Under the provisions of the Income-Tax Act 1961, it is mandatory for every person who qualifies under the definition of “resident” in the previous financial year to correctly assess his tax liability based on the relevant slab rates and submit the tax amount and file a summarised document prescribing details of incomes earned or investments made or losses sustained throughout the year with the help of a document known as the Income Tax Return filing.
It is a summarised form that enables the taxpayer assessed to declare his assets, incomes, investments, to claim tax deductions or carry forward of any business losses, tax refunds, etc. and submit it to the Central Government through the Income-Tax Department’s e-filing portal. Each person must file an Income-Tax Return within the due date where his annual income exceeds the basic exemption limit as provided under the Act, as doing the same offers numerous advantages and any intentional failure to file an ITR may invite legal consequences.
What Are The Eligibility Criteria Of Income Tax Return filing
Provided below is a list of persons who shall be mandatorily required to file their Income-Tax Returns (ITR) on exceeding the annual basic exemption limit as per the defined tax slabs under the Income-Tax Act for tax payment purposes-
- Individuals and sole proprietors (resident as well as non-resident Indians).
- Companies (mandatory irrespective of turnover or profit generated in any year).
- LLPs and Partnership Firms (mandatory irrespective of turnover or profit generated in any year).
- Individuals receive incomes from investments made in securities such as (shares, bonds, mutual funds, etc.) or from bank deposits or getting regular interest income from renting of house property, etc.
- Individuals receiving incomes from property owned by trusts i.e. charitable trusts, religious trusts, or any income received by trusts from any voluntary contributions received.
What are the various types of tax-filing forms applicable to various persons?
Provided below is the list of the forms along with their applicability-
|Name of the Form||Applicable to||Not Applicable to|
|1. ITR-1( SAHAJ)||This form is required to be filed by a resident person whose total annual income comprises of- Income from Salary or pension income; Income from House Property except where the assessee is carrying forward losses from the previous year/s; Income from other Sources except where the total income excludes Lottery or Horse-Race income or Agricultural income up to Rs. 5000/-||ITR-1 cannot be filed in a case where – The assessee has a total annual income of more than Rs.50 lakh; Has an agricultural income exceeding Rs. 5000; The assessee had capital gains in the previous year; The assessee has received income from any business or profession; The assessee has received income from more than one House property; Assessee holds the position of directorship in a company; If the Assessee is a Non-ordinarily resident or non-resident in the previous year possessing either foreign assets or foreign income.|
|2. ITR-2||It is required to be filled by an individual or a Hindu Undivided Family having incomes such as Salary or Pension income; Any income 0received from House Property; Any income received from other sources including any lottery or horse-race incomes; Has earned an agricultural income exceeding Rs. 5000/- in the previous year; Holds directorship in any company received any income from capital gains; total income is more than Rs. 50 Lakhs in the previous year. Assess who either Non-Ordinarily resident or Non-Resident India is holding either foreign assets or foreign income.||This form is not applicable for an assessee having his income from any business or profession in the previous year.|
|3. ITR-3||This is required to be filed by any individual or a HUF earning an income out of any proprietary business or who has received any income due to their profession. It includes incomes such as – Income due to carrying of any business or profession; Income Received as a director of a company by Assessee; Income received as a partner of a partnership firm where the Assessee holds investments in the equity shares of an unlisted company at any time in the Previous Financial year; Other incomes such as Income from salary, Income from House Property Income from other sources head;||NA|
|4. ITR-4||This could be used by an Assessee who is either individuals or HUFs, Partnership firms ( except LLPs), who are resident in the previous year and whose total income comprises incomes such as Income received from any business based on presumptive income scheme taxation under section 44AD or 44AE of the Act; Income received from any profession and assessed based on presumptive income under section 44ADA of the Act. Salary income or pension income up to Rs.50 lakh in the previous year; Income received from one house property not exceeding Rs. Rs.50 lakh (except where the amount has been carried forward or losses carried forward)Income received from other sources not exceeding Rs. 50 Lakh (except income from lottery and horse-racing);||ITR -4 cannot be filed in cases where- A total annual income of the Assessee exceeds Rs 50 lakh; Assessee receives income from more than one house property assessed owns or holds any foreign asset; Assessee holds the position of director in any company assessee holds or held equity shares of an unlisted company at any time of the financial year; Where the Assessee is accountable for tax payments of incomes of some other person in whose hands the tax is deducted.|
|5. ITR-5||This form is required to be filed and submitted by the following persons- Partnership firms including LLPs; Any AOP or BOI; Artificial Juridical Person; Any property or estate of any deceased, insolvent, Trusts, and investment funds.|
|6. ITR-6||Required to be filled by assesses who are companies except those who make an application for tax exemption under section 11 of the Income-Tax Act.|
|7. ITR-7||This form is required to be filled by persons ( including companies) who– Are required to file their ITRs as per the provisions of sections 139(4A)/139(4B)/ 139(4C)/ 139(4D)/ 139(4E) or Section 139(4F).|
Income Tax Return Filing with Legalmart
The Government of India has recently updated the Income –Tax Department e-filing portal to make the process of ITR filing simple, smooth, and easier for facilitation of ITR filing and submission for which, the applicant needs to register himself/herself on the portal and fill the form and finally e-verify the form to complete the process.
However, it is necessary to first understand the process fully and then fill the required information with caution as failing to do the same, may require to re-submit the form. Therefore, at Legalmart we are a large team of professionals who help you to understand the process and provide end-to-end guidance to complete the same within time and any unnecessary delay in the process.
Advantages Of Income Tax Return filing
- Protection from unnecessary hassles and penalties – Filing Income-Tax Return within the due date can protect the assets from unnecessary hassles and a hefty sum of penalties which includes late filing fees as well as penal interest where the assessee has failed to file ITR and there is unpaid outstanding tax liability as per section 234A & 234B of the Income-Tax Act, for which there is no relief available under the Act.
- Deduction in interest payment for home loans – Under the provisions of the Income-Tax Act 1961, a person who avails a home loan can be allowed deductions in tax liability concerning the bank EMIs or interest paid to the bank for such loan for several years, making it beneficial for the assessee to file returns and claim such deductions for home loans.
- Easy process of loan approval – Banks & Financial institutions generally ask for a copy of ITRs to assess the financial situation of the loan applicant and his ability to repay loans within the prescribed time limit.
- Claim Tax Refund – It is comparatively easier for an assessee to claim an income-tax refund who files ITR before or on the due date of ITR submission as compared to any assessee who files ITR after the due date which is especially advantageous for salaried and self-employed assesses.
- Valid proof of income – Self–employed individuals and Individual assesses who are salaried can even use duly filed and submitted ITR and have Form 16 duly issued by his employer, can use ITR as a valid proof of income in case of any requirement.
- Requisite for Visa Processing– Income-Tax Return is a pre-requisite document that is required to be provided in the documents while making an application for the visa. The foreign embassies generally do ask for a copy of ITR to assess the financial situation of the visa applicant, and this is the most beneficial feature for self-employed and salaried individuals.
- Allows carry forward of losses- Filing of ITR is beneficial for the assessee even he has incurred losses in the relevant assessment year, as reporting such losses shall not only free him from tax liability for the current assessment year but also reduce his tax liability for the coming assessment years in equal installments, subject to the condition that such assessee files such ITR either before or on the due date.
- Avoidance of Penalty – There are various penalties prescribed under the Income-Tax Act in the event the assessee fails to file Income-Tax return before the due date which can go up to Rs. 10,000 along with the applicable tax liability. Thus, it is more beneficial for assesses like individuals and companies to avoid penalty and prosecution by the Income-Tax Authorities.
Disadvantages of Income Tax Return Filing
- Late Fee Penalty under 234E– Assessee who fail to file their ITRs till 31st December 2021, shall be required to pay a late filing fee of Rs. 5000/- and where such delay continues even after 31st December 2021, the assessee shall be made subject to a maximum penalty of Rs. 10,000.
- Penal Interest on Outstanding unpaid Tax– Where the assessee fails to file ITR within the due date along with any unpaid amount of Income-Tax outstanding on such due date, then such assessee shall be required to pay such tax amount along with the penal interest under section 234A, which is @ 1% per month or part of a month.
- Inability to Carry Forward of Losses incurred by Taxpayer– Where the assessee fails to submit a return within due date, such person shall not be able to apply for carrying forward of losses to succeeding years, upon filing of belated returns.
- Heavy Penalty along with Prosecution by Income-Tax Authorities– Where the assessee has not filed ITR even after the end of the relevant assessment year i.e. by 31st March 2022, the Income-Tax Authorities may send a notice on the registered address of the assessee and even could prosecute such person, if the unpaid tax amount exceeds tax amount is more than Rs. 3000. Further, such assessee may be obligated to make a payment up to a maximum of Rs. 10,000.
Due Dates For Income Tax Return Filing
Following are the due dates prescribed for the Assessment Year 2021-22 is as follows-
|S. No||Assessee||Due Date for ITR filing|
|1.||For individuals/HUF/AOP/BOI who do not need to audit their books of accounts||31st December 2021 (extended from 31st July 2021)|
|2.||Businesses who are required to make an audit||15th February 2022 (extended from 31st October 2021)|
|3.||Businesses (Requiring TP Report)||28th Feb 2022 (extended from 30th Nov 2021)|
Document Required for Income Tax Return Filing
Provided below is the general list of documents required while filing Income-Tax Returns-
- PAN card details.
- Aadhaar Card.
- Bank account details.
- Previous bank statements.
- Duly filled Form 16 i.e. 16A, 16B, 16C.
- TDS certificate.
- Proof of tax-saving investments, if any made.
What are the prescribed penalties for failure to timely file Income Tax returns?
Provided below are some penalties for delay in filing ITR returns for the A.Y. 2021-22.
|Under Section 234F||Filing and submission of ITR beyond the due date of filing ITR returns-||A total sum of Rs. 5000/- shall be levied if the ITR is filed and submitted before the final due date of 31st December 2021. However, if the ITR is filed beyond 31st December 2021 but before 31st March 2022, the late filing fee could be higher up to Rs.10, 000.|
|Under Section 234A||Failure to file and submit ITR along with an outstanding amount of income-tax being unpaid-||A late filing interest on the outstanding tax liability at the penal rate of 1% per month from the last date of filing returns.|
|Under Section 271H||Delay in filing and submission of TDS/TCS returns within the prescribed due date.||Any amount anywhere between Rs.10, 000-Rs.1, 00,000, along with a late filing fee of Rs. 200 per day from the due date to the date when the payment is made as provided under section 234E.|
|Under Section 270A||Failure by the assessee to either submit his ITR timely or where he deliberately under-reports his taxable income.||Half of the unreported income amount for which ITR was either not reported or under-reported.|
Online Process for Income Tax Return Filing
Provided below is the step-by-step process of filing Income-Tax Return –
- Step 1- Log on to the e-filing portal of the Income-Tax Department using the login credentials created at the time of registration and move to the Dashboard.
- Step 2- Click e-filing, then Income-Tax Returns, and then finally select “File Income-Tax return”.
- Step 3- Select the relevant Assessment year and click the “Continue” option.
- Step 4- In case you have previously filled ITR, click “Resume Filing” and complete the form. If you haven’t filled the same, click “Start New Filing” and select the relevant ITR form, and click “Proceed” with the form.
- Step 5- Fill in the required details and review the information so filled and click “Confirm”.
- Step 6- Now, enter details of all the taxable incomes and all applicable deductions in all the provided sections and click “Proceed” to move further.
- Step 7- Next, you will be able to view the total tax computation in a summarised form based on the details provided earlier. If there is final tax liability payable, then click “Pay now” if you want to pay and could choose “Pay Later” if you wish to make payment later.
However, if the net tax liability is zero or you are eligible to get a refund, then you will be directed to the “Preview” and “Submit your Return” options.
- Step 8- Preview and verify thoroughly all the details once and fill in details related to address and current address and move to the final validation option.
- Step 9- Finally after validation, you will be required to click “Proceed” to the e-verification page through various modes provided, select any one mode and after e-verification click “Continue” and do the final submission of the ITR.
Why you choose Legalmart?
Hence, every eligible Assessee must file and submit Income-Tax Returns since it has a lot of advantages to offer for the development of the country as well as for the citizens of the country. Even, if the Assessee doesn’t reach the taxable amount of tax, or a businessman is not having profit income in any assessment year, he/she can report the same and may carry forward such losses for several years, further reducing such losses.
Further, to encourage proper transparency and easier facilitation of filing and submission of the ITR, the Government of India has simplified the process and allowed easier methods to complete the process of filing Income-Tax Returns through the Income Tax department, e-filing portal.
But, it is always advisable to obtain advice or guidance from a reliable professional source that could help you to assess your taxable income in a better way and help you with other tax-related procedures and compliances, so you do not have to worry about delays in filing ITR returns, or to further go into the complex process of making application for refunds or waiting for the same.
At Legalmart, we have a large team of professional and qualified professionals who will help you to manage your tax-related compliances apart from registration and return filing before the due date and are committed to serving you 24*7 assistance in undertaking Income Tax Return filing and other similar procedures at reasonable prices and with utmost efficiency.