A complete guide on what is ITR – meaning, forms, and e-filing.
As an income-earning Indian citizen, you must pay taxes to the Government of India. Whether you are a resident Indian with investments abroad or an NRI with investments in India, you must pay taxes on your global income. The process of paying your taxes is called the filing of Income Tax Returns (ITRs). Read on to understand what is ITR and online ITR filing.
ITR is essentially a form used to provide information about your income sources and taxes to the Income Tax Department. This information is used to determine your tax liability based on your annual income. You have to file income tax returns at specific durations during a financial year, every year, based on your tax slabs.
Besides your general income source, your ITR File must also include capital gains earned from market investments. You can also enjoy exemptions up to certain limits based on your investments. You must remember to file the returns before a specified date. If you fail to submit your ITR file before the date of filing, you might have to pay a penalty. Conversely, if you pay more than the tax you are liable to in a year, you become eligible for an income tax refund.
The Income Tax Department lists several forms on their website that you must fill according to your income and tax slabs. Here is a breakdown of the returns forms available:
This form is for resident Indian taxpayers with a total income up to INR 50,00,000 p.a., from salaries, one house property, other investment avenues, and agricultural income up to INR 50,000.
These forms are for individuals and Hindu Undivided Families (HUFs) that do not have income from profits and gains from business or similar professions.
This form is for individuals whose business attracts presumptive income. You must be an individual, HUF, Firm (other than a Limited Liability Partnership), or a resident Indian earning a total income of up to INR 5,000,000 per annum. Your income must come from businesses or professions that fall under sections 44AD, 44ADA, 44AE of the Income Tax Act, 1961. If you fit these criteria, then you must fill this form.
Electronic filing, or e-filing, is the process of filing your tax returns over the internet. You can use the tax preparation software approved by the Income Tax Department to pay your taxes electronically. E-filing has become quite popular since it allows taxpayers to file their ITR online from the comfort of their home, at a time convenient to them, by using a filing portal.
Filing ITR online or offline is not only convenient, but it also helps you get access to loans and credit cards. You can also enjoy tax exemptions. Ensure you check the various investments that qualify for income tax deductions under different sections of the Income Tax Act of India.
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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.