Income Tax Return

It is simply a form to be filed with the Income Tax Department. A Form to be filed as a statement of income earned. It is arranged in such a way that calculating tax liability, scheduling tax payments, or requesting refunds for the overpayment of taxes has been made convenient for the taxpayers. They must, first, determine the type of Income Tax Return (ITR) Form they need to fill out before actually filing their Returns. Which Form is to be filled, depends on the income that the taxpayer earns. Its purpose is to report our income and taxes paid thereon to the government.

Types of ITR

ITR Forms for Individuals

ITR – 1 (Sahaj) – For individuals earning income from salaries, one house property, interest income, agriculture, other sources, etc.

ITR – 2 – For Individuals and HUFs having income other than from profits and gains of business or profession. It may be from capital gain, lottery or foreign assets, etc.

ITR – 3 – For individuals and HUF with income from profits of a business or profession.

ITR – 4 (Sugam) – For Individuals, HUFs, and Firms (other than LLP) having presumptive business income tax returns. This is computed under sections 44AD, 44ADA, or 44AE.

ITR Forms for Non-Individuals

ITR–5 – Entities other than,- (i) individual, (ii) HUF, (iii) company, and (iv) person filing Form ITR-7

ITR – 6 – All companies except those that claim tax exemption as per Section 11.

ITR – 7 – Person incl. companies required to furnish returns under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) only.

Benefits of Filing Income Tax Returns

Many investors have very low or zero tax liability and therefore this section does not have to file returns mandatorily. Even though they have some sort of income occurring.

And there is another section that only file returns when something urgent requirement comes up asking for their last few years of ITR. They approach a nearby CA and file their old tax returns.

There has been low-Income Tax filing Compliance in India. However, in recent years, the Govt. of India has taken some stringent measures to enforce the Income Tax Law by linking various benefits for prompt tax filers.