Forms of ITR
Everyone in India pays taxes. Everyone needs to pay taxes because the government needs money to perform various functions. So government charges a fee in the form of tax. You have to pay tax on your property, goods and service, income, etc.
The government of India utilizes the tax for various social welfare schemes, paying government employees, providing you facilities, and many more. The second-largest source of revenue of government through tax is income tax.
However, only 1.46 Crore people out of 130 Crore are paying taxes on their income. Not everyone needs to pay income tax. Only those who are eligible for paying income tax have to pay it. It is because of the tax slabs.
A person has to give information about his income through forms. Then the information submitted goes to the Income-tax depart. These are called forms of Income-tax return.
There is 7 type of ITR form. The forms of ITR depend on the type of income, the income of the individual, and the category of the taxpayer (Hindu Undivided Family, company, individual, etc.).
The taxpayer needs to be very careful about these factors for choosing the right form. If a taxpayer chooses the wrong form then it has to repeat the whole process of filing ITR.
Filing ITR form is mandatory in the following conditions:
- If your income is more than the exempted tax limit. The limit is:
- For individuals below 60 years- 2.5 Lakh
- For individuals above 60 years but below 80 years- 3.0 Lakh
iii. For individuals above 80 years- 5.0 Lakh
However, even if your income is below the exempted limit you will have to file ITR in some conditions. Such conditions are:
- If you have deposited an aggregate amount of more than Rs.1 crore in one or more current bank accounts.
- If you have incurred an aggregate expenditure of more than Rs 2 lakh on foreign travel for yourself or another person.
iii. If you have incurred an expenditure aggregate of more than Rs.1 lakh towards electricity consumption.
- If you want to claim an income tax refund from the income tax department.
- If you have invested in or earned from foreign assets during the financial year.
- If you want to apply for a visa or a loan.
- If the taxpayer is a corporate entity irrespective of profit or loss.
Once you filed ITR, the application is processed and evaluation of tax is done by Income Tax authorities. Then the application undergoes internal checks and validation processed by the tax authorities. Then the authorities determine the final tax liability and communicate the same with the taxpayer.
You may find the ITR filing process hectic but you should go for filing it. It benefits you in many ways. Here are the top three reasons why you should file ITR:
- Helps you to claim to Carry forward losses: Carry forward of losses is an accounting technique through which the current year’s losses are pushed to future year’s Income. It reduces the tax liability by lowering your taxable income in future years.
So if you incurred losses under “Capital Gains” or “Profits and Gains from Business or Profession” and want to carry them forward to the following financial year, you must file an income tax return.
- It eases the loan process: If you want to apply for a house loan or any other type of loan (other than a mortgage). Before approving a loan, a lender generally asks for proof of income. You will be required to submit your ITR for the previous two or three fiscal years as part of the procedure.
- It will contribute to the development of a nation: Income tax helps the revenue generation of government. This revenue is then used in the development of the nation.