Income Tax Return (ITR)

Definition

An Income Tax Return (ITR) is the prescribed form in which a taxpayer declares their income, claims deductions, and computes their income tax liability for a given financial year, submitted to the Income Tax Department of India through the e-filing portal. The requirement to file an ITR is determined by income thresholds, the nature of income, and certain specific triggers, for example, individuals earning above the basic exemption limit (Rs 3 lakh under the new regime for FY 2024-25), those having foreign assets or foreign income, those claiming refunds, those holding directorship in companies or unlisted equity investments, and those with deposits in bank accounts above Rs 1 crore in aggregate are all required to file ITRs even if their tax liability is nil. Companies and LLPs must mandatorily file ITRs irrespective of income.

The Income Tax Department prescribes different ITR forms for different categories of taxpayers: ITR-1 (Sahaj) for salaried individuals with total income up to Rs 50 lakh; ITR-2 for individuals and HUFs with capital gains or foreign assets; ITR-3 for individuals with income from business or profession; ITR-4 (Sugam) for individuals, HUFs, and firms opting for the presumptive taxation scheme; ITR-5 for partnership firms, LLPs, and AOPs; ITR-6 for companies; and ITR-7 for trusts, political parties, and institutions. Filing the wrong ITR form renders the return defective and may be treated as non-filing. ITRs must be filed online through the e-filing portal and verified using Aadhaar OTP, net banking, or by sending a signed physical copy to CPC Bengaluru within 30 days.

Key deadlines for ITR filing are: July 31 for non-audited individuals, HUFs, and other non-corporate taxpayers; September 30 for taxpayers requiring audit (extended to October 31 in some years by notification); and October 31 for transfer pricing cases. Belated returns can be filed by December 31 of the assessment year but attract a penalty of Rs 1,000 to Rs 5,000 under Section 234F, with no penalty for taxpayers with total income below Rs 5 lakh. Updated returns (ITR-U) can be filed under Section 139(8A) within two years of the relevant assessment year to correct omissions or errors, subject to payment of additional tax. Pre-filled ITRs using data from AIS, Form 26AS, Form 16, and employer data are now available, significantly reducing the data entry burden for individual taxpayers.

Key Points

• ITR filing is mandatory for individuals above the basic exemption limit, companies, LLPs, and those with foreign assets, foreign income, or certain high-value transactions.
• Seven ITR forms exist for different taxpayer categories; filing the incorrect form renders the return defective and may be treated as non-filing.
• Due dates are July 31 for non-audited taxpayers, September 30 for audit cases, and October 31 for transfer pricing cases; belated returns attract penalty under Section 234F.
• ITR-U (Updated Return) under Section 139(8A) allows correction of omissions within two years of the assessment year, subject to payment of additional tax of 25% or 50%.
• Pre-filled ITRs using AIS, Form 26AS, Form 16, and salary data are available on the e-filing portal, reducing manual data entry for salaried taxpayers.
• Verification of ITR (Aadhaar OTP, net banking, or signed ITR-V sent to CPC) must be completed within 30 days of filing, failing which the return is treated as not filed.