What is ITR Filing?
ITR Filing refers to the process of submitting the Income Tax Return (ITR) to the Income Tax Department of India. It is a declaration of an individual’s or entity’s income, expenses, deductions, and taxes paid during a financial year. Filing ITR is mandatory for individuals and businesses whose income exceeds the prescribed limit, and it serves as a means to report income and claim tax refunds if applicable.
Key Features of ITR Filing
Requirements for ITR Filing
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Income Details
Accurate details of all sources of income, including salary, business income, interest income, etc.
Tax Deductions
Documentation for any deductions claimed under various sections of the Income Tax Act (e.g., Section 80C, 80D).
Financial Records
Proper financial records, including bank statements, investment proofs, and expense records.
PAN Card
A valid Permanent Account Number (PAN) is required for filing ITR.
Aadhaar Number
Linking the Aadhaar number with PAN is mandatory for ITR filing.
Documents Required for ITR Filing
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Form 16
Issued by employers, this form provides details of salary, tax deducted at source (TDS), and other income
Form 26AS
A tax credit statement that summarizes TDS deducted and deposited against the taxpayer’s PAN
Bank Statements
Bank statements to verify income and any interest earned
Investment Proofs
Documentation for investments eligible for tax deductions, such as life insurance, PPF, NPS etc.
Expense Receipts
Receipts for expenses that can be claimed as deductions under the Income Tax Act
Other Income Details
Documents related to income from sources like rental properties, capital gains, or business income
Advantages
The Way of Sustainable Growth and Resilence
Legal Compliance
Claiming Refunds
Loan Applications
Financial Planning
Carrying Forward Losses
Building Credit History
Disadvantages
Company Carries Risks
Complexity
The ITR filing process can be complex, especially for those with multiple income sources or investments.
Penalties for Late Filing
Late filing can result in penalties, interest on unpaid taxes, and complications in claiming refunds.
Penalties for Non-compliance
Late filing or non-compliance can result in significant penalties and interest charges.
Professional Assistance Costs
Some taxpayers may need to hire tax consultants or professionals, incurring additional costs.
Frequent Changes in Tax Laws
Changes in tax laws can create confusion and require taxpayers to stay updated.
E-filing Challenges
Technical glitches or issues during e-filing can lead to delays or difficulties in submission.
