Income Tax Returns or ITR is a form used to declare the net tax liability, claiming of tax deductions, and to report the gross taxable income. It is mandatory for individuals who earn a certain amount of money have to File IT Returns.
Firms or companies, Hindu Undivided Families (HUFs), and self-employed or salaried individuals must file ITR to the Income Tax Department of India.
What is ITR Filing?
ITR filing is the process by which taxpayer has to file a report of his total income earned on financial year. Through Income Tax Department official portal individual can complete their filing of returns. It has notified with seven various forms - ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7.
Note: You can now file your taxes through the New income tax portal. The new portal comes with a plethora of features and is designed to ease the tax filing process.
Why Should you File ITR?
It is mandatory for one to file income tax returns in India, if he comes under any of the following conditions:
- 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 being a resident of India, one has an asset or financial interest in any entity located outside India.
- If being a resident of India, one is a signing authority in a foreign account.
- If one receives income derived from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not-for-profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
- If one is applying for a loan or a visa.
- If an NRI derives any or all of his/her income through sources in India, that income is liable to be taxable in India, and income tax returns for the same will be necessary.
With the implementation of efiling of Income Tax Returns, the following cases will require an e-filing Income Tax :
- In case a refund is required
- In case the gross total annual income exceeds Rs.5 lakh
- In case an income tax refund is required
- ITR 3, 4, 5, 6, 7 have to be mandatorily e-filed
Penalty for Late Filing of ITR
In case the returns are not filed by the due date, huge penalties are levied on the taxpayer. Apart from penalties, there could be other inconveniences and consequences that the individual would face in case the returns are not filed. Depending on when the returns are filed after the due date, individuals could face penalties between Rs.1,000 and Rs.10,000.