To keep updated about their income and income tax return, a form must be submitted to the income tax department. Income tax return (ITR) is a form that is filled by taxpayers to know about their income and tax payable in the Income Tax Department. Generally, ITR has 7 forms, and the person has to choose in which category he belongs to. It is every individual’s duty, a member of the Hindustan Undivided Family (HUF).
Basically, a taxpayer to file an ITR before a specified due date. If a person files after the due date, he is charged with a penalty by the Income Tax Department. The information about income in ITR includes all the money that a taxpayer has earned in a particular financial year (1st April of that year to 31st March of the next year).
Now, in this article, we will read about the benefits of filing ITR.
The Income That Is Shown In ITR Can Include
- Income from salary
- Income from house property if he owns a house
- Income from business
- Income from capital gains
- Income from lottery gains and some other sources.
Benefits of filing ITR, even when income is below the exemption limit
Why Should I File ITR?
It is our duty to file an ITR as a citizen. The tax calculated has to be paid within the prescribed limits, or else you may end up paying the penalty.
Benefits Of Filing ITR Even When Income Is Below Exemption Limit
1. To Claim A Refund
When you have paid any extra tax in the previous financial year, you can claim a refund from the Income Tax Department. Also, to claim a refund under section 80D and section 80C for medical health insurance policies, you have to file an ITR. You can also use this to claim a refund under section 90A, 90, and 91. When you are a foreigner, you can avail of an option called “double taxation avoidance agreement” with this ITR form.
2. As Proof Of Income
Income Tax Return is also called as “Sahaj,” and it contains all the income details of an individual. This form acts as proof while applying for a loan. Also, it uses to compensate for things if any misfortune has happened in the taxpayer’s house.
3. Faster Visa Approving
While applying for a visa, the ITR form is beneficial because it checks the individual’s income and details with this form. You can avoid hassle for three years with a copy of your returns.
4. Loss Is Carried Forward
When your business is too low because of losses in the previous years, your tax liability is reduced and carried over your losses to lower the capital gains or taxable income dues. This happens only when you file an ITR, or else the government can’t help you out with your losses.
5. To Avoid Penalties
When you avoid filing an ITR, you may pay penalties up to Rs.10,000. This statement was implemented from the FY2017-18. Although it is only Rs.1000 for the taxpayers whose salary is less than 5 lakhs, every taxpayer must file the income tax return. It is the duty of every individual to support the nation. According to section 234A, 1% of interest is added to the due tax amount every month. This happens when you don’t file for an ITR.
6. A Proof To Banks
ITR is used as proof to provide any loan from the public or private bank. Because bank managers have to know all the borrower’s details to check whether they could pay the money within the specified time or not, it makes work easy for bank employees.
Many banks ask for ITR forms for at least three consecutive years, and some lenders will definitely ask for your ITR forms. Sometimes, when you buy a high valued land, the related documents are sent to the IT department to cross-verify your money by looking into ITR forms. So it is required to fill the ITR forms.
7. As A Residential Proof
ITR is also treated as residential proof because the ITR receipts are sent to your registered address when you apply through offline mode. It is also used as proof while applying for a credit card. Banks can reject your credit card if you have not applied for ITR.
8. As An Income Proof To Freelancers
Freelancers or independent professionals generally don’t have Form-16. The only form they can show as proof of income is this ITR form.
9. For Government Tenders
If a person wishes to fill a government tender as a part of his business, then he has to show his ITR forms from the past three to four years as a proof whether you are eligible for this tender or not. This not actually a strict rule, but nowadays, government officials are asking for these ITR forms.
Why Has E-Filing Become More Craze?
Any taxpayer can sit at home and file an ITR form whenever he is free, and there is no waste of time to travel to submit his documents. So e-filing has become more popular nowadays as the government decided to digitalize everything. The income tax department has created a website to file an ITR form online. So the benefits that come with e-filing are;
i. Ease In Documentation Verification
To verify a document for approval of anything is mandatory, but because of poor connection, it has become hectic work for an individual to get his documents verified. So the income tax department helps you prepare your income chart through online mode, which is very important while applying for a loan. An ITR form will contain all the information in detail so that bank can verify it.
ii. Ease In The Filing
You can easily fill an ITR form either by yourself or by a professional. It consumes less time, and so it is not hectic work to do by an individual. The only thing you have to do is log in to the website and fill in all the required details and then submit them. An ITR-V form is generated as an acknowledgment, and this has to be submitted within 120 days of filing your returns.
You can see all the returns filed by you in the previous assessment years on your website. You can easily download the excel sheet that contains all the details of your income. The only thing you have to do is remembering your PAN card number and your birth date.
Better security with e-filling rather than paperwork; you can also have proof of receipt. Easy to do than offline work.
The type of ITR that can be filed by a taxpayer depends upon the category he belongs to.
Various Types Of ITR forms
So now let us discuss the various ITR forms that can be filed:
Taxpayers whose income is less than 50 lakhs are eligible to file this ITR form. The income can include salary or pension, from one house property, and some other sources mentioned in the form.
But below mentioned taxpayers cannot file this ITR-1 form:
- Total income exceeding 50 lakhs
- If Income from the agricultural sector exceeds Rs.5000.
- If you have tax on capital gains.
- A person with a business or professional income is not eligible to file this form.
- If the taxpayer is the director of the company, then he is not eligible to file this.
- If your income includes equity shares during a financial year.
- Owning foreign assets or foreign income.
- If you are a non-resident of India.
Taxpayers who are individual or a part of the Hindustan Undivided Family (HUF) can file this form if you don’t have any profit or loss of income from business or some profession. Generally, who is not eligible to file ITR-1 can file this. A person who has income from more than one house property and income from other sources and the total income should be greater than 50 lakhs.
Following are the taxpayers who are eligible to file ITR-2:
- Whose income is more than 50 lakhs
- Whose total income includes the income of his spouse or child of the assessee.
- When agriculture income exceeds Rs.5,000.
- When income includes foreign assets and foreign income.
- When a taxpayer is a non-resident and resident not ordinarily resident (RNOR).
- Who is not eligible?
- A taxpayer whose total income is from business or profession.
This form can be filed by an individual or Hindustan Undivided Family member when the income is inherited from a business or profession.
Persons having income from;
- When he is an individual director in a company.
- If a person has unrequited shares in the business sector during a particular financial year.
- The income of a person in the firm.
- Total income of the person >50 lakhs.
4. ITR-4 Or Sugam
Any individual or a member of HUF or any member in the firm (except LLF) can file this form if he/she has a business or profession. This form also includes people who have opted for a presumptive income scheme as per section 44AD, Section 44ADA, and Section 44AE of the Income Tax Act.
Who is not eligible to file this form?
- A person who has a total income of more than 50 lakhs
- A person who has a loss in business.
- Owning a foreign asset and income from more house properties.
- If the person is the director of a company and has unlisted equity shares during the financial year.
ITR 5 is for firms, LLPs (Limited Liability Partnership), AOPs (Association of Persons), Bois (Body of Individuals), Artificial Juridical Person (AJP), Estate of deceased, Estate of insolvent, Business trust and investment fund.
This form can be filed for any company except those listed in section 11 (except those listed for religious property or charitable). This is filed only through online mode.
Companies which wish to get refund under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) or section 139(4E) or section 139(4F).
- Return under section 139(4A) is for properties that come under charity or religious purposes.
- A political party can file returns under section 139(4B) if total income exceeds the maximum amount, not chargeable to income tax.
- A news agency can file a return under section 139(4C), scientific research organization, fund, or any educational institution or other medical institution.
- Return under section 139 (4D) can be filed by any college or university which doesn’t need to get lost under these sections.
- Return under section 139 (4E) can be filed by every business to avoid a loss by these sections.
- Under section 139 (4F), the return can be filed by any investment fund referred to in section 115UB.
Who Is Not Eligible To File An ITR?
If any individual or a HUF member whose age is less than 60 years has a total income of fewer than Rs.2.5 years are not eligible to file an ITR. Similarly, if a person’s age is 60 to 80 years with a total income less than Rs.3 lakhs is not eligible.
If he/she is more than 80 years with a total income of fewer than Rs.5 lakhs, they are also not eligible to file an ITR. This is because it might become difficult for them to pay the tax with less income. So the government has taken this decision. Remaining any individual who doesn’t belong to this category are requested to file an ITR or penalty is issued.
Who Is Eligible To File An ITR?
For all individuals (<59 years) whose income is more than Rs.2.5 lakhs. For senior citizens (60-79 years) whose income is more than Rs.3 lakhs and for very senior citizens (>80 years) whose income is more than Rs.5 lakhs. Note that income is calculated before any deductions because of their loans and some other exemptions under section 10.
- Every registered company which generates income regardless of loss or profit in the respective financial year.
- If any person wants to claim a refund because of excess tax paid in the previous years.
- If an individual wish to interest in the assets that are present in foreign countries.
- Foreign companies that get benefited while investing in India.
- NRIs who earn more than Rs.2.5 lakhs in a single financial year.
Documents Required To File An ITR?
It is essential to submit every document while filing an ITR, or else your request will be canceled, and then if it becomes late, you might end up paying the penalty.
So get ready with the documents that are required while filing an ITR. The documents are;
i. Bank and post office savings account passbook, PPF account passbook.
ii. Salary slips, Aadhaar card, PAN card.
iii. Form-16 issued to you by the employer. This form contains details of salary paid and TDS deducted. If any, interest certificates from banks and post office.
iv. Form-16A if TDS deducted on payments like fixed deposits, recurring deposits other than salary.
v. Form-16B from the buyer if you have sold a property, showing the TDS deducted on the amount paid to you.
vi. Form-16C from your tenant if any TDS is deducted on the rent received by you.
vii. Form-26AS shows the details of taxes deposited against your PAN like TDS deducted by banks, employer, or other organizations from the payments paid to you, advanced taxes deposited by you, etc.
viii. Proofs to claim under a health insurance policy under section 80D and 80C.
How To Check ITR Status Online?
You can check your ITR status easily by following these below options:
a. Under this option, you can check your ITR status without logging in.
b. Click on the ITR Status tab present on the extreme left of the e-filing website.
c. Then you are directed to a new website where you have to provide your PAN number, ITR acknowledgment number with the captcha code that is given.
Later, after all these steps, the status of your ITR is displayed on the screen.
a. Here in this option, you can check ITR status by logging in.
b. Login to the e-filing website and click on the option “view returns/forms.”
c. Then select income tax returns and assessment year from the dropdown box.
d. Then the status of your filing is displayed on your screen. Now, make sure that you have informed the income tax department about your ITR form filing every year within the specified date.
How To Download An ITR?
You can file an ITR either through online or offline mode. But today’s generation chooses to file through online mode as this is easy and fast.
Step-1: Go to the income tax e-filling website.
Step-2: Click on the “View Returns/ Forms” option to view your e-filled tax returns.
Note: If you are new to the website, then register into the website by providing the necessary details.
Step-3: Details of all the years for which returns are filed is displayed then.
Step-4: To download the ITR-V, click on the acknowledgment number. Begin download by selecting that option.
Step-5: To view your downloaded document, provide your password. The password is your PAN no. with your birthdate.
To e-verify the return through Aadhar OTP or Net-Banking OTP. If the taxpayer doesn’t wish to verify the returns, then the ITR has to be sent to CPC Bangalore within 120 days. After doing all these steps, income tax acknowledgment is developed.
1. How do I correct my ITR if I had made a mistake while filing?
You can correct your mistake by filing a revised return. There is no penalty generated while filing a revised return. You have to file it before completing the assessment year by the assessment officer, or you have to file at the end of the applicable assessment year, whichever is earlier.
2. What happens if I miss filing an ITR?
If you miss filing an ITR, then you have an option to file a belated return by the end of the applicable assessment year. There are also various penalties to be paid depending upon your annual income and how late you are applying.
3. How much would it cost to get my taxes filed by an authorized e-filing intermediary?
There are no fixed charges to this step, but it is said that rates are higher for more complicated income tax returns like capital gains, returns of self-employed or business individuals under section 44AB, etc.
4. Can I file for an ITR without a PAN card?
The answer is No. The essential document that is required for filing an ITR is the PAN card itself. Even in e-filing, you have to provide your PAN number along with your birthdate to download a form.
5. I have forgotten to file my ITR form for FY 2019-20. Can I still make a delayed filing this year?
You can no longer file an ITR for the previous year if this financial year has been started. If you get any notice from the Income-tax department to pay, you can file for an ITR. But because of this outbreak, the covid-19 income tax department decided to extend the due date to file an ITR to November 30, 2020.
6. Is TDS refundable?
Yes, by filing a return of income form, you can claim the return of taxes deducted. Any individual or organization can file these returns.