Income tax is a tax charged on the annual income earned by an individual. The amount of tax paid will depend on how much money you make as income over a financial year.
| Return Type | Applicability |
|---|---|
| ITR-1 | ITR-1 form can be used by Individuals who have less than Rs.50 Lakhs of annual income earned by way of salary or pension and have one house property only. |
| ITR-2 | ITR-2 form must be filed by individuals who are NRIs, Directors of Companies, shareholders of private companies or having capital gains income, income from foreign sources, two or more house property, income of more than Rs.50 lakhs. |
| ITR-3 | ITR-3 form must be filed by individuals who are professionals or persons who are operating a proprietorship business in India. |
| ITR-4 | ITR-4 form can be filed by taxpayers enrolled under the presumptive taxation scheme. To be enrolled for the scheme, the taxpayer must have less than Rs.2 crores of business income or less than Rs.50 lakhs of professional income. |
| ITR-5 | ITR-5 form must be filed by partnership firms, LLPs, associations and body of individuals to report their income and computation of tax. |
| ITR-6 | ITR-6 form must be filed by companies registered in India. |
| ITR-7 | ITR-7 form must be filed by entities claiming exemption as charitable/religions trust, political parties, scientific research insitutions and colleges or universities. |
Its is mandatory for individuals, NRIs, partnership firms, LLPs, companies and Trust to file income tax returns each year. Individuals and NRIs are required to file income tax return, if their income exceeds Rs.2.5 lakhs per annum. Proprietorship firms and partnership firms are required income tax return – irrespective of amount of income or loss. All companies and LLPs are mandatorily required to file income tax return,
Who Should Pay Income Tax?
It is mandatory to file ITR for individuals If the total Gross Income is over Rs.3,00,000 in a financial year (Including standard deduction). This limit exceeds Rs.3,00,000 for senior citizens and Rs.5,00,000 for super senior citizens. The entities listed below must pay taxes and file their income tax returns.
- Artificial Judicial Persons
- Corporate firms
- Association of Persons (AOPs)
- Hindu Undivided Families (HUFs)
- Companies
- Local Authorities
- Body of Individuals (BOIs)
What are the Different Types of Income?
- Property Income – Renting a house is taxable under this type of income.
- Salary Income – Income earned as a salary or pension is also taxable under this type of income.
- Business or Professional Income – Profits generated by self-employed individuals, freelancers, businesses, or contractors, and income made by professionals like chartered accountants, life insurance agents, lawyers, and doctors who practice in their fields, including tuition teachers, are taxable under this type of tax.
- Capital Gain Income – Surplus income generated from the sale of capital assets like stocks, mutual funds, or real estate is taxable under this type of income.
- Income from Other Sources – Income earned as interest from savings bank account, fixed deposits, and lottery winning are considered as income from other sources.
Penalty for Late Filing Income Tax Return
Taxpayers who do not file their income tax return on time are subject to penalty and charged an interest on the late payment of income tax. Also, the penalty for late filing income tax return on time has been increased recently. The penalty for late filing income tax return is now as follows:
Income Tax Return Due Date
The due date for income tax return filing is 31st July of every year for individual taxpayers. The due date for income tax return filing for companies and taxpayer requiring tax audit is 30th September. Section 44AD of the Income Tax Act deals with tax audit under Income Tax Act.
Business- In case of a business, tax audit would be required if the total sales turnover or gross receipts in the business exceeds Rs.1 crore in any previous year.
Professional- In case of a profession or professional, tax audit would be required if gross receipts in the profession exceeds Rs.50 lakhs in any of the previous year.
Presumptive Taxation Scheme- If a person is enrolled under the presumptive taxation scheme under section 44AD? and total sales or turnover is more than Rs. 2 crores, then tax audit would be required.
Penalty for late filing income tax return has been increased to Rs.5000 for returns filed between 1st August and 31st December.
Income Tax Deductions
Section 80C Deduction-Income tax deduction of upto Rs.1.5 lakhs can be claimed on amount paid or deposited in PF, PPF, LIC premium paid, National Savings Certificate, ULIP, principal part of repayment of housing loan, tuition fees paid for children, term deposit in bank, deposit in Senior Citizen savings scheme and more.
Section 80D Deduction-Section 80D deduction can be claimed by individuals and HUF for payments to medical insurance paid by cheque under GI scheme. Also fees of upto Rs.5000 paid for preventive health checkup can be claimed as income tax deduction under Section 80D.
Section 80EE Deduction-Additional deduction under Section 80EE can be claimed on interest on housing loan paid through EMI by the assessee. The maximum deduction allowed under Section 80EE is Rs.1 lakh. The deduction can be availed on the first home loan, the amount of loan does not exceed Rs.35 lakhs and the property value does not exceed Rs.50 lakhs.
Section 80E Deduction-Section 80E deduction can be claimed by individuals for repayment of interest on loan taken in respect of higher deduction. The amount of interest paid can be claimed as a deduction under Section 80E. The maximum period for which this deduction can be availed is 8 years starting from repayment of loan or till the entire loan is repaid, whichever is earlier.
Section 80G Deduction-Section 80G deduction can be claimed on donations to certain funds, charitable institutes within the ceiling amount of 10% of the Gross Taxable Income. The amount of deduction available would depend on the exemption enjoyed by the fund.
FAQs
When am I supposed to file my income tax returns?
Individuals, NRIs, partnership firms, LLPs, companies and Trusts are supposed to file Income Tax Returns every year.
Who is supposed to file ITR-2?
ITR-2 form must be filed by individuals who are NRIs, Directors of Companies, shareholders of private companies or having capital gains income, income from foreign sources, two or more house property, income of more than Rs. 50 lakh.
Is there a penalty if I fail to file my Income Tax Returns?
Yes, taxpayers who do not file their Income Tax Return on time are subject to penalty and charged an interest on the late payment of income tax. The penalty for late filing has been increased recently.
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