Which ITR form should I file?

Income Tax Return or ITR is like a yearly report card where you list your income, expenses, tax saving investments and declare some transactions to the government. It's required by law for many people. This helps the government keep track of taxpayers and understand where tax money comes from. Having filed ITR forms can also make it easier to get a loan from a bank since it shows you have a steady income.

Who should file ITR?

1) People with annual income of more than Rs 2.5 lakh. The threshold is higher at Rs 3 lakh in case of a person above 60 years and even higher at Rs 5 lakh in case of a person above 80 years.

2) Anyone depositing more than Rs 50 lakh in a savings bank account in a year.

3) Anyone depositing more than Rs 1 crore in a current account in a year.

4) If a person has spent more than Rs 1 lakh on electricity bills.

5) In case of a businessperson if the turnover exceeds Rs 60 lakh.

6) In case of a professional if the annual income exceeds Rs 10 lakh.

7) If someone has spent more than Rs 2 lakh on a foreign travel.

8) In case a TDS of more than Rs 25,000 is cut for a person.

Types of ITR Forms

Taxpayers must fill and submit different ITR forms depending on the income threshold, source of income and nature of profession.

ITR 1

This form is for a resident individual with income from salary or pension, one house property, income from other sources, except lottery and race horses and agricultural income of up to Rs 5,000.

However, there are many other clauses also when you cannot use ITR 1, such as income exceeding Rs 50 lakh. So, it is better to look at each form.

ITR 2

This form is for those who are directors in a company, owner of unlisted equity shares, those with income from capital gains, foreign income, agricultural income of more than Rs 5,000, assets in other countries, getting benefits of ESOPS, and those who have carried forward loss.

ITR 3

This form is for individuals and Hindu Undivided Families (HUFs) with income from business or profession. Also, if one happens to be a director in a company or have equity in an unlisted company then one must fill ITR 3.

ITR 4

If an individual or an HUF has business income or income from profession which is calculated using the presumptive income scheme then they have to fill ITR 4. This, however, can be used only if income does not exceed Rs 50 lakh or if there is income from more than one house property.

ITR 5

ITR 5 is used by limited liability partnerships, body of individuals, association of persons, and business trusts.

ITR 6

This form is used by companies that don’t claim exemptions under Section 11 of the Income Tax Act. Section 11 exempts income earned from properties held for charitable or religious purposes.

ITR 7

This form is for a person or companies with income from charitable or religious trusts, political parties, educational and medical institutions.

Forms useful for filing ITR

Form 16 – This form is given by a person or organisation who deducts tax on source. It gives the total tax deducted and the income on which the tax has been deducted.

Form 26AS – A comprehensive detail of all tax paid by a person or on their behalf.

Why should you file ITR?

Filing your Income Tax Return is important for a few reasons:

1. It's the Law: If you're required by law to file taxes and you don't you could face hefty fines.

2. Getting Loans: When you need a loan your ITR serves as proof of your income making it easier to get approved.

3. Tax Refunds: Without filing your ITR you won't receive any tax refunds you're owed.

4. Carrying Forward Losses: If you want to use losses from this year to offset next year's taxes you need to file your ITR.

5. Visa Applications: Some countries ask for your tax returns when you apply for a visa so having your ITR ready can make the process smoother.
 

Deadline to file ITR in India

Deadlines for filing ITRs are as follows

• If you're an individual or a HUF and you don't need to get your accounts audited you should file your ITR by July 31st.
• For businesses that need an audit the deadline is October 31st.
• If your business has a transfer pricing report you have until November 30th.
• If you miss these deadlines you'll face penalties. You'll have to pay 1% of your taxes owed for each month you're late plus a late fee of Rs 5,000.

How to file ITR?

Here is a step-by-step guide on filing of ITR online

1. Login: Visit the income tax portal and log in with your PAN or Aadhaar and password.

2. Navigate to e-file: Click on the e-file section in the top bar then select File Income Tax Return.

3. Choose Assessment Year: Enter the assessment year for which you are filing taxes.

4. Select Taxpayer Type: Specify whether you are an individual, HUF or other entity.

5. Choose Correct ITR Form: Use the provided information to select the appropriate ITR form number.

6. State Reason for Filing: Provide a reason for filing your ITR.

7. Add Personal Details: Enter personal details including bank account information.

8. Provide Income Details: Input details of your income sources.

9. Enter Deductions: Provide information about any deductions you are eligible for.

10. Verify Tax Amount: Ensure that the tax amount calculated matches the figure generated by the form.

11. E-Verify ITR: Use Aadhaar, net banking or other methods to electronically verify your ITR.
 

How can I download the ITR Form utility online?

1. Go to Income Tax department's official website.
2. Look for Downloads.
3. Choose the assessment year you need.
4. Select Common Offline Utility (ITR 1 to ITR 4).
5. To get the Excel file for the ITR you want click on Utility Excel Based.

Key changes notified in the new ITR forms for FY 2022-23 (AY 2023-24)

1. No major changes in who can use ITR 1, except

• Can't be used if TDS is deducted on cash withdrawals or if there's deferred tax on ESOP.
• HUFs can't use ITR1 anymore.
• Individuals with equity shares or directorship in a company can't use it either.

2. New section in forms ITR3, ITR5 or ITR6 for reporting income from intraday trading.

3. If you switched between old and new tax regimes you need to report it in ITR3 and ITR4.

4. Foreign investors now need to share their SEBI registration number for additional disclosure.

5. Specific income from individuals via advances needs to be reported under Advances in the Source of Funds section.
 

Conclusion

Filing your ITR is not just about meeting legal requirements it's a smart move overall. It can help with getting loans, visas and more. But when you file accuracy is key. Double check that everything matches your Form 16 and Form 26AS. And make sure to do it on time to dodge penalties.