Master Guide on Filing Income Tax Return: Everything You Need to Know

Filing an Income Tax Return (ITR) is a crucial step for every taxpayer. It’s the official way to report your income and taxes to the Income-tax Department. By filing your ITR, you can also claim refunds and carry forward losses to future years. Depending on your income sources and the nature of your financial activities, different ITR forms are available.

Understanding the Different ITR Forms
The Income-tax Department offers a variety of ITR forms, each designed to cater to different categories of taxpayers:

• ITR-1 (SAHAJ): This form is intended for individuals who earn income from a salary or pension. It’s also suitable for those with income from one house property (without any carry-forward loss) and income from other sources.
• ITR-2: If you’re an individual or a Hindu Undivided Family (HUF) and do not have income from a business or profession, ITR-2 is the form for you.
  ITR 2 is also applicable in the following cases:
  1- If income is more than 50 lacs,
  2- Capital gains
  3. More than 1 house property
  4. Foreign income / Foreign asset
  5. Crypto income (if reported as capital gains)
  6. Holding directorship of a company
  7. Holding unlisted equity shares
• ITR-3: This form is applicable if you’re an individual or HUF with income from a business or profession.
• ITR-4 (SUGAM): Ideal for individuals, HUFs, and partnership firms that opt for presumptive taxation under sections 44AD, 44ADA, or 44AE.
• ITR-5: Firms, LLPs, associations, cooperative societies, and other entities can use ITR-5. However, entities that need to file under specific sections, such as trusts or political parties, should not use this form.
• ITR-6: Companies, except those claiming exemptions under section 11, must use ITR-6.
• ITR-7: This form is designated for trusts, political parties, and entities required to file under sections 139(4A), 139(4B), 139(4C), or 139(4D).
• ITR-V: This is not a return form but an acknowledgment slip for returns filed online without a digital signature.

How to File Your Income Tax Return

There are several methods to file your ITR, depending on your convenience and the specific requirements:

• Paper Form: Some individuals, particularly super senior citizens (80 years and above), may opt to file their returns using the traditional paper form.
• Online with a Digital Signature: This is the most secure method, requiring a digital signature to authenticate your return.
• Online with an e-Verification Code: After filing your return electronically, you can verify it using an e-verification code (EVC) sent to your registered email or mobile number.
• Online, followed by ITR-V Submission: If you file your return online without a digital signature, you need to send a signed copy of the ITR-V form to the Centralized Processing Center (CPC) in Bengaluru within 30 days of filing the return.

Documentation Requirements

One of the advantages of filing an ITR is that it’s generally a document-free process. You don’t need to attach any proofs, such as investment documents or TDS certificates, along with your ITR. However, it’s essential to keep these documents handy, as you may need to produce them during assessments, inquiries, or audits by the tax authorities.
ITR – 1 (SAHAJ): Who Should Not Use It
Form ITR – 1 (SAHAJ) is for individuals with straightforward income sources. However, you cannot use this form if you:

• Are a non-resident or not ordinarily resident.
• Are a company director.
• Have total income exceeding ₹50 lakhs.
• Have income from more than one house property.
• Have held unlisted equity shares at any time during the year.
• Claim deductions under sections 80QQB or 80RRB for royalties.
• Have tax deducted under sections 194N or 192(1C).
• Claim deductions under section 10AA or Chapter VI-A.
• Have brought forward losses.
• Seek deductions under section 57 (except family pension).
• Want relief under sections 90 or 91.
• Want credit for tax deducted at source for someone else.
• Have assets or signing authority in foreign accounts.
• Have any of the following types of income:
  • Business or professional income.
  • Capital gains.
  • Special rate taxable income.
  • Dividend income exceeding ₹10 lakhs.
  • Unexplained income taxed at 60%.
  • Agricultural income over ₹5,000.
  • Foreign income.

ITR – 2: Who Can Use It
Form ITR – 2 is suitable if:

• You don’t qualify for ITR – 1 and you do not have business income.
• Your income includes:
  • Interest, salary, bonus, commission, or remuneration from a partnership firm.
  • Income to be clubbed from family members.

ITR – 2: Who Cannot Use It
You cannot use Form ITR – 2 if:

• You have income from business or profession.
• Your income includes interest, salary, or remuneration from a partnership firm.

ITR – 3: Who Can Use It
Form ITR – 3 is for individuals or Hindu Undivided Families (HUFs) who:

• Have income from business or profession.
• Have income in the form of interest, salary, bonus, or commission from a partnership firm.

ITR – 3: Who Cannot Use It
Form ITR – 3 cannot be used by:

• Any person other than an individual or HUF.
• Individuals or HUFs without business or professional income.

Any person other than an individual or HUF.
Individuals or HUFs without business or professional income.

• Individuals, HUFs, or firms (except LLPs) with:
  • Business income under sections 44AD or 44AE.
  • Professional income under section 44ADA.
  • Salary or pension income.
  • Income from one house property.
  • Other sources (excluding lottery winnings, race horse income, or dividend income over ₹10 lakhs).

ITR – 4 (SUGAM): Who Cannot Use It
You cannot use Form ITR – 4 if:

• You are a non-resident or not ordinarily resident.
• You are a company director.
• Your total income exceeds ₹50 lakhs.
• You have income from more than one house property or held unlisted shares.
• You claim specific deductions or reliefs.
• You have foreign assets or income, or income taxable at special rates.

ITR – 5: Who Can Use It
Form ITR – 5 is meant for:

• Firms, LLPs, AOPs, BOIs, trusts (except those filing ITR – 7), and other specified entities.

ITR – 5: Who Cannot Use It
Form ITR – 5 is not for:

• Entities required to file under sections 139(4A), 139(4B), 139(4C), or 139(4D) (e.g., trusts, political parties, educational institutions).

ITR – 6: Who Can Use It
Form ITR – 6 is for companies other than those claiming exemption under section 11 (charitable or religious trusts).

ITR – 7: Who Can Use It
Form ITR – 7 is for:

• Trusts, political parties, institutions, and similar entities required to file under sections 139(4A), 139(4B), 139(4C), or 139(4D).

ITR – 7: Who Cannot Use It
Form ITR – 7 cannot be used by:

• Entities not required to file under sections 139(4A), 139(4B), 139(4C), or 139(4D).

Filing Your Return: The Electronic Way

To file your return electronically, visit Income Tax Department’s e-filing portal. You can use the free e-filing utilities provided by the department, available in Java and Excel formats, which are simple and user-friendly.

For assistance, you can contact the e-filing help desk at 1800 103 0025.
E-Filing vs. E-Payment

• E-Filing: Submitting your income tax return online.
• E-Payment: Paying your taxes online via net banking or card.

Both processes are designed to be quick and efficient.
Is Filing a Return Necessary Without Positive Income?
Yes, if you have a loss that you wish to carry forward, you must file your return to claim this loss.
Due Dates for Filing Returns

• Companies (except those requiring Form No. 3CEB): October 31.
• Others (with Form No. 3CEB): November 30.
• Individuals and firms (audited accounts): October 31.
• Other assessees: July 31

Understanding Late Filing and Penalties
Late filing of your ITR can have financial repercussions. If you’re not required to file a return but choose to do so voluntarily after the due date, there won’t be a late filing fee under Section 234F. However, if you are obligated to file and miss the deadline, you will face a late filing fee. The fee amounts to ₹5,000 if the return is filed after the due date specified under Section 139(1). For those with a total income of up to ₹5 lakh, this fee is reduced to ₹1,000. And in case income is less than Rs 3 lacs then there is no penalty.
Belated returns can be submitted under Section 139(4) if you miss the original deadline. This belated return must be filed within three months before the end of the relevant assessment year i.e. 31 December or before the completion of the assessment, whichever comes first. It’s important to note that belated returns will still attract late filing fees as mentioned earlier.
In addition to belated returns, the Finance Act 2022 introduced the concept of an updated return. This can be filed within 24 months from the end of the relevant assessment year, regardless of whether you’ve previously filed an original, belated, or revised return.

Claiming Refunds and Correcting Mistakes
If you’ve paid more tax than required, you can claim a refund by filing your ITR. The excess tax will be credited to your bank account through an Electronic Clearance Service (ECS) transfer. It’s crucial to review your Form 26AS, a consolidated tax statement, to ensure all TDS and tax credits are accurately reflected.
Should you discover mistakes in your original return, you have the option to file a revised return. This should be done within three months before the end of the assessment year or before the completion of the assessment. Returns filed manually cannot be revised electronically, so it’s essential to use the online filing system if you wish to make corrections.
Maintaining a copy of your filed return is crucial, as legal proceedings under the Income Tax Act can be initiated for past years. With the ease of digital filing, keeping a digital copy is simple and effective.

Filing Requirements and Procedures
Even if you’ve paid all your taxes in advance, filing a return is mandatory for individuals whose income exceeds the exemption limit. For the Assessment Year 2020-21 and beyond, additional conditions also mandate return filing if certain financial thresholds are met, such as high deposits in bank accounts or significant expenditures on foreign travel or electricity bills. Failing to file can result in penalties.
For taxpayers whose TDS is deposited under the wrong PAN, the deductor must correct the PAN details in their statement. Once corrected, you can claim the TDS in your return. Discrepancies in TDS credits should be reconciled with the deductor to ensure accurate reflection in Form 26AS.

Key Takeaways for Effective Filing

• File on Time: Avoid penalties and missed opportunities by filing before the due date.
• Verify Form 26AS: Ensure TDS and tax credits are accurately reflected.
• Check Documentation: Gather and review all necessary documents before filing.
• Choose the Correct Form: Use the appropriate ITR form based on your income sources.
• Double-check Details: Ensure all personal and financial details are correct.
• Complete E-Verification: If e-filing, remember to complete e-verification or post the acknowledgment if not using a digital signature within 30 days of filing returns.
• Review Annual Information Statement (AIS): Confirm your tax credits and financial transactions.

By following these guidelines and staying informed about your filing obligations, you can navigate the complexities of income tax returns with confidence.