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An Income Tax Return (ITR) is a form that taxpayers use to report their income details and tax payments to the income tax department. There are seven different ITR forms available for ITR e filing: ITR 1 through ITR 7. The appropriate form for a taxpayer depends on various factors, including their sources of income, the total amount earned, and the type of taxpayer they are (such as individuals, Hindu Undivided Families (HUFs), companies, etc.). Each taxpayer must accurately complete and submit their income tax filing by a specified deadline to comply with tax laws.
Filing income tax returns is a legal obligation for all individuals and businesses in India. Failure to file returns can result in penalties and fines. Filing income tax returns is a way to demonstrate compliance with the tax laws of the country. It helps to prevent tax evasion and ensures that citizens are contributing their fair share to the development of the country. Income tax return filing is not only a legal duty but also a financial responsibility that applies to various groups under different circumstances.
Here's a detailed look at who is required for income tax e filing:
TDS stands for Tax Deducted at Source, a method where income tax is automatically deducted from an individual's payments during certain transactions, such as salary, rent, interest, professional fees, and commissions. Typically, the recipient is obligated to pay the income tax. However, the TDS mechanism allows the tax to be collected upfront from the payments made, ensuring timely tax collection by the government.
The amount received after the TDS deduction is the recipient's net income, and they must then report the gross amount (before the TDS deduction) in their tax return.
Apart from depositing the tax, the deductor must file TDS returns. A TDS return is a quarterly report consolidating all transactions involving Tax Deducted at Source within a given quarter. TDS return filing must be completed quarterly to ensure compliance with tax regulations and avoid potential penalties. Once the TDS returns are submitted, the details will appear on Form 26 AS. While filing the TDS returns, the various details to be mentioned are:
TDS return can be best described as the quarterly statement or summary of all TDS-related transactions made during the specific quarter. Typically, it comprises details of the TDS collected and deposited to the Income Tax Authority by the deductor. The essential details disclosed in a TDS return statement include the following –
Notably, all details included in the online TDS return form are also disclosed in the payee’s Form 26AS. It is mandatory for all individuals who come under the purview of tax slabs prescribed by the IT department.
Similarly, the penalty has to be paid in case one furnishes incorrect information. Notably, Section 234 states that if a taxpayer fails to file TDS return within the due date, he/she must pay a penalty of Rs.200 each day until filed. Regardless, the total liability must not exceed the TDS amount at any given point in time.
A tax audit is done by a certified Chartered Accountant who verifies the books of accounts maintained by the taxpayer and issues a tax audit report in the prescribed format. The tax audit report contains various details such as gross receipts, expenses, depreciation, tax liability, etc. Is a tax audit required.
The tax auditor shall furnish a tax audit report online by using his login details in the capacity of ‘Chartered Accountant’. Taxpayers shall also add CA details in their login portal.
Once the tax auditor uploads the audit report, the same should either be accepted/rejected by the taxpayer in their login portal. If rejected for any reason, all the procedures need to be followed again till the audit report is accepted by the taxpayer.
Last date for filing of income tax audit report is 31st October of the subsequent year in case the taxpayer has entered into an international transaction and 30th September of the subsequent year for other taxpayers. The subsequent year itself is the assessment year.
You must file the tax audit report on or before the due date of filing the return of income. It is 31st October of the subsequent year in case the taxpayer has entered into an international transaction and 30th September of the subsequent year for other taxpayers. The subsequent year itself is the assessment year.
Form No. 3CA/3CB is a format of audit report, whereas Form 3CD is a Statement of particulars required to be furnished under Section 44AB of the Income-tax Act. If the assessee is required to get his books of accounts audited under any other law, it is sufficient for him to get his accounts audited under that law and furnish a report of such audit and a report in form 3CA and 3CD by a Chartered Accountant by the prescribed due date.
Also known as SAHAJ is applicable to an individual having salary or pension income or income from one house property (not a case of brought forward loss) or income from other sources (not being lottery winnings and income from race horses, income taxable undersection 115BBDAor income reffered in section 115BBDA or income referred in section 115BBE).
Return Form ITR - 1 (SAHAJ) can be used by an individual whose total income includes:
ITR Sahaj Forms are attachment-less forms. This means that taxpayers are not required to attach any documents.
However, taxpayers should retain the following documents for their records and be prepared to produce them before tax authorities if requested, particularly in situations like assessments or inquiries.
Form ITR – 2 can be used by an individual and Hindu Undivided Family who is not eligible to fileITR-1 Sahaj and not having income from “profit and gains of business or profession” and also not having income from “Profits and gains of business or profession” in the nature of interest, salary, bonus, commission or remuneration, by whatever name called, due to, or received by him from a partnership firm.
Further, in a case where the income of another person like spouse, minor child, etc., is to be clubbed with the income of the taxpayer, this return form can be used only when such income falls in any of the above categories..
ITR-2 forms are used by individuals or Hindu Undivided Families whose total income for the assessment year includes:
If the Income Tax Returns are clubbed with a spouse, minor child etc, then their returns can only be filed together if the sources of income are similar to the ones mentioned above. Should there be a variation in earnings in even one category, the Assessee is liable to fill up a separate and relevant Income Tax Returns Form.
ITR 3 Form is a return form that individual taxpayers and members of Hindu Undivided Families can use to file income tax returns. To be eligible to file ITR with this form, you must have a proprietorship or a business as one of your income sources.
ITR 3 has various tabs for you to report your source of income as salary, capital gains and house property. You can file tax returns with ITR Form 3 online by visiting the official portal of the Income Tax Department. You must verify your details in this form physically or electronically before the final submission.
Now that you have a brief idea of what ITR 3 means, let’s take you through the eligibility criteria that you must fulfil to file returns with it.
In short, any individual earning income under the head “profits or gains from profession or business” who is not eligible to file ITR-1, ITR-2 or ITR-4, has to file Form ITR-3.
To file your income tax return (ITR) on Taxvisor for ITR-3, the following documents are needed.
Presumptive Taxation Scheme
Small businessmen might not have sufficient resources to keep accurate accounting records and determine the profit or loss. Due to this, managing the income and taxes from such a business is challenging. Therefore, the Income Tax Department has established some simple regulations under which your income depends on your company's gross receipts. This is known as the presumptive method, in which tax payments are made on an estimated basis.
The features of the presumptive taxation scheme are listed below:
Form ITR – 4 (SUGAM) can be used by an Individual/HUF/Firm (Other than LLP) whose total income for the year includes:
The ITR-5 form from the Income Tax Department is designed for filing income tax returns by entities such as firms, LLPs, Association of persons (AOPs), Body of Individuals (BOIs), Artificial Juridical Person (AJP), Estate of deceased, Estate of insolvent, Business trust, and investment fund.
This form can be used by the following persons
However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4D) shall not use this form. Not sure which ITR form you need to use? Read our guide for help.
In case an assessee who is required to furnish a report of audit under sections 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via), 10A, 10AA, 12A(1)(b), 44AB, 44DA, 50B, 80-IA, 80-IB, 80-IC, 80-ID, 80JJAA, 80LA, 92E, 115JB or 115VW he shall file the report electronically on or before the date of filing the return of income.
Companies apart from companies that which are claiming for exemption under section 11 should refurbish their income tax return in the ITR-6 Form. Companies that can claim exemptions under Section 11 are the ones who hold their income from property for religious or charitable purposes.
ITR 6 applies to all companies except those claiming an exemption under Section 11 of the Income Tax Act. Section 11 applies to income derived from property held under a trust or legal obligation for charitable or religious purposes. Therefore, companies with income used for charitable or religious purposes are not eligible to file ITR 6.
Companies registered under the Companies Act of 2013 or the Companies Act of 1956 are required to file the ITR 6 Form. This includes:
Under Section 11, the following sorts of entities are eligible to claim exemption:
The CBDT notifies 7 various ITR forms to file the ITR. The Income Tax Act of 1961 releases all the ITR forms and specifies the following procedures. Taxpayers need to accurately fill out the relevant ITR form and file it with the Income Tax Department within the specified due date. Filing an incorrect or incomplete ITR can lead to penalties and legal consequences. In this excerpt, we will talk about ITR-7, and how to file and download ITR-7. If you are confused with the relevant form to file ITR, leave it to Taxvisor. When you file ITR with Taxvisor, we select the right ITR form automatically for you.
The following are the sections, as per which ITR-7 should be filed by an individuals and companies: