Income Tax Return

What is Income tax return?

An income tax (IT) return is an income tax form which you need to fill and submit it electroncially to the Income tax Department. In this form you need to give details of your income and taxes (taxes - that you may have paid or other people who may have deducted your tax). The income tax return forms are in various formats viz ITR-1, ITR-2 etc. Each form depicts a separate category of Income tax payers. You need not worry of your category as myITreturn handles it for you automatically.

Remember, Income tax is a Direct tax and you need to only report Direct Income (salary, pension, interest etc) and taxes paid on that Income. The tax return formats are predefined formats by the Central Board of Direct Taxes (CBDT- which is also called the Income tax Department).

The tax returns must be filed every year and must be filed by a specific date. If the return shows excess tax has been paid during a given year, you are eligible for a ‘income tax refund’, subject to the department’s interpretations and calculations.

Click here to online ITR Filling

Taxpayers and Income Tax Slabs

Taxpayers in India, for the purpose of income tax includes:

• Individuals, Hindu Undivided Family (HUF), Association of Persons(AOP) and Body of Individuals (BOI)
• Firms
• Companies

Each of these taxpayers is taxed differently under the Indian income tax laws. While firms and Indian companies have a fixed rate of tax of 30% of profits, the individual,HUF, AOP and BOI taxpayers are taxed based on the income slab they fall under. People’s incomes are grouped into blocks called tax brackets or tax slabs. And each tax slab has a different tax rate. In India, we have four tax brackets each with an increasing tax rate.

• Income earners of up to 2.5 lakhs
• Income earners of between 2.5 lakhs and 5 lakhs
• Income earners of between 5 lakhs and 10 lakhs
• Those earning more than Rs 10 lakhs

This is the income tax slab for FY 2017-18 for taxpayers under 60 years. There are two other tax slabs for two other age groups: those who are 60 and older and those who are above 80.

Exceptions to the Tax Slab

One must bear in mind that not all income can be taxed on slab basis. Capital gains income is an exception to this rule. Capital gains are taxed depending on the asset you own and how long you’ve had it. The holding period would determine if an asset is long term or short term. The holding period to determine nature of asset also differs for different assets. A quick glance of holding periods, nature of asset and the rate of tax for each of them is given below.

Income Tax Payment

The Government collects income tax from three channels:

• TDS
• Advance tax
• Self Assessment tax

TDS

• TDS exists to help government get tax throughout the year. There’s a prescribed table on how much tax deducted under what circumstances.
• Your employer cuts TDS based on the information available to him about you. So if you’ve made investments, but have not declared or if you live in a rented house, but have not shared rent receipts, your finance department will have no choice but to deduct tax based on only thing they know – your CTC.
• This is why the investment proofs deadline in your office is super important. Save yourself some headache and submit your investment proofs on time.
• Banks don’t know if you’re working in a company or if income from fixed deposits is what you solely rely on. So they deduct a standard 10% tax before they give away the interest. Now if you fall in the 20% or 30% bracket, it’s on you to pay the remainder of the income tax. That’s why sometimes you may find yourself paying some tax at the time of filing a tax return
• Make sure banks have your PAN number. They deduct 20% tax if they don’t have your PAN in their records.
• Anyone who’s receiving an income of a specified nature say salary, interest, commission, rent, professional income etc. will have some percentage of tax withheld as prescribed by the government.

Advance Tax

Self-employed people must do the calculation themselves and pay the tax to the Government periodically every quarter.The deadlines are:

To calculate your advance tax:

• Add up all the invoices received and include future payments you will be receiving till March 31 to estimate your taxable income.
• Deduct expenses directly related to your business, and any investments you have made under Section 80C in order to arrive at your taxable income.
• Determine your tax liability for the year
• Reduce the Tax already deducted at source from your tax liability as determined above
• If the remaining tax payable is greater than Rs 10,000 you will have to pay advance taxes based on the rates prescribed in the above table.

Self Assessment Tax

When you are filing a tax return and you find out that you need to pay additional tax, you’d be paying self assessment tax. Another way to think about this would be.

• if you are paying tax for a financial year after the deadline has ended, you will pay self assessment tax.
• if you are paying tax for a financial year during the financial year, you will pay advance tax.

Payment of TDS Advance Tax and Self Assessment Tax:

TDS is deducted by the payer himself and remitted to the government by him. Hence the taxpayer need not worry about this part of his tax liability. As regards advance tax and self assessment tax, the same can be discharged online using Challan 280. Read our detailed guide on payment of taxes online.

List of Income Tax Return Form

The Income Tax Return forms are used to file income tax returns for the income earned during a particular financial year. The forms can be classified into two categories – those applicable to individuals and those applicable to firms and companies. As per the Central Board of Direct taxes, Forms ITR 1, ITR 2, ITR 2A, ITR 3, ITR 4 and ITR 4S are applicable to individuals. On the other hand, ITR 5, ITR 6 and ITR 7 are applicable to firms and companies.

1) ITR 1

For ITR 1, also known as SAHAJ, is applicable only to individuals. On the other hand, individuals whose income is taxable shall not be eligible to use this form for filing the returns. This form can be used in the following cases :

• When individuals earn income through salary or pension
• When individuals earn income through a single house property (except in case when loss is carried forward from previous year)
• When individuals earn income from other sources like dividend, interest, etc.

This form is not applicable in the following cases :

• Individuals having multiple house properties
• Individuals having income from business or profession
• When total income of individuals include income/loss from capital gains
• When income of individuals includes windfall like from winning of lottery or horse racing
• When agricultural income of an individual exceeds Rs 5,000
• Individuals who earn income from any country outside India
• When an individual is claiming Double Taxation Relief under Section 90/90A/91 of I-T Act
• A resident is having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India
• When individuals earn income through a single house property (except in case when loss is carried forward from previous year)
• When individuals earn income from other sources like dividend, interest, etc.

In case the income of the spouse or minor child is to be clubbed with the income of an individual, he/she can file the return in ITR 1, if such income to be clubbed falls under the above applicable criteria.

1) ITR 2A

Form ITR 2A was introduced in the Assessment Year 2015-16. It can be used by individuals or Hindu Undivided Family (HUFs) in following cases:

• When there is an income from salary/pension
• When an individual/HUF has income from multiple house properties
• When the total income of an individual/HUF includes income from other sources, including windfall income like winning of lottery or horse racing

This form is not applicable in following cases:

• When total income of individuals/HUFs includes income from business or profession
• When total income of individuals/HUFs includes that from capital gains
• When an individual/HUFs is claiming Double Taxation Relief under Section 90/90A/91 of the I-T Act
• Individuals/HUFs who earn income from any country outside India
• In case, a resident is having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India

3) ITR 2

This form can be used by individuals or HUFs in following cases

• When there is an income from salary/ pension
• When an individual/ HUF has income from house property
• When total income of individuals/ HUFs include income from capital gains
• When the total income of an individual/ HUF includes income from other sources including windfall income such as from winning of lottery or horse racing

This form is not used when the total income of individuals/HUFs includes that from business or profession. In case the income of spouse or minor child is to be clubbed in the income of individual, he can file return in ITR 2 if such income to be clubbed falls under the above criteria.

4) ITR 3

This form is applicable to individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship. This form can be used by individuals or HUFs in following cases :

• When there is an income from salary/pension
• When an individual/HUF has income from house property
• When there is income from business or profession of the partnership firm in which individual/HUF is a partner. Such income may include any income like salary, bonus, interest, commission or remuneration from the firm.
• When total income of individuals/HUFs include income/loss from capital gains
• When total income of individual/HUF includes income from other sources, including windfall income like from winning of lottery or horse racing
• For presumptive business with a turnover of over Rs 2 crore.

This form shall be applicable even if the partner in the partnership firms does not have any income in the form of salary, remuneration, etc. except share of profit of the firm which is exempt under Section 10(2A) of the Income Tax Act.

This form is not applicable when the total income of individuals/HUFs includes income from his/her proprietorship firm.

5) ITR 4

Form ITR 4 needs to be filed by those who opt for presumptive income like professionals, doctors, filmstars, etc. Even a businessman or a doctor or a professional with a turnover of less than Rs 2 crore can opt for ITR 4 under Section 44 AD of presumptive income with a declaration of profits.

Consultants by profession like interior decorator, architect, technical or professional consultants who charge money for professional advice can also opt for this scheme.

The only difference between ITR 3 and ITR 4 is that ITR 3 is applicable only if individual/HUF has no income from proprietary business or profession, whereas ITR 4 is applicable in such cases.

6) ITR 4S

This ITR form is also known as SUGAM Form. This ITR can be used by individuals whose total income includes income from business or profession. However, such income is considered on presumptive basis as per Section 44 AD and 44 AE of the Income Tax Act, 1961. This form can be used in following cases

• When an individual has income from salary or pension
• When an individual earns income through a single house property
• When an individual has presumptive business income
• When an individual has income from other sources except windfall income i.e. income from winning lotteries or income from horse races

This form is not valid for the following cases :

• When income from house property includes income from multiple house properties
• When the total income of individual includes income from capital gains
• When income of individuals includes windfall income like from winning of lottery or horse racing
• It is not applicable in case the agricultural income of an individual exceeds Rs 5,000
• Individuals who earn income from any country outside India
• When a resident has any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India

7) ITR 5

This ITR form is to be used by following entities for filing their income tax return:

• Firms
• Limited Liability Partnerships (LLPs)
• Body of Individuals (BOIs)
• Association of Persons (AOPs)
• Co-operative Societies
• Artificial Judicial People
• Local Authorities

8) ITR 6

Form ITR 6 is applicable to companies. All the companies, except those who claim exemption as per Section 11 are required to file their returns in Form ITR 6. Companies that claim exemption under Section 11 are those companies that have income from property held for charitable or religious purposes. All the companies eligible to file ITR 6 need to file their returns electronically and sign through digital signature.

9) ITR 7

Persons who have to file their returns under Section 139(4A), 139(4B), 139(4C), 139 (4D), 139 (4E) or 139(4F) of the Income Tax Act, 1961 need to use form ITR 7. Following catregories are required to furnish their return under aforesaid section:

• Section 139(4A): The ITR under this section is applicable to every person, individual or company who is in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes. All people falling under the aforesaid category shall furnish a return in ITR 7, if the total income without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax.
• Section 139(4B): Return u/s 139(4B) is required to be furnished by any political party, if the total income without giving effect to the provisions of section 13A exceeds the maximum amount which is not chargeable to income-tax.
• Section 139(4C): Following entities fall under Section 139(4C) which are required to file return in Form 7
• Research association referred to in section 10(21)
• News agency referred to in section 10(22B)
• Association or institution referred to in section 10(23A)
• Institution referred to in section 10(23B)
• Any fund, university, education institution, or hospital referred to in Section 10(23C)
• Mutual Fund referred to in Section 10 (23D)
• Securitisation trust referred to in Section 10(23DA)
• Venture capital company or venture capital fund referred to in Section 10(23FB)
• Trade union or association referred to in Section 10(24)(a) or Section 10(23)(b)
• Body or authority or Board or Trust or Commission (by whatever name called) referred to in section 10(46)
• Infrastructure debt fund referred to in section 10(47)
• Section 139(4D): Every university, college or other institution which is not required to furnish return of income or loss under any other provision of this section, shall furnish the return in respect of its income under this section.
• Section 139(4E): Every business trust which is not required to furnish return of income or loss under any other provision of this section, shall furnish the return in respect of its income under this section.
• Section 139(4F): Every investment fund referred to in Section 115UB which is not required to furnish return of income or loss under any other provision of this section, shall furnish the return in respect of its income under this section.

Procedure for submitting ITR return in digitalcenter portal with 4 easy steps

• Step1. login to digitalcenter.co.in
• Step2. click on add new ITR fill up the all details and upload all essential documents with self attested then click on submit button
• Step3. Once form has submitted , Our Team will get in touch with customer for getting email and mobile verification and some information regarding ITR .
• Step4. After verification , Your ITR will be processed within 2 days.