Income tax is a type of direct tax collected by the government of India on the income earned by individuals, HUFs, partnership firms, and businesses during a financial year. It is calculated based on the tax slabs defined by the Income Tax Department. Any individual or entity that has earned income above the prescribed limit in a given financial year is legally liable to pay income tax to the government of India. The process of paying tax to the government of India is known as ‘filing an income tax return or ITR’. Filing an ITR is mandatory under the Income Tax Act of 1961. Income tax e-filing is the process of filing ITR electronically or digitally.
Income tax e-filing has simplified the ITR filing process for the assessment year (AY) 2023-24. This blog will detail the step-by-step guide to ITR filing from the comfort of your home or office by registering on the Income Tax e-filing website. We will also discuss different ITR forms, eligibility for filing returns, and how to track the status of your returns.
What are income tax returns (ITR)?
Income Tax Return is a form that individuals, business organizations, NGOs, or other corporate entities are required to submit to the Income Tax department. ITR will contain information about the person’s or the organization’s income and the tax due to be paid during the year. Information filed in ITR pertains to a particular financial year, i.e. starting on 1st April of a specific year and ending on 31st March of the following year.
Income sources to report in ITR:
- Income from salary
- Profits and gains from business and profession
- Income from house property
- Income from capital gains
- Income from other sources such as dividends, interest on deposits, royalty income, prize money from lottery wins, etc.
Difference between the financial year and assessment year in ITR
If you have filed an ITR or have familiarized yourself with the ITR filling process, you would have heard about ‘Financial Year’ and ‘Assessment Year’. Since the terms can sound confusing, we will explain the difference between the two to help you file your ITR accurately.
A financial year is a 12-month period in which a person or entity earns income. An assessment year is when the previous financial year’s earnings are assessed, taxes are calculated, and the filing of ITR is done.
Both the assessment year and the financial year begin on April 1 of a year and end on March 31 of the following year. For example, financial year 2022-23 refers to the fiscal year that runs from April 1, 2022, to March 31, 2023. The AY starts right after the FY ends. Therefore, the assessment year for FY 2022-23 will be AY 2023-24.
Different types of ITR forms and eligibility
There are seven different types of ITR forms for different categories of individuals, corporations, and sources of income. The Income Tax Department has assigned different forms for each taxpayer depending on the category of income generation:
- ITR-1: This form is applicable only for resident individuals (not applicable to NRIs/HUF/any other entity) having a total annual income of up to Rs 50 lakh and having income under the following heads:
- Income from Salary/Pension; or
- Income from house property
- Income from Other Sources
- ITR-2: The ITR-2 form is for all individuals/HUF who are not eligible to file ITR-1 and who have income from any source other than income from Business or Profession.
- ITR-3: This form is for individuals and HUF who have income from profits and gains from business or profession.
- ITR-4: This form applies to all resident individuals/HUF/Firms (other than LLP) having total income up to Rs 50 lakh & having income under the following heads:
- Income from business or profession computed on a presumptive basis under sections 44AD, 44AE, or 44ADA
- Income from Salary/Pension
- Income from One House Property
- Income from other sources
- ITR-5: The ITR-5 form applies to entities other than Individuals, HUF, Companies & persons filing form ITR 7. Ideally, this form covers all partnership firms, LLP, AOP, BOI, Artificial Juridical Persons, Cooperative Societies, and Local Authorities. The form is also used by investment funds, business trusts, and estates of the deceased and insolvents.
- ITR-6: All companies other than companies claiming exemption under section 11 are required to use this form. Section 11 pertains to charitable trusts/religious trusts for which ITR 7 is applicable.
- ITR-7: This form applies to persons including companies required to furnish returns u/s 139(4A), 139(4B), 139(4C) or 139(4D) or 139(4E) or 139(4F). This includes religious & charitable trusts, political parties, scientific research associations, universities & colleges.
A step-by-step guide to filing ITR online
Just like all your other financial transactions, tax filing is also online now. The process of filing your ITR online is known as income tax e-filing. E-filing has many advantages such as prompt process, improved accuracy, convenience, confidentiality, ease of use, etc.
You can e-file your ITR form in the following ways:
- By using a digital signature while submitting a return electronically.
- By electronically transmitting the data in ITR form with an electronic verification number.
- By sending the information in the ITR form electronically and then physically mailing the return verification in the ITR-V form to the income tax office.
Let’s dive deep into the e-filing process so that you can file your ITR before the due date with confidence.
Follow these steps for easy ITR online filing
- Step 1: You can start the income tax e-filing process by following these steps. ITR online filing process can be initiated from the official e-filing web portal of the Income Tax Department.
- Step 2: Log on to this portal by entering your user ID (PAN), password, and a captcha code. However, if you are a new user, you need to first register an account with the portal.
- Step 3: Select the option ‘e-File’ on the menu and click on ‘Income Tax Return’ from the drop-down menu.
- Step 4: This page auto-populates your PAN details. Now, go ahead and select ‘Assessment Year’ for which you are filing the ITR. Then, select ‘ITR Form Number’ where you should opt for ITR form applicable to your category.
- Step 5: Choose the status: Please select the status applicable to you such as Individual, HUF, or Other.
- Step 6: State the reason for filing ITR (income from proprietary business/profession)
- Step 7: Add bank account details
- Step 8: Choose ‘Filing Type’ as ‘Original.’ If you wish to file a revised return against a previously filed original return, then select ‘Revised Return.’
- Step 9: Find the option ‘Submission Mode’ and select ‘Prepare and Submit Online.’ Now, click on ‘Continue.’
- Step 10: At this point, you are required to provide details of income, exemptions, deductions as well as investments. After that, add the details of tax payments by way of TDS, TCS, and/or advance tax.
- Step 11: Remember to fill in all data carefully and accurately. Additionally, click on ‘Save the Draft’ periodically to avoid losing any data.
- Step 12: Select your preferred verification option from the following:
Instant e-verification
E-verification can be done at a later date but within 30 days from the date of filing ITR.
Verification can be done through a duly signed ITR-V sent to CPC (Centralised Processing Centre) via post and within 30 days of filing a return.
- Step 13: Select ‘Preview and Submit’, and then ‘Submit.’
A point to note here is that it is mandatory to verify returns electronically under digital signature for accounts requiring auditing under u/s 44AB.
Additionally, when you select the option ‘I would like to e-verify,’ you can opt for instant e-verification in any one of the following manners:
- Digitally sign the verification part
- Authenticate the process by way of an electronic verification code (EVC)
- Use your Aadhaar details to enter an OTP
- Authenticating through a prevalidated bank or demat account
Documents required for filing ITR
Filing ITR requires some documents and some homework on your part. This is because you can accurately assess your tax liability only after completing your books of accounts for the financial year. You will save time if you maintain meticulous books of accounts and have done your final accounting for the financial year before you start your ITR e-filling process. We have listed the documents required to help you prepare your ITR e-filling:
- PAN
- Aadhaar card
- Bank account details
- Form 16 (if applicable)
- Investments details
- Books of accounts
Tracking ITR status and refund
Sometimes, you might end up paying more taxes than what is due. In such a situation, you will receive a refund from the income tax department. Thankfully, the IT Department offers an online facility for tracking your refund status. You can easily check the progress of your refund by entering your PAN (Permanent Account Number) and the applicable Assessment Year.
You can check your refund status using either of these methods:
- TIN NSDL website: https://tin.tin.nsdl.com/oltas/refund-status-pan.html
- Income tax e-filing portal: https://eportal.incometax.gov.in/iec/foservices/#/know-refund-status/user-information
Consider the following steps before you check the status of your ITR refund:
- Tax refunds are initiated by the tax department once you have e-verified your return
- Typically, it takes 4-5 weeks for the refund to be deposited in your bank account
- If the refund is not received within this timeframe, you should consider these steps:
If your refund due has been determined after 31st March 2023, please follow the steps mentioned below:
- Visit: https://eportal.incometax.gov.in/iec/foservices/#/know-refund-status/user-information
- Enter PAN and Assessment Year for which the refund is to be checked.
- Enter your mobile number and click on continue.
- Enter the OTP received on mobile and click on continue.
- Refund status will be displayed.
If your refund due has been determined on or before 31st March 2023, please follow the steps mentioned:
- Visit https://tin.tin.nsdl.com/oltas/refund-status-pan.html
- Enter PAN and Assessment Year and click on Proceed
- Refund status will be displayed.
Conclusion
ITR e-filing is not a complicated process if you do it diligently. Keeping your financial records organized is the basic step to ensure a smooth filing process. While filing your ITR form online can appear confusing, there is no reason to postpone it till the prescribed last date. We understand the importance of accurate, on-time filing of your ITR, and hence this comprehensive guide to handhold you through the ITR e-filing process.
FAQs
What does the ITR form contain?
Income Tax Return (ITR) is a form which a person or entity is supposed to submit to the Income Tax Department. It contains information about the person’s income and the taxes to be paid on it during the year.
How do I check my income tax?
Log in using your USER ID (PAN number), the password, and the captcha code. Click on ‘Select An Option’ and then click on ‘Income tax Returns’ from the drop-down menu. Fill in the assessment year and submit.
Is it mandatory to file an income tax return below Rs. 2.5 lakh?
No, it is not mandatory though it is advisable to file your returns even if your total annual income is below Rs 2.5 lakhs. But for those with a total income of above Rs. 2.5 lakh, it is mandatory to file an ITR.
Who should file income tax returns?
Generally speaking, all individuals below the age of 60 whose total income in a financial year is above Rs. 2.5 lakh. The income threshold for senior citizens (aged 60-79) is Rs. 3 lakh, while for super senior citizens, the bar is Rs. 5 lakh in a year. In addition, individuals who have assets abroad, NRIs who earn above Rs. 2.5 lakh in India in a year, and all registered firms that generate an income even if they have not made a profit are compulsorily required to file their ITRs in India.
How much income is tax-free?
Individuals, HUFs, an association of persons (AOP), or a body of individuals (BOI) with total annual income below Rs. 2.5 lakh need not pay any income tax. The exemption limit for those aged above 60 years is Rs. 3 lakh, while for individuals aged 80 and above, the limit is Rs. 5 lakh.
