Who can file ITR ? How to file ITR ?

Who can file ITR: People living in India and earning a total income of up to Rs 50 lakh qualify for this. ITR-1 can be submitted by individuals who derive income from employment, property, or other sources. Non-resident Indians (NRIs) are not allowed to submit ITR-1. Salaried taxpayers can submit their ITRs using Form 16.

Understanding Income Tax Returns (ITR) in India: Who Can File ITR and How?

Filing Income Tax Returns (ITR) is a crucial financial responsibility for individuals in India. It not only ensures compliance with the law but also helps individuals keep their financial records in order and claim refunds where applicable. In this comprehensive guide, we will discuss who can file ITR in India and the different types of ITR forms available.

Part 1: Eligibility Criteria for Filing ITR

1.1. Resident Individuals

Resident individuals are Indian citizens who have either stayed in India for more than 182 days in a financial year or 60 days if they have been in India in the current financial year and 365 days or more in the preceding four years. Such individuals are required to file their ITR, provided their income exceeds the specified threshold.

1.2. Non-Resident Indians (NRIs)

NRIs, or Non-Resident Indians, are individuals who are Indian citizens but reside abroad. NRIs are required to file ITR in India if their income generated in India exceeds the prescribed limit. Income from Indian sources like property, business, or other investments are taxable.

 1.3. Hindu Undivided Family (HUF)

HUF is a separate tax entity that can file an ITR. It consists of a group of family members governed by Hindu law, and it has its PAN (Permanent Account Number). HUFs can file ITR based on their income.

1.4. Businesses and Corporations

Businesses, including sole proprietorships, partnerships, and companies, are also required to file ITR. Different ITR forms apply to businesses based on their type and turnover.

Part 2: Types of ITR Forms

2.1. ITR-1 (SAHAJ)

ITR-1 is for individuals with income from salary, one house property, and other sources such as interest income. This is the most basic ITR form and is typically used by salaried individuals.

2.2. ITR-2

ITR-2 applies to individuals and HUFs who have income from sources other than those mentioned in ITR-1. It includes capital gains, foreign income, and more complex financial situations.

 2.3. ITR-3

ITR-3 is for individuals and HUFs who are partners in a firm and have income from the firm’s profit or any other source of income. This is typically used by business owners and professionals.

 2.4. ITR-4 (SUGAM)

ITR-4 is designed for individuals, HUFs, and firms with income from business or profession, particularly for small businesses.

2.5. ITR-5

ITR-5 is for associations of persons (AOPs), bodies of individuals (BOIs), and firms. It is used when an entity is not covered under ITR-3 or ITR-4.

 2.6. ITR-6

ITR-6 is meant for companies that do not claim exemption under section 11 (income from property held for charitable or religious purposes) and have a total income exceeding Rs 1 crore.

 2.7. ITR-7

ITR-7 applies to entities such as trusts, political parties, research associations, and more. These entities have to file ITR-7 to report their income.

 Part 3: The Filing Process

Filing ITR in India is now made easier through the online portal of the Income Tax Department. You can follow these general steps:

1. Register on the official income tax e-filing portal.
2. Select the appropriate ITR form based on your income sources.
3. Fill in the required information accurately, including personal details, income details, deductions, and taxes paid.
4. Verify the information and calculate your tax liability.
5. Upload the XML file to the portal and submit your ITR.
6. You can e-verify your ITR using Aadhar OTP, net banking, or by sending a physical ITR-V to the Centralized Processing Centre (CPC).

Part 4: Important Deadlines

Filing ITR in India is subject to specific deadlines

• – The due date for most individuals is July 31st of the assessment year.
• – Companies and firms have a deadline of September 30th.
• – NRIs have the same deadline as companies and firms if their accounts are required to be audited.

Filing an ITR is a legal obligation for many individuals and entities in India. Understanding who can file ITR and the appropriate form to use is crucial. Complying with these regulations not only helps avoid legal issues but also allows you to claim deductions and refunds, ensuring your financial well-being. Always stay updated on the latest income tax regulations to provide accurate and timely filing.

Who is not eligible for ITR

In India, most individuals and entities are required to file Income Tax Returns (ITR) if their income meets certain criteria. However, there are specific cases where certain individuals or entities may not be eligible or required to file ITR. Here are some situations where filing an ITR may not be necessary:

1. Income Below the Taxable Limit: Individuals whose total income for the financial year falls below the taxable limit are not obligated to file an ITR. As of my last knowledge update in September 2021, the taxable limit for individuals below 60 was Rs 2.5 lakhs. It’s essential to check the current income tax slabs and limits as they may have changed in subsequent years.

2. Agricultural Income: Agricultural income is generally exempt from income tax. If an individual’s income consists solely of agricultural income and does not exceed a specified limit, they may not be required to file an ITR. However, if they have non-agricultural income, they may still need to file for that portion of their earnings.

3. Exempt Income: Some types of income are exempt from income tax, such as income from certain investments or sources. If an individual’s entire income is made up of such exempt income and there is no taxable component, they might not need to file an ITR.

4. Non-Resident Indians (NRIs): NRIs, who do not earn income in India and have no taxable income in the country, generally do not need to file ITR. However, if they have income generated in India, they may need to file an ITR.

5. Super Senior Citizens: Individuals aged 80 years and above may be exempt from filing ITR if their income consists of pension and interest income, provided that the interest is earned from a bank or post office, and tax has been deducted at source.

6. Minors: Minors (individuals below the age of 18) with income derived from investments, such as fixed deposits or savings accounts, may not be required to file ITR if their total income does not exceed the taxable limit. In such cases, the income is usually clubbed with that of the parent or guardian, and the parent or guardian is responsible for any tax liability.

It’s important to note that tax laws can change, and tax exemption limits and rules may vary from year to year. Therefore, it is advisable to consult a tax professional or refer to the latest income tax regulations to determine your eligibility and obligations regarding filing Income Tax Returns. Additionally, even if you are not required to file an ITR, doing so voluntarily can be advantageous in certain situations, such as when you want to claim refunds or establish a financial history.

Can a person file his/her own ITR?

Yes, individuals in India can file their own Income Tax Returns (ITR) on their own without the need for a tax consultant or chartered accountant. The Income Tax Department provides an online portal that allows taxpayers to e-file their returns, making the process relatively straightforward. Here’s how you can file your own ITR:

1. Registration: If you’re not already registered on the Income Tax e-filing portal, you need to create an account. You will need your Permanent Account Number (PAN) for registration.

2. Choose the Appropriate ITR Form: Select the relevant ITR form based on your income sources and financial situation. Commonly used forms include ITR-1, ITR-2, ITR-3, and ITR-4. Ensure you select the correct form to report your income accurately.

3. Gather Required Documents: Collect all the necessary documents, such as your Form 16 (if applicable), bank statements, details of investments, and other financial records. Having these documents ready will make the process smoother.

4. Fill in the Details: Enter your details, income details, deductions, and tax payments in the ITR form. The online portal provides step-by-step instructions, and there are usually help icons to assist you in understanding each section.

5. Verify the Information: Review all the information you’ve entered for accuracy. Ensure that you have claimed all eligible deductions and exemptions.

6. Calculate Tax Liability: The portal usually calculates your tax liability automatically. It will also calculate any refund or balance payable.

7. Submit the ITR: Once you are satisfied that all the information is correct, submit the ITR electronically. You will receive an acknowledgment in the form of an acknowledgment number.

7. Verify Your ITR: You can e-verify your ITR using methods such as Aadhar OTP, net banking, or sending a physical ITR-V to the Centralized Processing Centre (CPC). E-verification is the quickest and most common method.

9. Keep Records: It’s important to keep copies of your ITR, acknowledgment, and supporting documents for future reference.

Filing your own ITR can save you money in terms of professional fees. However, suppose you have complex financial situations, investments, or business income, and you are not confident about tax laws and regulations. In that case, it may be advisable to seek the assistance of a tax professional or chartered accountant to ensure accurate and compliant filing. They can also guide tax planning and optimization.