form. Organizations eligible for tax exemptions under Section 11 are those that generate income from property used for religious or charitable activities. This specific income tax return form must be submitted online. |
| ITR 7 | This form must be utilized by organizations seeking an exemption, such as colleges, universities, scientific research institutions, religious or charitable trusts, political parties, and others. |
Who Should File Income Tax Returns?
You have the option to e-file your Income Tax Return (ITR) for the financial year 2024-25, which corresponds to the assessment year 2025-26. Filing is compulsory for all categories of taxpayers, with the exception of the following situations.
- Taxpayers aged 75 or above and satisfying the following conditions:
- Pension and interest income constitute the sole sources of total income. Interest income may originate from any account held with the same bank where they receive their pension.
- They have submitted a declaration to the bank.
- Such bank deducts TDS under Section 194P.
- Taxpayers with an income less than the applicable basic exemption limit.
New Tax Regime Income Tax Slab Rates for FY 2025-26
The revised tax slabs under the new regime that are applicable from 1st April 2025 are as follows:
| Income Tax Slabs | Income Tax Rates |
|---|---|
| Up to Rs. 4 lakh | NIL |
| Rs. 4 lakh - Rs.8 lakh | 5% |
| Rs. 8 lakh - Rs.12 lakh | 10% |
| Rs.12 lakh - Rs.16 lakh | 15% |
| Rs.16 lakh - Rs. 20 lakh | 20% |
| Rs. 20 lakh - Rs. 24 lakh | 25% |
| Above Rs. 24 lakh | 30% |
The rebate has been raised to Rs. 60,000 from Rs. 25,000 for the fiscal year 2025-26. With the updated tax framework, individuals with earnings up to Rs. 12 lakhs will incur no tax liability thanks to the enhanced rebate of Rs. 60,000. For salaried individuals, the tax obligation will be eliminated for incomes up to Rs. 12.75 lakhs due to the standard deduction of Rs. 75,000.
How to file ITR?
Income Tax Returns (ITR) can be submitted through the income tax portal by accessing the taxpayer’s account. It is advisable to adhere to the following steps when filing the ITR.
Step 1: Login to the Income Tax portal using your PAN as the login ID and password as encrypted.
Step 2: On the home page, go to ‘e-File’ tab > ‘Income Tax Returns’ > ‘File Income Tax Return’.
Step 3: Select the correct Assessment Year. The assessment year for FY 2024-25 is 2025-26.
Step 4: Select Filing Status – whether you are individual, HUF, or any other kind of assessee. Mostly for salaried and freelancing taxpayers, ‘Individuals may be chosen.
Step 5: Select ITR Type, depending on your income level.
Step 6: Select Reason for filing ITR. You may file because of the taxable income has crossed the exemption limit or on satisfaction of specified conditions.
Step 7: Enter your personal details, bank account details, income earned, deductions claimed and taxes paid. Cross verify the summary for accuracy and proceed filing the return.
Step 8: On successful completion of e-filing, the last step is e-verification.
Types of Forms for ITR E-filing
Form 16: Form 16 serves as a TDS certificate for salary that an employee obtains from their employer. This form outlines the gross salary along with exemptions like HRA and LTA. Additionally, it includes information about the net taxable salary, any other income or losses declared by the employee, tax-saving deductions, and the salary TDS.
Form 26AS: Form 26AS provides information regarding tax deducted at source (TDS) on different types of income, including salary, interest, and proceeds from the sale of immovable property. Additionally, the form includes information on self-assessment tax, advance tax payments made by the taxpayer, and certain financial transactions.
Form 15G and Form 15H: Form 15G and Form 15H allow you to receive income without TDS. You can submit Form 15G if you are under 60 years old and your annual taxable income is below the basic exemption limit. Form 15H can be submitted if you are a senior citizen and the tax owed on your total income is zero. It is necessary to provide Form 15G or Form 15H to the individual or entity disbursing your income.
Why Should You File ITR?
Filing income tax returns in India is compulsory for individuals who meet any of the following criteria:
- Individuals who fall within the respective tax slabs.
- If it’s a Company or Firm, irrespective of the profit or loss made in a financial year.
- If a tax refund needs to be claimed.
- If a loss under a head of income needs to be carried forward.
- If one is applying for a loan or a visa.
- If you are a resident of India and possess an asset or financial interest in any entity situated outside of India, as well as being a signing authority on a foreign account.
- If a Non-Resident Indian (NRI) earns any or all of their income from sources within India, that income is subject to taxation in India.
- If an individual obtains income from property that is held in a trust for charitable or religious objectives, or for a political party, research association, news agency, educational or medical institution, trade union, not-for-profit university or educational institution, hospital, infrastructure debt fund, or any authority, body, or trust.
