Filing your ITR ( Income Tax Return) is like an annual tradition. It’s when you provide details of your earnings and tax payments to the Income Tax Department, as required by the Income Tax Act of 1961. The Income Tax Return (ITR) form allows taxpayers to report income, deductions, and tax payments, enabling the department to assess tax liability.
When is it mandatory to file ITR?
| Age group | Old tax regime | New tax regime |
| Below 60 years | Rs 2.5 lakhs | Rs 3 lakhs |
| 60-80 years | Rs 3 lakhs | Rs 3 lakhs |
| 80 years above | Rs 5 lakhs | Rs 3 lakhs |
Even if income is below basic exemption following condition makes it mandatory:
- Deposits over ₹1 crore in a ‘current’ bank account: ITR filing is mandatory for self-employed individuals who have a current account with a bank and have deposited an amount or aggregate of amounts equal to or exceeding Rs 1 crore in a financial year.
- Deposited more than Rs 50 lakh in ‘savings’ bank account: You have to mandatorily file a tax return if you have deposited a total amount of Rs 50 lakh or more in one or more of your savings bank accounts.
- Spent more than ₹2 lakh on foreign travel: If a resident individual has spent Rs 2 lakh or more (at one go or in aggregate in a financial year) on himself/herself or any other person travelling to a foreign country.
- Electricity expenditure exceeding ₹1 lakh: If a taxpayer has paid electricity bill of Rs 1 lakh in a single payment or on an aggregate basis in a financial year, then ITR filing is mandatory.
- TDS or TCS deductions exceeding ₹25,000
Curious about TDS and TCS?
| TDS (Tax Deducted at Source) | TCS (Tax Collected at Source) |
| A portion of tax deducted from payments and deposited with the government, ensuring timely collection and easing financial obligations. | Tax collected by sellers from buyers at the time of certain transactions, deposited with the government to ensure compliance and timely tax collections. |
Which ITR form is right for you?
The primary ITR forms in India and their respective eligibility criteria to help taxpayers determine which form is applicable based on their income sources and entity classification.
ITR-1 (Sahaj)
Total income for the financial year should not exceed ₹50 lakh and can include salary, one house property income, family pension, agricultural income (up to ₹5000), and other sources like interest from savings accounts, deposits, income tax refund interest, enhanced compensation interest etc.
Practical Example
| Category | Details |
| Name | Apeksha |
| Income style | Salaried employee at IT company |
| Conditions | • Rs.40 lakhs • Salaried employee • One House property |
ITR-2
ITR-2 is for individuals or HUFs who are ineligible for ITR-1 (Sahaj) and do not have income from business or profession, including interest, salary, bonus, commission, or remuneration from a partnership firm. It also applies if they need to club the income of a spouse or minor child, provided it falls into these categories.
Practical Example
| Category | Details |
| Name | Raj |
| Income style | Salary, Capital Gains, Rental Income |
| Conditions | • Rs.70 lakhs • Capital Gains (Mutual Funds) • Rental Income (more than one property) |
ITR-3
This Return Form is to be used by an individual or a Hindu Undivided Family who is having income under the head “profits of business or profession” and who is not eligible to file Form ITR‐1 (Sahaj), ITR‐2 or ITR‐4 (Sugam).
Practical Example
| Category | Details |
| Name | Preksha |
| Income style | Freelance Content Writing |
| Conditions | • Rs.25 lakhs • Profits or gains from business or profession |
ITR-4 (Sugam)
For individuals with an income not exceeding ₹50 lakh during the financial year, the eligible income types include business and profession income computed on a presumptive basis (estimated/assumed income); salary/pension; one house property; and agricultural income up to ₹5000.And,other sources
Practical Example
| Category | Details |
| Name | Sneha |
| Income style | Operating a bakery, computed on a presumptive basis |
| Conditions | • Rs.45 lakhs • This scheme is for businesses or professionals with income up to 50 lakh |
Summary
Refer the image below for the summary of the entire Read. Hope you became smarter with money now.
FAQs
How do I know which tax regime is better for my income when filing ITR?
Choosing the right tax regime depends on your income and deductions. The new tax regime offers lower tax rates but removes most deductions, while the old regime allows deductions like Section 80C but has higher rates. Assessing your deductions can help determine which regime saves you more.
What happens if I choose the wrong ITR form?
Filing the wrong ITR form can lead to the rejection of your return or a notice from the Income Tax Department, delaying processing. It’s important to carefully select the form that matches your income sources to avoid errors and penalties.
If I have multiple income sources, can I use more than one ITR form?
No, each individual can only submit one ITR form per financial year. You should select the form that best represents all your income sources combined. For example, if you have business income along with salary, ITR-3 would be suitable.
What if I miss the ITR filing deadline?
Missing the ITR filing deadline can result in late filing fees, interest on taxes owed, and ineligibility to carry forward certain losses. The Income Tax Department allows for late filing with a penalty until December 31st of the assessment year.
What documents do I need to file my ITR correctly?
While filing ITR, you’ll need documents like Form 16, TDS certificates, investment proofs, interest certificates, and records of capital gains, if applicable. These help verify your income sources and support deductions claimed.
