What is ITR and how to file it online ?

What is ITR and how to file it online?

If you are a taxpayer in India, you may have heard of the term ITR or Income Tax Return. But what exactly is it and why do you need to file it? In this post, we will explain what ITR is, who should file it, how to file it online, and what are the benefits of filing it.

What is ITR?

ITR is a form that you need to fill and submit to the Income Tax Department every year. It contains information about your income, expenses, deductions, investments, taxes paid, and refunds claimed for a particular financial year. By filing ITR, you declare your total income and tax liability to the government. You also claim any tax benefits or refunds that you are eligible for.

Who should file ITR?

According to the Income Tax Act, 1961, every person who has a taxable income in India is required to file ITR. This includes individuals, Hindu Undivided Families (HUFs), companies, firms, trusts, associations, etc. The taxable income is the income that exceeds the basic exemption limit for a given financial year. The basic exemption limit for the financial year 2022-23 is Rs 2.5 lakh for individuals below 60 years of age, Rs 3 lakh for senior citizens (60-80 years), and Rs 5 lakh for super senior citizens (above 80 years).

However, even if your income is below the basic exemption limit, you may still need to file ITR in certain cases. For example, if you have:

  • Deposited more than Rs 1 crore in one or more bank accounts in a financial year.
  • Incurred more than Rs 2 lakh on foreign travel for yourself or any other person in a financial year.
  • Paid more than Rs 1 lakh on electricity bills in a financial year.
  • Claimed any tax relief under Section 90 or 90A or 91 of the Income Tax Act (relating to double taxation avoidance agreements).
  • Carried forward any losses or losses under the head ‘Income from house property’.
  • Received any income from outside India or have any assets outside India.
  • Received any notice from the Income Tax Department for filing your return.

How to file ITR online?

The easiest and most convenient way to file your ITR is online through the e-filing portal of the Income Tax Department . You can choose from two methods of e-filing:

  • Prepare and submit online: This method allows you to fill and submit your ITR form directly on the portal using your login credentials. You can also pre-fill some of your personal and financial details from the Annual Information Statement (AIS) available on the portal. This method is suitable for simple returns such as ITR-1 and ITR-4.
  • Upload XML: This method allows you to download the relevant ITR utility (Excel or Java) from the portal , fill it offline on your computer, generate an XML file, and then upload it on the portal using your login credentials. This method is suitable for complex returns such as ITR-2 and ITR-3.

After submitting or uploading your ITR form, you need to verify it using any one of the following options:

  • Digital Signature Certificate (DSC): This is an electronic signature that authenticates your identity and ensures data security. You need to attach a signature file generated from a DSC management utility along with your ITR form.
  • Aadhaar OTP: This is a one-time password sent to your mobile number registered with Aadhaar. You need to enter this OTP on the portal to verify your ITR form.
  • Electronic Verification Code (EVC): This is a 10-digit alphanumeric code generated through various modes such as prevalidated bank account details, prevalidated demat account details, bank ATM, or e-filing portal. You need to enter this EVC on the portal to verify your ITR form.
  • Physical verification: This is an option for those who do not want to e-verify their ITR form. In this case, you need to download the acknowledgment form (ITR-V), sign it manually, and send it by ordinary or speed post to the Centralized Processing Center (CPC) of the Income Tax Department in Bengaluru within 120 days of filing your return.

What are the benefits of filing ITR?

Filing your ITR on time has many benefits such as:

  • Avoiding penalties and interest: If you fail to file your ITR by the due date (31st July for individuals and 30th September for businesses), you may have to pay a penalty of up to Rs 10,000 under Section 234F of the Income Tax Act. You may also have to pay interest on any tax due under Section 234A of the Act.
  • Claiming refunds: If you have paid excess tax during the year through advance tax, self-assessment tax, or tax deducted at source (TDS), you can claim a refund of the excess amount by filing your ITR. The refund will be credited to your bank account after processing your return.
  • Carrying forward losses: If you have incurred any losses from business, profession, or capital gains, you can carry them forward for up to eight years and set them off against future income, provided you file your ITR on time. This can help you reduce your tax liability in the subsequent years.
  • Availing loans and credit cards: If you apply for any loan or credit card, the lender may ask for your ITR as a proof of your income and repayment capacity. Filing your ITR regularly can help you establish your creditworthiness and get easy approval for loans and credit cards.
  • Applying for visas and government tenders: If you plan to travel abroad or apply for any government tender, you may need to submit your ITR as a proof of your financial stability and tax compliance. Filing your ITR can help you avoid any hassles or delays in these processes.

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