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INCOME TAX RETURNS<br>Filing your first income tax return marks a major milestone in every citizenu2019s financial journey, laying the foundation for responsible tax compliance. For someone new, however, the procedure may appear overly difficult and time-consuming, and some of the terminology may be completely unfamiliar. This doesnu2019t have to be the case. Making your initial entry into the realm of income tax? Iu2019ve got your back, so donu2019t worry. Although it may seem a little daunting at first, income tax is essentially about determining how much of your hard-earned money is sent to the government. It
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PowerUpYourFinancialCompliance withIncomeTaxReturnFiling Makeyourincometransparent,compliant,andopportunity-ready!IncomeTaxReturnFilinginjusta fewclicks. FileyourITRtodayandunlockrefunds,creditworthiness,andfinancialconfidence! RegisterNow INCOMETAXRETURNS Filingyourfirstincometaxreturnmarksamajormilestoneineverycitizen’sfinancialjourney,layingthe foundationforresponsibletaxcompliance.Forsomeonenew,however,theproceduremayappearoverly
difficultandtime-consuming,andsomeoftheterminologymaybecompletelyunfamiliar.Thisdoesn’thaveto bethecase.Makingyourinitialentryintotherealmofincometax?I’vegotyourback,sodon’t worry.Although itmayseemalittledauntingatfirst,incometaxisessentiallyaboutdetermininghowmuchofyourhard-earned moneyissenttothegovernment.It’showweallworktogethertomaintainpublicserviceslikeroads,schools, andothers.Knowingthefundamentalswillhelpyouremainontopofyourmoneyandpreventanyshocks whentaxseasonarrives,regardlessofwhetheryou’reanewearnerorjustwondering.Differentformsareused fordifferentincomegroupsandfordifferentsortsofincome,suchasfreelanceorsalariedlabor.Thinkofitas updatingyourfinancialstatuswiththetaxauthorities,despitethefactthatitsoundscomplicated. • IncomeTaxreturn • IncomeTaxReturnisreferredtoasITR.AllITRformsarereleasedbythecentralboardofdirect taxes(CBDT),whichalsooutlinestheproceduresthatmustbefollowedto.AnIncomeTaxReturn (ITR)isadocumentsubmittedtotaxauthoritiesthroughwhichanindividualorbusinessdeclares itsincome,taxliabilities,andrelatedcontributionsorrefunds.Thetaxofficehasissuedseven differentITRforms–fromITR-1toITR-7–tailoredaccordingtotaxpayercategoriesandincomesources. Every taxpayerisexpectedtofiletheirIncomeTaxReturn(ITR)byJuly31oftheassessmentyeartostay compliant andavoidlatepenalties.Dependingonthetaxpayer’scategory(individuals,HUF,corporations,etc.),income sources,andincomeamount,differentITRformsare applicable. • Reasonforfiling ITR • Ifyouwishtoaskthedepartmentforarefundofyourincometaxes. • If,duringthefinancialyear,youmademoneyfromorinvestedinoverseasassets. • Ifyou wantto submit anapplication for aloan or visa. • Regardlessofprofitorloss,ifthetaxpayerisabusinessor firm. • Unlessyoufilethereturnbeforethedeadline,youwillnotbeabletocarryforwardanylossesfromyour businessor professionor under thecapital gains headto the nextyear. • Whenisfilingincometaxreturns(ITRs)inIndiarequired? • Ifyourgrosstotalincomeexceedsthebasicexemptionceiling,whichwasasfollowsundertheoldtax system: • Theexemptionthresholdforpeopleunder60isRs2.5lakh. • Theexemptionlimitforpeopleover60butunder80isRs3.0lakh. • Seniorcitizensover50yearsofagedonotpayincometaxiftheirannualincomedoesnot exceedRs5lakh,whichgivesthemagenerouspension benefit. • Underthenewtaxregime,thebasicexemptionlevelisRs.3lakh,regardlessofage.Evenifyour earningsfallbelowthetax-freethreshold,you’restillrequiredtofileyour income taxreturn ifyou meet anyofthesespecificconditions:
MorethanRs1crorewasdepositedintothe“current”bankaccount.Ifthetotaldepositsinone ormoreofyourbankaccountsexceedRs.1croreyouarerequiredtofileanincometaxreturn underIndiantaxlaws.However,depositsplacedintothepostofficecurrentaccountare exempt fromthis requirement. • MorethanRs50lakhwasdepositedintothe“savings”bankaccount:Ifyouhavedepositeda totalofRs50lakhormoreinoneormoreofyoursavingsbankaccounts,youarerequiredtofile atax return. • OverRs2lakhwasspentonatripabroad:IfyouhavespentmorethanRs2lakhontravel abroad,eitherforyourselforanotherperson,youmustelectronicallyfileataxreturn. • ThecostofelectricityexceedsRs1lakh.Intheeventthatyourpowerexpensesforthe precedingyearexceeded.Ifyourtotaldepositsorexpensescross₹1lakhinafinancialyear, you’llneed to file your incometax return—even if your income isn’ttaxable. • TDSorTCSexceedsRs25,000.IfyourTCSorTDSforthepreviousfinancialyearismorethanRs 25,000,youarerequiredtofileanincometaxreturnevenifyourincomeisbelowthecut-off limit. ThelimitisRs50,000forelderlycitizens(thoseover60). • OverRs60lakhisthebusiness’sturnover. Youmustfileataxreturnifyouareabusiness owner andyourtotalsales,turnover,orgrossreceiptsfortheprecedingyearexceededRs60lakh. • OverRs10lakhisearnedbyprofessionals:Ifyouworkinaprofessionandyourgrossreceipts forthepreviousyearareaboveRs10lakh,youarerequiredtofileataxreturn. • ExemptionfromfilingIncome TaxReturn • Inadditiontothecurrentexemptindividuals,suchasthosewhosetotalincomeislessthanthebasictax exemptionlimitornon-residentswhoseincomedoesnotaccrueororiginatefromIndia,thecentralgovernment hastheauthoritytoexemptaspecificclassorclassesofpeoplefromfilingincometax returns. • What ITR Should I File? • ItcanbealittleconfusingatfirsttofigureoutwhichIncomeTaxReturn(ITR)formtofile,butwecanhelp!If youareasalariedpersonorhaveincomefrominterest,pensions,orevenatinysidebusiness,youmaywant toapplyfortheITR-1,oftencalledSahaj.ITR-3orITR-4,however,mightbemoreyourstyleifyouhave capital gainsincomeorareprofitablefromyourbusinessoroccupation.ITR-5orITR-6maybenecessaryifyouarea businessorpartnership.Itallcomesdowntoaligningtheformwithyour revenue-generatingstrategy. Let’ssee indetailwhichITRformissuitableforyou. • ITR1OR SAHAJ • Thisreturnformisforaresidentwhoearnedthefollowingincomeduringtheassessmentyear:incomefroma pensionorsalary;incomefromasingleresidence(exceptfromsituationsinwhichlossesfromtheprevious yeararecarriedforward);orrevenuefromOthersources(apartfromLotterywinningsandraceHorseRevenue) incomefromagricultureuptoRs5000.
PersonexemptedfromfilingITR1: • ApersonearningmorethanRs50lakh. • Apersonwhohasheldanyunlistedequitysharesatanypointduringthefiscalyearorwhoservesasa directorofacorporation. • Non-residentsandresidentsnotnormallyresident(RNOR). • Individualswhohaveearnedincomethroughanyofthefollowingsourcesarerequiredtoreportitwhen filingtheirtaxreturns. • Multiple residential properties. • Legalgambling,racehorses,lotteries,etc. • Capitalgainsthataresubjecttotaxes,bothshort-andlong-term. • IncomefromagricultureexceedingRs5,000. • Professional and business. • AresidentwhoisasigningauthorityonanyaccountlocatedoutsideofIndiaorwhopossesses assets (includingafinancialstakeinanyorganization)outsideofIndia. • Peopleclaimingsection90/90A/91exemptionfromdoubletaxationorrelieffromforeigntaxes paid. • Receivedfromaqualifyingstart-up,deferredincometaxonanESOP. • ProfitsfromVirtualDigitalAssets(Cryptocurrency) • Peopleforwhomsection194NdeductsTDS. • MajorchangesinITR1 • PeoplemustspecifytheirpreferredtaxregimeontheirITR1incomereturn.Accordingtothechangesmadeby theFinanceAct2023inSection115BAC,theNewTaxRegimewillbethedefaulttaxregimestartingthisyear. Bydefault,people,HUFs,AOPs,BOIs,andAJPswillbesubjecttothenewtaxregime.Thosewhochoosethe previoustaxsystem,however,mustspecificallydecidenottouseSection115BAC(6).AccordingtoSection 139(1),anybodyhavingincome—asidefromincomefromabusinessorprofession—mustindicatetheir preferredtaxregimeontheirincometaxreturnfortheapplicableassessmentyear. • Itispossibleforanyonewhoearnsmoneyfromabusinessorprofessiontochoosetoleavethenewtax systemandreturntothepreviousone.TheymustfileFormNo. Tooptforthisexemption,youneedtofileForm 10-IEAbeforethedateofwithdrawalunderSection139(1)oftheIncomeTaxActalongwithyourITRreturn. Section80CCH introducedby the Finance Act2023 provides anew supplementary provisionto provide newtax benefitstoqualifyingindividuals.AnyonewhojoinstheAgnipathschemeandstartscontributingtothe AgniveerCoreFundfromNovember1,2022cangetfulltaxdeductionontheircontributionsasperthe current taxlaws.amountdepositedintheAgniveerCorpusFund,accordingtothisprovision. • Inordertoaccountforthismodification,anewcolumnhasbeenaddedtoITRform1thatenablestaxpayersto providepertinentinformation aboutthe amountthatqualifies foradeduction underSection 80CCH. • ITR 2
WhenanindividualorHinduUndividedFamily(HUF)doesnothaveabusinessorprofessionthatgenerates money,theyuseITR-2tofiletheirincometaxreturns.Peoplewhoreceiveincomefromcapitalgains, pensions, salaries,andothersourcesusuallyuseit. • Who is qualified to submit an ITR-2? • Ifyou’reanindividualorpartofaHinduUndividedFamily(HUF)earningincomefromsourcesotherthan businessorprofessionalwork,theITR-2formistheoneyou’rerequiredtofileforincometaxcompliance. Therefore,thosewhoearnmoneyfromthefollowingsourcescansubmitForm ITR-2: • Salaryorpension income • Incomefromresidentialrealestate(thismightcomefrommorethanoneresidential property) • Anygainsorlossesyoumakefromsellingshares,mutualfunds,orproperty—whetherheldbrieflyor forthelonghaul—needtobereportedundercapitalgainsinyourtaxreturn. • Othersourcesofincome(suchaslotterywinnings,horseracingwagers,andotherlawfulgambling activities) • IncomefromagricultureoverRs 5,000 • Anon-residentandaresidentwhoisnottypicallya resident • ThecombinedrevenuefromallofthesesourcescouldsurpassRs50lakh • Additionally,you must file returnsin ITR-2 if: • Youareadirectorofanycompany • Anindividualwhohaspurchasedunlistedequitysharesofafirm • MajorchangesinITR2 • TheITR-2form nowincludesthe followingmodifications: • ScheduleVDA–VirtualDigitalAssetTransferRevenue:Tocalculaterevenuefromcryptocurrenciesor othervirtualdigitalassets,anewschedulehasbeenadded. • ReliefunderSection89A–Anewprovisionpertainingtoreliefforresidentswhoreceiveincomefrom foreignretirementbenefitsaccountshasbeenadded. • PointNo.1(e)4–IncomesubjecttotaxesintheyearpriortowhichreliefunderSection89Awas requestedinanyprioryear. • Section10(12C)–Sec.10(12C)addsanewexemptiontootherexemptincome:anypaymentmadeby theAgniveerCorpusFundtoanAgnipathSchemeparticipantorhis nominee. • ScheduleSI–Anewpointhasbeenadded.Revenuefromthetransferofvirtualdigitalassets (115BBH). • Section80CCH–AnewprovisionwasinsertedunderChapterVIAdeduction:Allcontributionsmadeto theAgniveerCorpusFundbyapplicantswhoworkfortheCentralGovernmentaretaxdeductible. • ARN–AdditionaldetailsareneededfortheARN(donorreferencenumber)underschedule80Gclause D.
ITR 3 IndividualsandHinduUndividedFamilies(HUFs)whoareinvolvedinbusinessorprofessionandwhomust keepthoroughbooksofaccountsareintendedtargetfortheITR-3form.Professionalswhoseremunerationis determinedbyactualprofits,suchascharteredaccountants,physicians,attorneys,engineers,etc.,fallunder thiscategory.Additionally,theITR-3formcanbeusedtofileincometaxreturnsforthosewhoearnfromboth salariedjobsandothersources,suchasfreelancingorpart-timebusinessventures. IndividualsandHUFswithincomefrombusinessorprofessionalprofitsandgainsaresubjecttotheITR-3. SincethisistheonlyformonwhichapersonorHUFcandeclareallpotentialprofits,itcanbereferredtoasa masterform. CananyonesubmitanITR-3form? Pursuingaprofessionorbusiness(bothtaxauditandnon-auditinstances)Thereturnmaycontaincapital gains,salary/pension,incomefromothersources,andincomefromreal estate. Remunerationobtainedfromapartnership Who is not allowed to submit an ITR-3 form? OnlyindividualtaxpayersandHinduUndividedFamilies(HUFs)runningabusinessorearningincomefroma professionareeligibletofiletheITR-3formundertheincome taxrules. HUFsandindividualswithoutincomefromabusiness,profession,orpartnershipfirmarenotpermittedtofile the ITR-3 Form. MajorchangesinITR3 ToreportyourcryptocurrencyandotherVDAincomeseparately,anewscheduleVDAhasbeenadded.A quarterlybreakdownmustbeprovidedundertheCapitalGainsScheduleifyoutreatincomefromVDAsas capitalgains.EveryVDAtransaction,togetherwiththedatesofsaleandpurchase,mustbedocumentedinthe newITR-3.ToascertainwhetheryoupreviouslychosetooptoutoftheNewTaxRegime,afewnewquestions havebeenaddedtotheITR3 form. Asanextradisclosurerequirement,foreigninstitutionalinvestors(FII/FPI)arerequiredtosubmittheirSEBI registration number. Thereportingofbalancesheetshasundergoneaminormodification.AdvancesfromthoselistedinSection 40A(2)(b)oftheIncomeTaxActandothersmustbedisclosedunderthe“Advances”categoryintheSourceof Funds section of the new ITR-3 form.
Therecentlyadded“TradingAccount”areaiswhereturnoverandincomefromintradaytradingmustbe disclosed. ITR 4 Individuals,HUFs,partnershipfirms(exceptfromLLPs),andresidentswhosetotalincomeconsistsofthe followingarecoveredbythecurrent ITR-4: • Revenuefromabusinessundersection44ADor44AE’spresumptiveincomescheme. • ProfessionalincomeunderSection44ADA’spresumptiveincome scheme. • SalaryorpensionincomeuptoRs50 lakh. • IncomefromasingleresidencethatdoesnotexceedRs50lakh(notincludingbrought-forwardor carry-forward losses). • Incomefromothersources,excludinglotteryandracehorseearnings,thatdoesnotexceedRs50lakh. • WhoMustSubmitanITR-4? • Individuals,HUFs,andpartnershipfirmswhosetotalincomeforFY2023–2024comprisesthefollowingmust fileanITR-4: • BusinessrevenuecomputedinaccordancewithSection44ADor44AE. • ProfessionalincomeasdeterminedbySection 44ADA. • IncomereportedonITR1shouldnotexceedRs.50lakhsfromallsourcescombined. • WhoisexemptfromfilinganITR-4? • Apersonwhoseentireincomesurpassesfiftylakhrupees. • Apersonwhoservesasadirectorofa business. • Thisformcannotbeusedbyapersonwhohasinvestedinunlistedequityshares. • TheIncome-taxActof1961mandatesthatanindividual,HUF,orpartnershipentitykeepthebooksof accounts. • Non-residentsandresidentswhoarenotordinarilyresidents(RNOR). • Peoplewhohavemademoneyusingthefollowingmethods:Legalgambling,racehorses,lotteries,etc. • Apersonwithmanyresidential properties. • Capitalgainsthataresubjecttotaxes,bothshort-andlong-term. • IncomefromagricultureexceedingRs5,000. • AresidentwhoisasigningauthorityonanyaccountlocatedoutsideofIndiaorwhopossesses assets (includingafinancialstakeinanyorganization)outsideofIndia. • Peopleclaimingsection90/90A/91exemptionfromdoubletaxationorrelieffromforeigntaxes paid. • ProfitsfromDigitalAssets(Cryptocurrency). • PeopleforwhomSection194NhasbeenusedtodeductTDS.
MajorchangesinITR4 • AcolumnforrevealingtheamountavailablefordeductionunderSection80CCHhasbeenaddedtoITRforms • 4.WiththeintroductionofSection80CCHbytheFinanceAct2023,anyonewhosubscribestotheAgniveer CorpusFundandisregisteredintheAgnipathSchemeonorafter 01-11-2022canclaimataxdeductionforthe entireamountputintheAgniveerCorpus Fund. • TheturnoverthresholdlimitforchoosingtousethepresumptivetaxationschemeunderSection44ADwas raisedfromRs.2crorestoRs.3croresbytheFinanceAct2023,aslongascashreceiptsdonotsurpass5%of thetotalturnoverorgrossreceiptsfortheprioryear.Additionally,ascashreceiptsdonotsurpass5%oftotal grossreceiptsfortheprecedingyear,Section44ADAwasrevisedtoenhancethethresholdlevelofgross receiptsfromRs.50lakhstoRs.75lakhs.ITR-4hasbeenamendedtoincorporateanewcolumnfor declaring “receiptsincash”underScheduleBPinordertoreflectthesemodifications.Checksandbankdraftsthatare notaccountpayeesareincludedinthedefinitionofcash. • ITR 5 • Businesses,limitedliabilitypartnerships(LLPs),associationsofpersons(AOPs)andbodiesofindividuals (BOIs),artificialjudicialpersons(AJPs),estatesofthedeceasedandinsolvent,businesstrusts,andinvestment fundsarealleligible tofilethis incometaxreturn. • TowhomistheITR-5Form applicable? • Thefollowingpeople canutilizethis form: • LimitedLiabilityPartnership(LLP),AssociationofPersons(AOP),BodyofIndividuals(BOI),ArtificialJuridical Person(AJP)mentionedinclause(vii)ofSection2(31),LocalAuthoritymentionedinclause(vi)ofSection 2(31),RepresentativeAssesseementionedinSection160(1)(iii),or(iv)CooperativeSocietySocietyregistered undertheSocietiesRegistrationAct,1860,orunderanyotherStatelawTrustotherthanTrustseligibletofile FormITR-7,EstateofaDeceasedPerson,EstateofanInsolventBusiness Trust mentionedinSection 139(4E), andInvestmentsFundmentionedinSection 139(4F). • MajorchangesinITR5 • GivetheAuditReportandUDINacknowledgementnumber. • DisplaytheamountthatmustbepaidtoMSMEafterthespecifiedtime frame. • Detailedinformationaboutthecapitalgainsaccounts scheme’s use. • DetailsoncontributionstopoliticalpartiesarerequiredunderSchedule80GGC. • ScheduleOScontainedinformationondividendreceiptsfromIFSCunitsaswellasthedeclarationof bonuspaymentsunderLIC policies.
ThescheduleforstartupsunderSection80-IACrequestsinformationonthedateofincorporation,the typeofbusiness,thecertificatenumberobtainedfromtheInter-MinisterialBoard,thefirstacademic year(AY)atwhichthedeductionwasclaimed,andtheamountofthedeductiontakenforthecurrentAY. • MSMEdetailsarerequired,includingtheassignedMSME’sregistrationnumberandstatus. • ITR 6 • Companiesotherthanthoseclaiminganexemptionundersection11arerequiredtofiletheirincometax returnsusingtheITR-6form,whichistheincometaxreturnfilingform. • Businessesthatholdtheirpropertyprofitsforreligiousorcharitablepurposesareclaimingundersection11. • WhoMustSubmitanITR6? • ITR6FormsmustbefiledbyallbusinessesincorporatedundertheCompaniesActof2013ortheprevious CompaniesActof1956.However,thecorporationisexemptfromfilingtheITR6Formifitsrevenueisderived frompropertyheldforcharityorreligiousreasons. • MajorchangesinITR6 • DetailsoftheLegalEntityIdentifier(LEI). • ‘Schedule115TD’wasestablishedtoreportthetaxdueonaccruedincome. • InformationontheCapitalGainsAccountsSchemeis disclosed. • ThenewSchedule80GGCrequestsinformationonpoliticalpartydonations. • Detailsregarding qualifyingstart-ups aresought by thenew Schedule80-IAC. • ThenewSchedule80LArequestsinformationontheIFSCoroffshorebankingunit. • DisclosureofthesumowedtoMSMEafterthespecifiedtime limit. • DisclosureofinternetgamingwinningsisrequiredbySection115BBJ. • ReportingdividendincomereceivedfromanIFSCcompanyunitinordertospecifythereturnfiling deadline. • ProvidingtheAuditReport’sacknowledgementnumberandtheUDINforthecompanythatis classified asamicroorsmallbusiness. • Providingthejustificationforthetaxaudit.
