Overview of Income Tax Return Filing (ITR Filing)

The income earned by the individuals and companies is subject to tax liability therefore, they have to file income tax return with the income tax department as per the provisions of Income Tax Act, 1961. The tax levied on the income is collected by the Central Government.

Who is Eligible to file an Income Tax Return?

• Individuals (Indian residents & NRI's) – Necessary for those whose income is exceeding the prescribed limit.
• Sole Proprietors
• Companies
• LLPs and Partnership Firms
  

  (The ITR filing is compulsory for 'Partnerships Firm', 'Sole Proprietorship Firm', 'Companies', and 'LLPs' irrespective of their turnover, income, profit, or loss.)

• Individuals getting income from mutual funds, bonds, stocks, fixed deposits, income from interest, house property, etc.
• Individuals obtaining income from property under charitable trusts, religious trusts, or income from voluntary contributions, and also who want to claim tax refunds.
• Salaried persons whose gross income before deductions under section 80C to 80U exceeding the exemption limit.
• All individuals with foreign income and assets, NRI’s and technology professionals on onsite projects.

Type of Income Tax Return Filing Forms

• ITR 1 (Sahaj)

  For individuals earning income from salary, single house property, agriculture, & income from other sources. This form is to be filed by individual residents having total income up to Rs. 50 lakhs and agricultural income up to Rs. 5,000.

  Note Not applicable to individual being director in a company or has invested in unlisted equity shares or having foreign assets or foreign income.

• ITR 2

  For individuals and HUFs having earnings other than from PGBP (profits and gain of business or profession). It may be from capital gain, lottery, or foreign assets, etc. while total income should exceed Rs. 50 lacs. In case of agriculture income, it should exceed Rs. 5,000. Also, it is filed by those who invested in unlisted equity shares during the financial year.

• ITR 3

  For individuals and HUFs having earnings from profits and gains of business or profession. It also needs to be filed by the individuals having their income as a partner in a firm.

• ITR 4 (Sugam)

  For Individuals, HUFs, and Firms (other than LLP) being a Resident having entire Income of up to Rs.50 lakhs from business or Profession. It also covers those who have opted presumptive income scheme under Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act.

  Note

  Not applicable to individual director in a company or who has invested in unlisted equity shares

• ITR 5

  ITR 5 is filed by firms, LLPs, AOPs (Association of Persons), BOIs (Body of Individuals) etc.

• ITR 6

  ITR 6 is filed by companies other than those claiming exemption under section 11 (Income from property held for charitable or religious purposes).

• ITR 7

  It is required to be filed by those falling under section 139(4A) or section 139 (4B) or section 139 (4C) or section 139 4(D) that can either be individual or a company.

What are the Benefits of ITR Filing?

• It makes tax payer eligible for loan processing.
• It helps in claiming TDS refund or any other tax paid in excess.
• Also, it allows carry forward of losses.
• It makes individual a responsible citizen.
• Helps in avoiding penalty provisions.
• Considered as a financial evidence for availing loan or visa.
• Helps government in keeping track of the income of taxpayer.

What Documents are required to file Income Tax Return?

• Copy & PAN of Aadhaar
• Address details
• Bank Account details
• Additional disclosures with reference to income from payroll & fixed deposits
• Data required for claiming deduction
• Data required regarding TDS return filing and advance tax payments
• Investment proof
• TDS certificate in Form 16
• Interest income certificate in Form 16A
• Form 26AS

What is the Procedure for Filing Income Tax Return?

• Collection of necessary documents such as Form 16 (TDS Certificate issued by the employer in case tax is deducted from salary), Form 16A (It is issued by the bank for TDS deducted on the interest payment on the fixed deposit) in the TRACES format & capital gain statement. TDS certificate should be digitally signed by the taxpayer. 
• Download Form 26AS & cross check with TDS certificate to ensure that tax deducted from your salary or from your interest income is deposited with the government.
• In case of any error, rectify Form 26AS. If the error is not rectified, taxpayer won’t be able to claim credit on deducted tax.
• Next step is to calculate total income chargeable to tax.
• After this, taxpayer needs to calculate tax liability.
• Once all the taxes are paid, you can proceed for Income Tax Return filing. You can only claim for refund if you file income tax return.
• Verification of Income Tax Return
• Receive e-verification acknowledgement
• Department will process your return and will communicate through mail.

Penal Provisions

• Under section 156, a demand notice is given to the taxpayer for the payment of tax.
• The amount determined should be paid within 30 days of the notice at the place and to the person specified in the notice.
• If the taxpayer makes default in the payment of tax due, he will be treated as an assessee in failure.
• Before levying penalty, a fair opportunity of being heard is given to the taxpayer.

What are the Due Dates for FY 20-21?

Taxpayer	Due Date
Assessee whose books of accounts are not required to be audited	31st July
Assessee whose books of accounts are required to be audited	30th September
Assessee whose accounts are not required to be audited (not having international/specified domestic transactions)	31st October
Assessee having audited books of accounts and international/specified domestic transactions	30th November

Tax Rates

Particulars	Tax rate
When the turnover or gross receipt of the company does not go beyond Rs. 400 crores in the previous year	25%
Company opted for section 115BA	25%
Company opted for section 115BAA	22%
Company opted for section 115BAB	15%
Any other domestic company	30%
In case of co-operative society
Income Up to Rs. 10,000	10%
Income from Rs. 10,001 to Rs. 20,000	22%
Income above Rs. 20,000	30%

Slab Rates

Annual Income	Slab Rate
Upto Rs. 2.5 Lakh	Exempt
Rs. 2.5 Lakh to Rs. 5 Lakh	5%
Rs. 5 Lakh to Rs. 7.5 Lakh	10%
Rs. 7.5 Lakh to Rs. 10 Lakh	15%
Rs. 10 Lakh to Rs. 12.5 Lakh	20%
Rs. 12.5 Lakh to Rs. 15 Lakh	25%
More than Rs. 15 lakh	30%

Note* As per the financial bill 2020 for financial year 2020-21.

In order to claim above mentioned tax rates, following exemptions and deductions allowed / disallowed.

Cannot be claimed under New Tax Regime	Allowed
Deductions under chapter VIA	Contribution to pension account
Leave Travel Allowance	Transport allowance to handicapped
House Rent Allowence	Daily allowance given under certain conditions
Standard deductions of Rs. 50,000	Travel allowance or transfer
Entertainment allowance / employment allowance / Professional tax	Interest can be claimed in respect of loan taken on a rented out property
Interest repayment on housing loan / Interest paid on education loan	Gratuity
Family pension	Lump sum pension (1/3rd will be exempt if gratuity received or ½ will be exempt if not received)
Losses cannot be set off from previous assessment year	leave encashment on retirement up to Rs. 3 lakh
Depreciation cannot be claimed	Interest and maturity amount from PPF and Sukanya Samriddhi
Medical insurance premium	Maturity proceeds from the life insurance policy
PF contribution, tution fee, life insurance premium or any other investment	Employer’s contribution to NPS, superannuation fund and EPF up to Rs. 7.5 lakh

Surcharge

Particulars	Rate
If total income exceeds Rs. 50 lakhs but not exceeding Rs. 1 Cr.	10% of the income tax
If total income exceeds Rs. 1 crore but not exceeding Rs. 2 Cr.	15% of the income tax
If total income exceeds Rs. 2 crore but not exceeding Rs. 5 Cr.	25% of the income tax
If total income exceeds Rs. 5 crore	37% of the income tax
Education cess	4% of income tax plus surcharge

Late Filing Fee for FY 2019 -2020

Penalty for late Income Tax Return Filing u/s 234F

Due Date	Income below Rs. 5 Lakhs	Income above Rs. 5 Lakhs
10th January 2021	-	-
10th January 2021 to 31st March 2021	Rs. 1000	Rs. 10,000

Recent Amendments

For Assessment Year 2020-21, CBDT has changed the eligibility conditions for filing form ITR-1 and form ITR-4.

• A taxpayer who is a joint owner of a house property is permitted to file form ITR-1 and form ITR-4 if the other conditions are met by the taxpayer.
• Form ITR-1 is valid for those individuals who have deposited in excess of Rs 1 crore in bank accounts or if they have incurred Rs. 1 lakh / Rs. 2 lakh on electricity or foreign travel, respectively.

CorpBiz Procedure for ITR Filing

Kindly utilize the steps given above to integrate legally and securely ITR Filing and get the benefits in the form of better-quality of business exposure. Our CorpBiz experts will be at your disposal for assisting you with guidance concerning ITR Filing for the smooth functioning of your business/Occupation in India. CorpBiz professionals will assist you in planning seamlessly at the least cost, confirming the successful conclusion of the process.

It is advisable that an attorney with “Income Tax experience” must be appointed to overwhelm many of the potential pitfalls that creep around within ITR Filing and to understand the requirement in detail. The elementary information would be mandatory from your end to start the process. The Attorney will begin working on your request once all the information is provided, and the payment is received.

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Frequently Asked Questions