Income Tax Return Filing in India – A Complete Guide

1. Introduction to Income Tax Return Filing

Income Tax Return (ITR) filing is a legal process through which individuals and entities report their income, deductions, and tax liabilities to the Income Tax Department of India. It is mandatory for all taxpayers whose income exceeds the basic exemption limit under the Income Tax Act, 1961. Filing ITR is not just a legal obligation but a financial discipline that helps maintain a strong financial profile. It is a key requirement for securing loans, visas, and establishing income proof.

2. Who Should File an Income Tax Return?

ITR filing is mandatory or advisable for the following individuals and entities:

• Individuals with income above the exemption limit

• Salaried employees with multiple income sources

• Freelancers and professionals

• Business owners and traders

• Companies and LLPs

• Individuals with foreign income or assets

• Those who wish to claim a refund

• Individuals carrying forward losses from previous years

• Persons applying for loans or visas

3. Benefits of Filing Income Tax Returns

• Claiming Refunds: If excess TDS has been deducted, filing ITR is necessary to claim it.

• Loan and Visa Approvals: ITR acts as income proof for home loans, business loans, and visas.

• Avoid Penalties: Timely filing prevents late fees under Section 234F.

• Carry Forward Losses: Losses can only be carried forward if ITR is filed on time.

• Builds Compliance Record: Demonstrates financial discipline and improves creditworthiness.

4. Types of ITR Forms and Applicability

• ITR-1 (Sahaj): For resident individuals with income up to ₹50 lakh from salary, pension, and one house property.

• ITR-2: For individuals and HUFs with income from capital gains or more than one house property.

• ITR-3: For individuals and HUFs having income from business/profession.

• ITR-4 (Sugam): For individuals, HUFs, and firms (other than LLP) under presumptive taxation.

• ITR-5 to ITR-7: For firms, LLPs, companies, trusts, and other specified persons.

5. Documents Required for ITR Filing

• Personal Details: PAN, Aadhaar, bank account details

• Income Proof:

  • Form 16 (salaried)

  • Salary slips

  • Interest certificates (FD/SB accounts)

  • Form 26AS and AIS

  • Profit & Loss account and Balance Sheet (business/profession)

• Investment Proofs:

  • LIC premium, ELSS, PPF, NSC, home loan, tuition fees, etc.

• Others:

  • Capital gains statements

  • TDS certificates

  • Rent receipts (for HRA claim)

6. Step-by-Step Process to File ITR

1. Collect Documents: Gather income, investment, and tax-related documents.

2. Select Correct ITR Form: Based on income type and category.

3. Calculate Total Income: Add all income sources.

4. Claim Deductions: Under Sections like 80C, 80D, etc. (if under old regime).

5. Pay Tax Dues: If payable, deposit self-assessment tax.

6. File Return: Submit on income tax portal https://www.incometax.gov.in

7. E-Verify: Complete verification via Aadhaar OTP, net banking, etc.

7. E-Verification of ITR

Returns must be verified within 30 days to complete the filing process. Modes:

• Aadhaar OTP

• Net Banking

• EVC via bank account or Demat

• Physical ITR-V submission to CPC, Bengaluru

8. Due Dates and Penalties

• ITR Due Date for Individuals: 31st July of the assessment year (for FY 2024-25: 31st July 2025)

• Late Filing Fee:

  • ₹500 if income is below ₹5 lakh

  • ₹5,000 if above

• Interest under Sections 234A/B/C: Applicable on late filing or payment of tax dues

9. Common Mistakes to Avoid

• Selecting the wrong ITR form

• Missing interest income or foreign income

• Ignoring Form 26AS/AIS mismatch

• Forgetting to claim eligible deductions

• Not verifying the return

• Delay in filing leading to penalty

10. Frequently Asked Questions (FAQs)

Q1: Is it compulsory to file ITR if my income is below the exemption limit?
A: Not mandatory, but advisable if you want to claim refunds or have foreign assets.

Q2: What happens if I miss the due date?
A: You may file a belated return till 31st December with a late fee. After that, ITR-U can be filed with additional penalty.

Q3: What is ITR-U?
A: ITR-U is an updated return allowed to correct or disclose additional income missed in original return within 2 years.

Q4: Can I revise my return after filing?
A: Yes, a revised return can be filed till 31st December of the same assessment year.

Q5: What if I don’t verify my ITR?
A: If not verified within 30 days, your return is treated as not filed.

Q6: How to check ITR refund status?
A: Log in to the income tax portal > Services > Refund Status.

Q7: Is ITR filing compulsory under the new tax regime?
A: Yes, if your income exceeds exemption limit. However, deductions are limited