Income Tax Return

What is Income Tax?


Income tax is the tax that an individual or a company is ought to pay to the government against the income earned by them during a financial year. Every entity is responsible for paying its taxes on time as taxes are the source of revenue for the government. More revenue for the government more would be the development of the nation.

Income Tax Return is the form that every company or individual is required to fill. The form contains a detailed description of the income earned along with the basic details about the entity. In case, it is detected that the entity is paying a surfeit of taxes then the entity is eligible to apply for an Income Tax Return.

The form is required to be filled every year before a specified date, failing which the entity will be accountable for a certain amount of penalty.

The Income Tax department has bifurcated the types of taxpayers based on their formation and types of income.

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Following are the types of taxpayers that are required to fill the ITR form:


    1. Individuals
    2. Hindu Undivided Family
    3. Partnership firms/ Limited Liability Partnership firms (LLPs)
    4. Companies
    5. Trusts
    6. Non-Resident Indians (NRIs)

 

Based on the type of income earned by different entities, there are 7 different types of Income Tax Return forms. The seven ITR forms are :

  • ITR-1:Individuals/ HUFs earning from salary, house property, or agriculture
  • ITR-2:Individuals/ HUFs earning from the business or a profession
  • ITR-3:Individuals/ HUFs earning from a proprietary business or profession
  • ITR-4:Individuals/ HUFs having an annual income of fewer than 2 crores.
  • ITR-5:Partnership Firms/ LLPs
  • ITR-6:Companies
  • ITR-7:Trusts

What is Individual Income Tax Returns filling?

The Income Tax Department expects Income Tax from individuals only if he/she crosses a certain amount of income per annum. Below the limit, the individual does not owe any sort of Income Tax to the government. The maximum non-taxable income is different for a citizen and a senior citizen. It is pivotal for an individual to go through the guidelines thoroughly before paying the taxes.

However, there are four ITR forms for an individual, and one has to be careful about which form to fill as the forms are bifurcated based on types of income.

The maximum non-taxable income is not the only criteria, if any one of the below-mentioned criteria is fulfilled, then one is obligated to fill for ITR:

  1. Deposits in one or more current accounts exceed Rs. 1 crore.
  2. Travel expenditure to a foreign country for more than Rs. 2 lakhs.
  3. Expenditure on electricity exceeds Rs. 2 Lakhs.

Following is a detailed description of the various ITR for Individuals :

  1. ITR-1:Individuals/ HUFs earning from salary, house property, or agriculture
  2. ITR-2:Individuals/ HUFs earning from the business or a profession
  3. ITR-3:Individuals/ HUFs earning from a proprietary business or profession
  4. ITR-4:Individuals/ HUFs having an annual income of fewer than 2 crores.

What is Company Income Tax Return?

Every company that is registered in India is required to file for an ITR every year, irrespective of the amount of turnover or profit/ loss made by them. Not even dormant companies (companies that have done no transaction during a financial year) are exempted from the filling. Once registered, the company is obligated to file for an ITR every year before 30th September, failing which the company will have to pay a penalty.

Companies have to file under ITR6.

What is LLP Income Tax Return?

Every LLP that is registered in India is required to file for an ITR every year, irrespective of the amount of turnover or profit/ loss made by them. The entities are required to file for an ITR even in the case of zero transactions. Once registered, the LLP is obligated to file for an ITR every year before 30th September, failing which the firm will have to pay a penalty.

LLPs are considered separate from their partners, hence, where the partners have to file for individual ITR, the LLPs will have to file for a return separately.

LLPs have to file under ITR5.

What is NRI Income Tax Return?

An NRI or a Non-Resident Indian is someone who:

  • Is in India for more than a period of 182 days
  • Is in India for 60 days during the previous year

Any individual, whether resident or NRI is required to file for ITR every year.

Advantages of Filing for ITR on time

The banks ask for your ITR statement before approving a loan. Having a statement filed on time creates one’s a credible image in front of banks.

In case, it is detected that the entity is paying a surfeit of taxes then the entity is eligible to apply for an Income Tax Return.

The ITR statement acts as Income proof as well as address proof.

The embassies ask for your ITR statement before approving a loan. Having a statement filed on time creates one’s a credible image in front of embassies.

The form is required to be filled every year before a specified date, failing which the entity will be accountable for a certain amount of penalty.


Frequently Asked Questions

TIncome Tax Return is the form that every company or individual is required to fill. The form contains a detailed description of the income earned along with the basic details about the entity.

Based on the type of income earned by different entities, there are 7 different types of Income Tax Return forms. The seven ITR forms are :

  • ITR-1:Individuals/ HUFs earning from salary, house property, or agriculture
  • ITR-2:Individuals/ HUFs earning from the business or a profession
  • ITR-3:Individuals/ HUFs earning from a proprietary business or profession
  • ITR-4:Individuals/ HUFs having an annual income of fewer than 2 crores.
  • ITR-5:Partnership Firms/ LLPs
  • ITR-6:Companies
  • ITR-7:Trusts

Yes, but the entity will be accountable for a certain amount of penalty.

None!There are no such disadvantages of filing for a return.