What Is Income Tax Return? How To File ITR Online?
In India, individuals, Hindu Undivided Families, firms, companies, etc., who earn beyond the basic exemption limit, have to pay income tax for each financial year diligently. Furthermore, to provide the government with information related to earnings during a financial year, a taxpayer has to file Income Tax Returns. ITR is a type of form that assessees have to fill out, declaring their taxable income, expenses, losses and deductions. Filing ITR is mandatory for those with an annual income of more than Rs.2.5 lakh and a failure to do so can lead to a hefty penalty.
Read on to get a clear understanding of Income Tax Returns and how to file ITR online.
What is Income Tax Return (ITR)?
For every financial year, starting from April 1 and ending March 31 next year, people earning over a certain limit have to file ITR. It helps the Income Tax Department to calculate one’s net tax liability. Furthermore, tax authorities can assess whether assessees are understating their income or overstating their losses through ITR. Thus, it helps to ensure that there is no tax evasion.
Keep in mind that ITR filing is not mandatory for all income earners. Only those up to the age of 59 years, earning more than Rs.2.5 lakh, have to file income tax returns. Meanwhile, for individuals above 60 years, the exemption limit is Rs.3 lakh.
While filing ITR, one has to specify how much income they make from different sources. As per Indian tax laws, income is categorised under the following heads:
- Income from salary
- Income from house property
- Capital gains
- Income from profits and gains of business or profession
- Income from other sources, like dividends, securities, interest on deposits, royalty, mutual funds, lottery, etc.
Also Read – Income Tax On Interest Earned From Fixed Deposits
Why Should you File ITR?
It is compulsory for an Indian citizen to file an ITR if the following conditions are applicable:
- If your yearly gross income exceeds the following exemption limits:
| Details | Income (in Rs.) |
| Below 60 years | Rs.2,50,000 |
| Above 60 years to below 80 years | Rs.3,00,000 |
| Above 80 years | Rs.5,00,000 |
- If you wish to get a refund of tax
- In case you have made investments or have income from foreign assets during a fiscal year
- If you want to avail a loan or apply for a visa
- When taxpayers are firms or companies regardless of loss or gains
Under certain conditions, you may have to file an income tax return form even when your earnings don’t exceed the exemption limit. The situations are as follows:
- Deposition of a lump-sum amount of above Rs.1 crore in one or many current accounts
- Have spent above Rs.2,00,000 for a foreign tour involving self or some other individuals
- Expenditure of above Rs.1,00,000 on electricity
How to File ITR Online
The Income Tax Department introduced an updated version of the ITR e-filing portal that has made filing income tax returns more accessible and easier. Here are the steps to file ITR online:
- Step 1: Visit the Income Tax e-Filing portal.
Go to the e-filing portal to begin filing your ITR.
- Step 2: Next, log in.
Click on the ‘e-File’ menu and log in using the password. Select ‘Income Tax Return.’ Select assessment year, form type, filing type, and submission mode (online). Click on ‘Continue.’
- Step 3: Enter your reason for filing ITR
Next, you will be asked to select a reason for filing ITR. Read the options and select the one that is applicable.
- Step 4: Enter your bank details
Fill in your bank details or validate existing bank information.
- Step 7: Verify the pre-filled details
You will be redirected to a new page where you will see the Income Tax Returns form. Most of the details are pre-filled. Verify all the details and fill in the blank columns.
- Step 8: e-Verify
‘Submit’ the ITR and choose a verification option. The verification process is mandatory, and you can opt for the ‘I would like to e-Verify’ option.
Due Date to File ITR for FY 2021-22
For FY 2021-22 (AY 2022-23), the due date for filing income tax returns is as follows:
| Category of Taxpayer | Due Date |
| Individual/HUF/AOP/BOI (not requiring an audit of books of accounts) | July 31 2022 |
| Businesses (requiring audit) | October 31 2022 |
| Businesses (Requiring Transfer Pricing report) | November 30 2022 |
*Note that these dates can also get extended. Thus, pay attention to any notice released by the Central Board of Direct Taxes.
Documents Required to File ITR
Filing Income Tax returns have been made simpler over time. But it is important to understand the documents you need to file an ITR to make sure that there is no discrepancy and to claim the deductions easily.
Here are the various documents you need to submit while filing your ITR, depending on your category:
For an individual taxpayer
Identity proof:
- Aadhaar card
- PAN card
- Bank account details
Income proof:
- Form 16/16A
- Final settlement details, if there was a job change in the financial year
- Gratuity or leave encashment
- Provident Fund withdrawal, if any
- Form 67, in case of any foreign earning
- Pension certificate
- Details of your taxable allowances such as HRA or LTA
- Details regarding interest income on investments or deposits
- Details on property-related transactions such as purchases, sales and rent
Deductions & investments:
- Home loan document as provided by your lender or bank
- Rental agreement and rent receipts
- Bank details regarding interest credit to your savings account
- Donation receipts from the permissible establishment which mention your PAN
- Certificates or relevant documents from government hospitals or registered doctors for medical treatment expenses
TDS & advance payment documents:
- TDS certificates issued by a bank or other registered institutions
- Advance payment receipts
- Form 26AS
For a sole proprietorship firm
Your business and personal income will be merged and taken into consideration for the same return in case of a sole proprietorship firm. The documents that you will require to submit are:
For a registered company or LLP
- ID proof
- Balance sheet of the company
- Proof of audit by a registered Chartered Accountant if the turnover is over the maximum limit
For claiming Capital Gains
- Sale and purchase deed, including the receipts for improvements made
- Proof of transfer costs
- Proof of brokerage and commissions
- Purchase deed in case of reinvestment made
Which ITR Form To File?
| Particulars | ITR-1 | ITR-2 | ITR-3 | ITR-4 | ITR-5 | ITR-6 | ITR-7 |
| Applicability | HUF, Individual (Resident) | HUF, Individual | HUF, Individual, Partner of a firm | HUF, Individual, Firm | Partnership firm or LLP | Company | Trust |
| Salary | Yes | Yes | Yes | Yes | No | No | No |
| Business Income | No | No | Yes | Presumptive Income | Yes | Yes | Yes |
| House Property | Yes (one) | Yes | Yes | Yes (one) | Yes | Yes | Yes |
| Capital Gains | No | Yes | Yes | No | Yes | Yes | Yes |
| Exempt Earnings | Yes (Income from agriculture below Rs. 5,000) | Yes | Yes | Yes (Income from agriculture below Rs. 5,000) | Yes | Yes | Yes |
| Lottery | No | Yes | Yes | No | Yes | Yes | Yes |
| Foreign Income/Assets | No | Yes | Yes | No | Yes | Yes | Yes |
| Other Sources | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
Different Types of ITR Forms
In total there are almost 9 types of ITR forms available, but only 7 forms are taken into consideration by individuals when filing returns: The various types of income tax returns forms are as follows:
- ITR-1
- ITR-2
- ITR-3
- ITR-4
- ITR-5
- ITR-6
- ITR-7
Note* – ITR 5, ITR 6, and ITR 7 forms are only available for companies/organisations.
What is ITR-1?
Such an ITR form is for Indian residents whose earnings for the assessment year 2021-22 cover:
- Pension income or salary income
- Earnings from house property (except for situations when a loss has been carried forward from preceding years)
- Other earning sources (apart from horse racing and lottery)
- Income from agriculture not exceeding Rs. 5,000
Also Read – Section 194K Of The Income Tax Act
Non-Eligibility for ITR-1 Form
This income tax return form is not applicable in the following cases:
- Earning is above Rs. 50,00,000
- Income from agriculture is above Rs. 5,000
- Capital gains have tax implications
- Income includes earnings from profession or business
- Earnings from more than 1 residential property
- You are a firm’s director
- Investments in unlisted shares during the fiscal year
- A resident individual who is an owner of assets (this includes a monetary interest in an entity) in a foreign country and has signing authority in any account outside the country
- If you are a non-resident or RNOR
- You have foreign earnings or assets
- Tax has been deducted u/s 194N of ITA. TDS deduction has taken place u/s 194N on cash withdrawals that exceed a specific limit, provided some specific conditions are mentioned.
What Is ITR-2?
This income tax return form is meant for HUFs and individuals whose earnings cover:
- Pension income or salary
- House property income
- Other earning sources (inclusive of horse racing and lottery)
Total earnings from the above-mentioned pointers should exceed Rs. 50,00,000.
- If you are a firm’s individual director
- When you have invested in unlisted shares during the fiscal year
- In case you are a non-resident or RNOR
- You have earned from capital gains
- Foreign income or foreign assets
- Income from agriculture above Rs. 5,000
ITR-2 is applicable when the earnings of another individual (such as a family member) are to be added to a taxpayer’s earnings and such incomes come under the categories mentioned above.
Non-Eligibility for ITR-2 Form
Taxpayers who earn from professions or businesses cannot file the ITR-2 form. An assessee who needs to file ITR for business income can use the following two forms.
What Is ITR-3?
HUFs and individuals who are earning from their professions or who conduct businesses can file the ITR-3 form. The following income sources qualify for this form:
- Profession or business
- A firm’s individual director
- You have been investing in unlisted shares during the fiscal year
- Return covers earnings from pension, salary, residential property or other sources
- A person earns income as a partner of a company
What Is ITR-4?
Such an income tax return form is available for partnership firms (except LLPs), HUFs, and individuals who are Indian residents and whose earnings comprise the following:
- Business income as per presumptive earning scheme u/s 44AE or 44AD
- Income from a profession as per presumptive earning scheme u/s 44ADA
- Earnings from pension or salary up to Rs. 50,00,000
- Earnings from a residential property that does not exceed Rs. 50,00,000 (excluding carried forward loss amount or any loss that is to be carried forward)
- Other earning sources which do not exceed Rs. 50,00,000 (apart from horse racing and lottery)
A freelancer having earnings from the above-mentioned sources can choose a presumptive taxation scheme if his/her gross receipts do not exceed Rs. 50,00,000.
Non-Eligibility for ITR-4 Form
- Earning is above Rs. 50,00,000
- You have earnings from more than 1 residential property
- In case of having a loss that can be brought forward or needs to be carried forward
- You own a foreign asset
- You have the authority to sign in an account outside India
- Having earnings from a foreign country
- If you are a firm’s director
- You have invested in unlisted shares in the fiscal year
- You are a non-resident/RNOR
- If you earn foreign income or own foreign assets
- If you can be assessed in terms of earnings of any other person concerning which there has been a tax deduction in the hands of that person.
What Is ITR-5?
ITR-5 is an income tax return form applicable for an investment fund, business trust, Estate of insolvent, Artificial Juridical Person, Body of Individuals, Estate of deceased, Association of Persons, and Limited Liability Partnership.
What Is ITR-6?
This return form must be filed electronically and is available to companies (except for companies that claim exemption u/s 11). Section 11 specifies earnings from properties used for religious or charitable purposes.
What Is ITR-7?
Such a form is required for persons who need to file returns under the following sections:
- Section 139(4A) includes any person earning from a property used for religious or charitable purposes (partially or wholly) and is held legally or under a trust.
- As per Section 139(4B), a political party needs to file its returns if the earning (without following Section 139A) is above the exemption limit.
- Section 139(4C) covers income earned by the following:
- A medical institution, hospital, educational entity, university, or fund
- Institution mentioned u/s 10(23B)
- An institution or association specified u/s 10(23A)
- New agency
- Scientific research institution
- According to Section 139(4D), any institution, college and university must furnish their returns in case they are not required to file ITR as per other sections of the Income Tax Act.
- As per Section 139(4E), a business trust should file its ITR if it is not required to furnish its return as per other sections of the IT Act.
- Section 139(4F) covers the income of an investment fund specified u/s 115UB. Such funds do not need to furnish returns under other provisions of the IT Act.
Benefits of E-filing Income Tax Return Form
E-filing your income tax return has various benefits as compared to manual or offline filing. Here are a few benefits of e-filing your ITR:
- It is an automatic process, so there are almost zero chances of errors which ensures swift processing.
- You will receive an immediate confirmation upon successful submission of ITR.
- You can do it from anywhere and at a time of your convenience.
- It also has the auto-fill feature, which makes it even more convenient for taxpayers.
- You can easily track the status of your filed returns through the Income Tax portal.
- E-filing is considerably more secure as compared to paper filing as your information is not being handed over to a third party.
- You can also link your net banking account to the portal and turn on automatic deposit in case of refunds and automatic debit for payment of taxes.
Dos and Don’ts of Filing your ITR Online
Filing your ITR online is a secure, simple and easy process, but making any minor mistake will make all your effort go to vain and even invite a penalty. Taxpayers are advised to be careful and keep the following dos and don’ts in mind while filing online.
Dos
- Choose the appropriate ITR form for yourself or your business.
- Verify the calculation quite a few times to ensure that it is error-free.
- Check all your sources of income and mention all of them while filing your return. Missing any one of them will be considered a discrepancy and invite heavy penalties.
- Keep all the needed documents organised and handy as they will contain all the crucial details necessary while filling up the form.
- Mention your Aadhaar number correctly as it is used by the Income Tax department to track your Aadhaar-based transactions.
- Cross verify your Form 26AS as it includes all details regarding your TCS and TDS deductions.
Don’ts
- Do not get confused between the Financial and Assessment year. Make the concepts of these two terms clear before filing your ITR.
- Avoid mistakes while putting in your personal information such as name, address and contact details.
- Do not forget to claim the eligible exemptions and deductions.
- Do not forget to provide your interest certificate for a housing loan.
- Avoid waiting till the last minute to file your ITR; if it is done in a hurry, it can leave even more room for errors.
- Do not delay filing your ITR as you will have to pay a penalty of Rs. 5000 for doing so.
Final Word
The income tax return forms provide information about expenses, income and other relevant tax implications. ITR helps assessees compute tax liability, plan tax payables and get refunds for overpaid taxes. The different ITR forms cater to the various requirements of the taxpayers during a financial year.
FAQs on Types of ITR Forms
Ans: Sections 44ADA, 44AE, and 44AD offer a presumptive income scheme wherein a company or an individual can compute their earnings on a notional basis. This means that the earnings are presumed at a specific rate (minimum) depending on the proportion of gross turnover/receipts or on the basis of owning commercial vehicles. However, a taxpayer must file ITR-3 if his/her business turnover is above Rs. 2 crores.
Ans: No, it is not compulsory to attach documents (such as investment statements or TDS proofs) to your ITR forms. However, taxpayers must keep such documents ready since the Income Tax Department may ask to submit the details during enquiry or assessment.
Ans: To simplify the tax payment procedure, the IT department has introduced a website wherein companies and individuals can submit IT returns at their own convenience. You need to visit the e-filing portal of the Income Tax Department to file your tax returns. This website doesn’t charge anything to facilitate e-filing.
Ans: You need to keep the following documents handy while filing ITR:
1. Information related to investments
2. Form 16
3. Bank account details
4. Aadhaar card
5. PAN card
6. Salary slips (for employees)
7. TDS certificate
8. Statement of interest in case of fixed deposits
9. Savings account bank statement showing interest income
10. Form 26AS
Ans: Section 80C provides a tax deduction of Rs. 1.5 lakh (maximum) for specific investments. The tax benefit is available for investing in LIC, ELSS, PPF, etc. Moreover, taxpayers can claim deduction under this section for incurring certain expenses, for example, paying registration fees and stamp duty when purchasing a house.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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