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ITR stands for Income Tax Return. It is a prescribed form through which the particulars of income earned by a person in a financial year and taxes paid on such income are communicated to the Income-tax Department.
In India, any individual or entity with taxable income is required to file an Income Tax Return (ITR). The following categories of people and organizations are required or eligible to file ITR
Individuals earning income through Salaries, freelancing, consulting, or running their own business must file ITR to report their income and expenses. They may also claim deductions related to business expenses.
A HUF is a separate taxable entity in India, and if the family earns income above the exemption limit, the HUF is required to file an ITR. HUFs may have income from business, property, or other sources.
Every company (private or public) must file an ITR, irrespective of whether it has profits or losses. Companies file their ITR under the corporate tax category, and it is mandatory to submit audited financial statements.
If you want to claim tax deductions under sections like 80C (for PPF, insurance premiums, etc.), 80D (for health insurance), or 80G (donations), you must file an ITR, regardless of whether your income is below the taxable threshold, as this can help in obtaining refunds or adjusting taxes.
Trusts, societies, and charitable organizations that earn taxable income, whether from donations or investments, need to file ITR to report their income. However, certain charitable organizations may enjoy exemptions under sections like 12A/80G.
Foreign companies earning income from sources in India (such as a branch or representative office in India) are required to file an ITR in India, and they may be subject to Indian taxation
Individuals earning income from capital gains, interest, or dividends need to file ITR if their total income exceeds the exemption limit. This includes income from stocks, mutual funds, and other financial instruments.
Even if you're living abroad, you may need to file an ITR in India if you have any income arising in India, such as rental income, capital gains, or interest on investments. This also applies to NRIs who wish to claim a refund of any taxes paid in excess (e.g., TDS).
Individuals with foreign bank accounts or foreign assets (e.g., properties or investments) must file ITR to report foreign income and comply with FATCA and CRS (Common Reporting Standard) regulations.
Agricultural income is exempt from tax under certain conditions. However, individuals with agricultural income above a certain threshold (₹5,000) may need to file an ITR, even if the income itself is exempt, to avail of other tax benefits or set off losses.
If you have incurred losses (e.g., from business, capital gains, or house property) and wish to carry these forward to future years for offsetting against future income, you need to file your ITR on time.
Below 60 years: If income exceeds ₹2.5 lakh.
60 to 80 years (Senior Citizens): If income exceeds ₹3 lakh.
Above 80 years (Super Senior Citizens): If income exceeds ₹5 lakh.
There are nine different types of ITR forms which you can use during ITR filing. According to the Central Board of Direct Taxes in India, you must use the relevant form to file your income tax. Here is a brief about the forms:
Filing an Income Tax Return (ITR) has several important benefits, both for individuals and businesses. Here are some key advantages:
In summary, filing your ITR not only helps you remain compliant with the law but also unlocks multiple financial benefits like tax refunds, eligibility for loans, and potential deductions. It is an essential part of financial management for individuals and businesses alike.
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