ITR

ITR stands for Income Tax Return. In India, an ITR is a formal filing with the Income Tax Department that reports an individual’s or entity’s income, deductions, exemptions, and tax liability for a financial year. The return determines whether the taxpayer has paid the correct amount of tax and whether any refund is due.

Forms and eligibility: The Income Tax Department issues several ITR forms. ITR-1 (Sahaj) is for resident individuals with salary income and one house property, with other sources up to a limit. ITR-2 is for individuals with income from sources other than salary or from capital gains; ITR-3 is for individuals with income from business or profession; ITR-4 (Sugam) is for presumptive income cases. Other taxpayers, such as partnerships, LLPs, companies, and certain trusts, use ITR-5 to ITR-7 forms. The precise form depends on the nature and source of income.

Filing and verification: Returns are filed online through the Income Tax Department’s e-filing portal. Taxpayers typically rely on documents such as Form 16, Form 16A, interest certificates, statements of investments, and TDS certificates to prepare the return. After submission, the taxpayer must verify the return, either electronically or by sending a signed ITR-V in some cases.

Deadlines and penalties: The due date for individual taxpayers is generally 31 July of the assessment year; other taxpayers have different timelines. Extensions may be announced by the department. Non-filing or late filing can lead to interest, penalties, and restrictions on certain transactions.

Purpose and impact: Filing ITRs enables tax assessments, refunds, and the carry-forward of losses where applicable. It is also used for proving compliance to lenders or authorities and for availing certain tax benefits.