What is an ITR? Filing an Income Tax Return, Benefits, Types, Last Date, and Consequences of Non-filing
The Income Tax Return (ITR) is a form used by the individuals and entities to submit their yearly income, deductions, and taxes paid to the Income Tax Department. The submission of ITR acts as a legal proof of income, facilitates tax compliance, and other financial transactions as well.
There are various types of ITRs for different assessees and income levels. This article elaborates on the ITR in detail.
Table of Content
What is an ITR (Income Tax Return)?
An Income Tax Return (ITR) is a form used by the taxpayers to file the information related to income, deductions, and taxes paid with the Revenue Department or Tax Authorities. The type of ITR depends on the nature of income and the type of assessee. The ITR filing is compulsory for some taxpayers while some file to gain other benefits offered to a tax complied assessee.
Who should File an ITR?
Following are the key conditions which mandatory requires filing of ITR:
Company or Firm: Irrespective of the income or loss, a company or a firm must file the ITR.
In case of Refund: The tax refund under the Income Tax can be claimed only through the timely filing of ITR.
In case of Carry Forward of Loss: If a taxpayer wants to carry forward losses under any heads of income, filing of ITR becomes mandatory.
Income Threshold: If the total income of an individual exceeds the basic exemption threshold before considering the deductions under Section 80C to Section 80U for the previous financial year, return filing is mandatory.
When Return is Filed on behalf of Others: Legal representatives of deceased individuals, guardians of minors, and the managers of incompetent persons must file the ITR on their behalf if their income exceeds the basic exemption limit.
Foreign Assets or Income: If an individual owns any foreign assets, including financial interest in any entity, or is a signing authority of any account located outside India, must file an ITR irrespective of the income level.
Thresholds of Deposits or Expenditures: ITR filing is compulsory if: more than INR 1 Crore is deposited in the current account, more than INR 2 Lakh is spent on foreign travel, more than INR 1 Lakh is spent on electricity consumption in a year.
In case of a Non-Resident Indian (NRI): If the sources of income earned in India exceeds the basic exemption limit, return filing by NRI is compulsory.
High-Value Transactions: If there is a purchase of an immovable property of INR 50 Lakh or more, return filing is compulsory.
Benefits of Filing an ITR?
The benefits of filing an ITR includes the following:
Helps to avail loan from banks, as it serves as a proof of income.
Helps to claim income tax refund, if any.
To carry forward loss under any heads of income can be done through timely filing of ITR.
Visa application and receipt becomes easy.
ITR Types and Applicability
The different types of ITR and its applicability is presented in the following table:
Steps to File an ITR
The ITR filing is a systematic process that can be completed online through the income tax e-filing portal. Following are the steps to file an ITR:
Availability of all the required documents: To file an ITR, the taxpayer must make available all the required documents such as PAN, Aadhaar, bank account information, Form 16 (if employed), interest statements, proof of investment, and other documents relevant to the related financial year.
Register/Login to the e-filing portal: The first time user should register at the e-filing portal at https://www.incometax.gov.in/iec/foportal/ using PAN, which will also be a User ID. An already registered user should login using the credentials.
ITR Utility Download: From the ‘Download’s’ section of the e-filing portal, the taxpayer should download the appropriate ITR utility based on the sources of income and applicable ITR. The utility is available in Excel as well as Java versions.
Complete the details in ITR form: Based on the preferred choice, the assessee should complete the ITR form filling out all the required fields. Based on the details provided related to income, the tax utility will auto-compute the income tax payable or refundable.
Validate and generate the XML file: After completing the ITR form in all aspects and also making the tax payment, if any, the assessee should validate the ITR, to check for any errors or missing information. After successful validation, the assessee can generate the XML file to proceed with filing.
Upload the XML file: The assessee has to login to the e-filing portal of income tax using the credentials to upload the XML file. To upload the file: navigate to ‘e-file’ menu > select ‘Income Tax Return’ > choose the relevant assessment year, ITR form type, and the mode of submission as ‘Upload XML’. The XML file generated should then be uploaded.
E-verification of ITR: Once the XML file is uploaded, the assessee has to complete the process of e-verification of ITR.
Confirmation message: Upon successful e-verification, the assessee will receive a confirmation on the registered email id and mobile number. The Income Tax department will process the filed ITR and intimate the assessee accordingly.
Last Date to File an ITR
The last date for filing an ITR is presented in a tabular format as below:
Consequence of Not Filing an ITR?
The late fee for ITR filing varies according to the date of filing and the taxpayer’s income. If filed after the deadline but before December 31st, the late fee is INR 5,000. ITR filing after December 31, will attract late fees up to INR 10,000. Also, the small taxpayers earning up to INR 5 Lakh, the late fee is capped at INR 1,000.
Invalid ITR vs Defective ITR
FAQ
Q1. Is filing an ITR compulsory for everyone in India?
No. ITR filing is mandatory in cases where the income of the previous year of an assessee exceeds the basic exemption limit. Therefore, not everyone is required to file the ITR in India.
Q2. Is it possible to file an ITR after the due date?
Yes. ITR can be filed after the due date with the payment of applicable late fees. The late fee varies based on the total income and type of assessee.
Q3. What is the late fee for filing the ITR after the due date?
If ITR is filed after the due date but before December 31, late fee of INR 5,000 will be levied. If ITR is filed after December 31, late fee of INR 10,000 will be levied. Moreover, for small taxpayers, the late fee is restricted to INR 1,000.
Q4. Can an individual file an ITR even if the income is Nil for the previous financial year?
Yes. Filing of ITR even if there is no income can make an individual avail various benefits from banks or financial institutions.
Q5. Can a company or partnership firm prefer not to file an ITR if the income is Nil for the previous financial year?
No. A company or partnership firms have to compulsorily file the ITR irrespective of the income or turnover during the financial year.
Q6. Can an assessee revise the originally filed ITR?
Yes. Where an assessee has made a mistake in the originally filed ITR, a revised iTR under Section 139(5) can be filed.
Q7. What is the due date for revising the ITR originally filed?
The due date for filing the revised ITR is the earlier of December 31 of the assessment year or the till the time the assessment is completed. For instance, the revised ITR for F.Y. 2023-2024 is the earlier of December 31, 2024 or completion of assessment.
Q8. What is e-verification of ITR?
E-verification of ITR is a simplified process through which the ITR is validated using various options ensuring the accuracy and authenticity of the information contained within it.
Q9. What is an invalid ITR?
An invalid ITR is one which fails to comply with the procedural requirements of the Income Tax Act such as failure to e-verify the ITR within 30 days of filing the same.
Q10. What is a defective ITR?
An ITR is considered as defective if the return or ITR schedules contain incomplete or inconsistent information, or for any other reason.
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