What is Income Tax Return (ITR) Filing?

Income Tax Return (ITR) filing is the process by which individuals and businesses report their income, deductions, and tax liabilities to the Income Tax Department of India. It is a mandatory annual process for taxpayers whose income exceeds the exemption limit prescribed by the government.

Why is ITR Filing Important?

1. Legal Compliance: Filing ITR is a legal obligation under the Income Tax Act, 1961.
2. Claiming Refunds: If excess tax has been deducted, taxpayers can claim a refund.
3. Loan and Visa Applications: ITR receipts serve as proof of income for banks and visa authorities.
4. Avoiding Penalties: Non-filing can result in penalties and legal action by the tax authorities.

Who Should File ITR?

• Individuals with an annual income above ₹2.5 lakh (₹3 lakh for senior citizens, ₹5 lakh for super senior citizens).
• Businesses and self-employed professionals with taxable income.
• Individuals with foreign assets or income.
• Those claiming tax refunds.
• Individuals with no taxable income who wish to file a Nil return for record, refund, or compliance purposes.
   

(Please note that the data is as on date and may vary ahead. Thereby, we kindly recommend you to seek advice from tax advisor for latest tax regulations.)

Types of ITR Forms

The Income Tax Department has prescribed different ITR forms based on the type of taxpayer and source of income:

• ITR-1 (Sahaj): For salaried individuals with income up to ₹50 lakh. (Please note that the data is as on date and may vary ahead. Thereby, we kindly recommend you to seek advice from tax advisor for latest tax regulations.)
• ITR-2: For individuals and HUFs (Hindu Undivided Families) with income from capital gains, foreign income, or multiple sources.
• ITR-3: For individuals and HUFs with income from business or profession.
• ITR-4 (Sugam): For individuals, HUFs, and firms under the presumptive taxation scheme.
• ITR-5, ITR-6, ITR-7: For firms, companies, trusts, and other entities.

How to File Income Tax Return (ITR) Online?

1. Visit the Income Tax e-Filing Portal: https://www.incometax.gov.in
2. Register/Login: Use PAN as the User ID.
3. Select the ITR Form: Choose the applicable form based on your income type.
4. Fill in the Details: Enter income, deductions, and tax liability details.
5. Validate and Submit: Review details and submit the form.
6. E-Verify Your ITR: Complete verification via Aadhaar OTP, net banking, or sending a signed ITR-V form to CPC Bangalore.

Penalty for Late Filing of ITR

• ₹5,000 penalty if filed after the due date but before December 31.
• ₹10,000 penalty if filed after December 31 (waived for income below ₹5 lakh, where the penalty is ₹1,000). (It may vary based on updated regulations and guidelines as and when amended from time to time, so we kindly recommend you to seek advice from professional before you take any/refrain from any action)

Documents Required for ITR Filing

(Please note that it is illustrative in nature and not exhaustive.)

• PAN card and Aadhaar card
• Form 16 (for salaried individuals)
• Bank statements and interest certificates
• Details of investments for deductions (under Section 80C, 80D, etc.)
• Capital gains statement (if applicable)

Common Mistakes to Avoid While Filing ITR

• Choosing the Wrong ITR Form
• Failing to Report All Income Sources
• Not Claiming Eligible Deductions
• Providing Incorrect Bank Details
• Not Verifying the ITR After Submission

Mutual Fund schemes Investments and Tax Benefits

Investing in mutual funds schemes can be a tax-efficient way to save on taxes. Equity-Linked Savings Schemes (ELSS), offer tax benefits under Section 80C of the Income Tax Act. By investing in these schemes, you can reduce your taxable income and save on taxes.

ELSS are a type of schemes that primarily invests in equities and equity-related instruments. These funds are eligible for tax deductions under Section 80C of the Income Tax Act, 1961. This means that investments in these schemes can help reduce your taxable income by up to ₹1.5 lakh per financial year if you are eligible as per applicable norms of Income Tax Act, 1961 and subject to the applicable tax regime and updated guidelines as and when amended from time to times. Unlike other mutual funds schemes, ELSS come with a mandatory lock-in period of three years, which means you cannot redeem your investment before this period. (Please note that the data is as on date and may vary ahead. Thereby, we kindly recommend you to seek advice from tax advisor for latest tax regulations.)).

Additional links

What is a Mutual Fund? - Beginner's Guide to Investing

AMFI - Introduction to Mutual Funds

Know everything about SIP

Salaried Individuals for AY 2025-26

Should you invest in ELSS under the new tax regime?

ELSS Fund – Tax Saving Mutual Fund