The full form of ITR is Income Tax Return. The tax that is taken from us by the central government on our annual income is called income tax. This is a type of form in which all the information about your income is filled. The money that the government gets from this tax, the government uses that money for the development of the country. Every person has to pay income tax according to his income. In this form i.e. ITR, you have to fill that how much you earned in a year and how much tax you paid to the government from that. ITR filing is governed by the Income Tax Act 1961.
Who is Eligible to File an Income Tax Return?
According to Section 139(1) of the Income Tax Act 1961, only those persons whose annual income is more than 2.5 lakhs will file income tax.
All the government or private companies working in India have to file income tax according to their annual income.
All individuals with foreign income and assets, NRI’s and technology professionals on onsite projects.
Individuals earning Income from mutual funds, bonds, stocks, fixed deposits, Income from interest, house property, etc.
If a person lives abroad but that person earns from India also, then that person also has to file his tax.
If an old person is 80 years old and if the annual income of that person is 10 lakh or more then that person is also required to file income tax.
Types of ITR Forms
There are 7 types of income tax return forms. The form is selected according to the income. You can know about this by contacting us and which form you have to choose. Let us discuss about the form here.
ITR Form 1 (Sahaj)
If you are an Indian citizen and your income is up to Rs 50 lakh, then this form is for you. The source of income should be from sources like salary, family pension, a residential property. Income from lottery or race course does not come under this category. If you have agriculture and income is up to Rs 5,000, then you can use ITR-1 form.
Note: This is not applicable to an individual being director in a company, having invested in unlisted equity shares, or having foreign assets or foreign Income.
ITR Form 2
ITR 2 form is for those individuals and HUFs (Hindu Undivided Families) who do not have income from profits and gains of business or profession but are not eligible for ITR 1 form. This form can be filled by those taxpayers who get income from interest like salary/pension, house property and other sources and it is more than Rs 50 lakh.
ITR Form 3
If you are a entrepreneur, invest in equity unlisted shares, earn as a partner in a company, then you can fill ITR Form 3. Profit, horse racing, lottery, rental income from more than one property.
ITR Form 4
(Sugam) Individual and HUF (Hindu Undivided Family) people having income through business, profession (doctor, lawyer etc.). Form 4 has to be filled for such people. It also covers those who have opted for the presumptive income scheme under section 44AD, section 44ADA and section 44AE of the Income Tax Act.
ITR Form 5
ITR 5 has to be filled by those entities who have registered themselves as Firms, LLPs, AOPs, BOIs.
ITR Form 6 and 7
ITR Form 6 is for those companies which do not get exemption under section 11 of the Income Tax Act. Those companies and individuals who have to file return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) need to fill ITR Form 7.
What are the Benefits of Income Tax Return Filing?
Helps the government to keep track of income of the taxpayer.
It helps claim a TDS refund or any other tax paid in excess.
ITR is the most important income proof .
Tax refund exemption is available by filling ITR .
It makes the taxpayer eligible for loan processing.
ITR is also necessary for more insurance cover .
It is also necessary to start ITR business.
List of Documents required for Income Tax Return Filling
The following documents are required for Income Tax Return filling:
Month wise salary slips.
PAN Card & Aadhaar Card.
Bank Account details.
Additional disclosures regarding income from payroll & fixed deposits.
Data required for claiming deduction.
Data required regarding TDS return filing and advance tax payments.
TDS certificate in Form 16.
Interest income certificate in Form 16A .