Income Tax Return Filing (ITR)

It is a compulsory financial charge or levy imposed by a government on individuals, businesses, or other entities to fund public services and government activities.

Direct Tax

These are paid directly by individuals or entities to the government

Income Tax

It is a tax levied by the Government of India on the income earned by individuals, firms, companies, and other entities during a financial year.
Tax Year: April 1 to March 31 (financial year)

Professional Tax

• It is a state-level tax levied on individuals earning an income from salary, business, or profession.
• It is governed by state laws, and the tax amount varies from state to state.
• The maximum professional tax payable per year is ₹2,500 (as per Article 276 of the Constitution).

Corporate Tax

It is levied on companies on their net profit.

Tax Deducted at Source (TDS)

• It is a tax collected by the government at the source of income.
• When an individual or entity earns income (such as interest on FD/RD), the payer (in this case, the bank) deducts a portion of the income as tax and remits it directly to the government.
• It ensures that tax is collected in advance rather than waiting for the year-end.
• No TDS is deducted if the interest earned does not exceed ₹40,000 (regular) or ₹50,000 (senior citizens).
• If no PAN is provided, TDS Rate of 20% applied.
• Customers can submit Form 15G (below 60 years) or Form 15H (above 60 years) to avoid TDS deduction if their total income is below the taxable limit.

Indirect Tax

These are paid indirectly through the purchase of goods or services.

Ex.

• Goods and Services Tax (GST)
• Customs Duty
• Stamp Duty
• Road Tax/Vehicle Tax
• Property Tax
• Education Cess
• Toll Tax

Key Concepts

Basic exemption limit

It means the amount of annual income on which you pay zero tax.

Financial Year (FY)

• It is the 12-month period in which you earn income.
• In India, it is always 1st April to 31st March of the next year.
• After the FY ends, the government gives you about 4 months to calculate everything (income, investments, TDS, deductions) and file your ITR.

Example: If you earn salary between 1 April 2024 – 31 March 2025, that period is FY 2024–25.

Assessment Year (AY)

• The year after the financial year, in which the income of the financial year is assessed and taxed.
• You file your ITR in the assessment year for income earned in the financial year.

Example: Income earned in FY 2024–25 will be taxed and reported in AY 2025–26 (filing happens between April 2025 and July/Sept 2025).

Annual Information Statement (AIS)

It’s a detailed statement available on the Income Tax portal that shows all the financial transactions linked to your PAN in a financial year.

• Income details (salary, interest, dividends, rent, etc.)
• Investments (mutual funds, shares, bonds)
• Tax deducted at source (TDS)
• High-value transactions (large cash deposits, property purchases, etc.)

Form 26AS

• It is your annual tax statement that shows all the taxes related to your PAN for a particular financial year.

Form 26AS has several parts:

• Part A: TDS by employers, banks, or others.
• Part A1: TDS on income where Form 15G/15H is submitted (no TDS deducted).
• Part B: TCS (Tax Collected at Source) entries.
• Part C: Details of tax paid by you (advance tax, self-assessment tax).
• Part D: Refund details.
• Part E: Details of high-value transactions (like property purchase, mutual fund investments) – earlier shown here, now moved to AIS.

Taxpayer Information Summary (TIS)

• It is a condensed summary of the data shown in your Annual Information Statement (AIS) on the Income Tax portal.

TRACES (TDS Reconciliation Analysis and Correction Enabling System)

• It’s the official portal of the Income Tax Department for everything related to Tax Deducted at Source (TDS).
• A TRACES-generated Form 16/16A has a unique TDS certificate number and is digitally watermarked.

Deductors (like your employer, bank, or tenant) use it to:

• File quarterly TDS returns.
• Deposit TDS they deducted from your payments.
• Generate TDS certificates like Form 16 and Form 16A.

Taxpayers use it to:

• Verify that TDS has been deposited and reported correctly.
• Download TDS certificates.
• Match with Form 26AS/AIS.

Important Forms

Form 16

• It is a TDS certificate for salary income issued annually by our employer.

It shows the:

• Salary paid during the year.
• TDS deducted and deposited to the government.
• Breakdown of exemptions (HRA, LTA, etc.) and deductions (80C, 80D, etc.)

Form 16A

It is a TDS certificate for non-salary income issued quarterly by whoever deducts tax from your payment (e.g., bank on FD interest, tenant on rent, company on professional fees).

Form 15G

• It is a self-declaration forms you give to a bank, post office, or other deductor so that they do not deduct TDS (Tax Deducted at Source) on certain incomes — like FD interest — if your income is below the taxable limit.
• It is for individuals below 60 years and HUFs (Hindu Undivided Families).

Conditions:

• You are a resident of India.
• Your total income is below the basic exemption limit (₹2.5 lakh in the old regime, ₹3 lakh in the new regime).
• The total interest income is less than the basic exemption limit.

Form 15H

• It is a self-declaration forms you give to a bank, post office, or other deductor so that they do not deduct TDS (Tax Deducted at Source) on certain incomes — like FD interest — if your income is below the taxable limit.
• It is for Senior citizens (age 60 or above).

Conditions:

• You are a resident of India.
• Your tax liability on the total income is nil for the year (even if total income exceeds the basic exemption limit, deductions can bring taxable income to zero).

Carry Forward of Losses in Taxation (India)

In India, taxpayers are allowed to carry forward losses from a financial year to future years to offset taxable income in those years. This helps reduce the tax liability in subsequent years. The process of carrying forward losses can be done for both individuals and corporates, with specific provisions under the Income Tax Act, 1961.

Standard Deduction

Flat deduction given to salaried employees and pensioners.

ITR Forms

1. ITR-1 (Sahaj)

It is for resident individuals (other than Not Ordinarily Resident) with simple income.

You can use if:

• Income up to ₹50 lakh.

Income from:

• Salary/Pension
• One House Property (not more)
• Other Sources (interest, etc.)
• No capital gains.
• No business/profession income.

You cannot use if:

• You are a director in a company.
• You have foreign income or assets.
• You have more than one house property.
• You have carried forward losses.

2. ITR-2

It is for individuals and HUFs not having business/profession income.

You can use if:

• Income from salary, pension, house property (one or more), capital gains, other sources.
• Income from foreign assets or income.
• Income from more than ₹50 lakh.
• You are a director in a company or invested in unlisted shares.

You cannot use if:

• You have income from business or profession (use ITR-3 or ITR-4 instead).

3. ITR-3

It is for individuals and HUFs having income from business/profession.

You can use if

• Income from salary, house property, capital gains, other sources, and business/profession.
• Partner in a firm (with or without remuneration).

4. ITR-4 (Sugam)

It is for resident individuals, HUFs, and Firms (other than LLP) opting for Presumptive Taxation Scheme under section 44AD, 44ADA, or 44AE.

You can use if:

• Income up to ₹50 lakh.
• Business income computed on presumptive basis (44AD/44AE).
• Professional income on presumptive basis (44ADA).

You cannot use if:

• You have capital gains, foreign income, more than one house property, or are a director in a company.

Files required before filing

• Form16 Part A and Part B (From the Employer)
• AIS (ITR Portal)
• Form26AS (ITR Portal)
• P&L Statement (From the broker)

Steps to Fill ITR

1) Select the Assessment Year and Online
2) Select the ITR Form Type : ITR 2
3) Disclaimer saying that New Regime is Default
(Note: Check you Form16 whether your employer treated you under Old or New Regime)

4) Select the option:

5) Select the required Schedules:

• Part A - General Personal Information (Mandatory)
• Schedule Salary (Mandatory)
• Schedule House Property (Mandatory)
• Schedule Capital Gains
• Schedule 112A
• Schedule Other Sources (Mandatory)
• Schedule SI (Auto Populated)
• Schedule VI-A (Auto Populated)
• Part B - TI (Mandatory)
• Part B - TTI (Mandatory)
• Tax Paid (Mandatory)
• Schedule CYLA (Mandatory)
• Schedule BFLA (Mandatory)
• Schedule CFL (Mandatory)
• Schedule AMTC (Mandatory)

6) Questions: (Skip the Questions)

• All No

7) Personal Information

• Verify all your personal information
• Select 139(1) Return filed on or before due date
• Select No to opt out of Old Regime

All Details - No

8) Bank Details
(Auto Populated)

9) Schedule Salary

• Nature of Employer : Others
• Value of perquisites as per section 17(2) : Refer Form16
• Profit in lieu of salary under Section 17(3) : Refer Form16 (Auto Populated)

10) Schedule Capital Gains

• Short Term
• Download the report from your broker (Ex. Groww)
• Section : 111A [for others]
• Cost of acquisition

• Full value of consideration
  
  (**Note: **Round-off the values)

• F. Information about accrual/receipt of capital gain

11) Schedule CYLA (Current Year Loss Adjustment)
(Leave it)

12) Schedule BFLA (Brought Forward Loss Adjustment)
(Leave it)

13) CFL (Carry Forward Losses)
(Leave it)

14) Schedule SI

15) Part B - TI
(Review it)

16) Part B - TTI

(Review it)

17) Schedule AMTC
(Leave it blank)

18) Part B - TTI
(Review it)

19) Pay

20) Preview and Submit Your Return

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