Income Tax Return
ITR stands for “Income Tax Return,” which is a form used to declare an individual’s or a company’s taxable income to the government. The form is submitted annually to the tax authorities, usually by a certain due date, and is used to calculate the amount of tax owed.
An ITR Return is a document that individuals or businesses file with the Indian Income Tax Department to report their income and taxes owed for a financial year. The ITR Return contains details of an individual’s or a company’s income, expenses, and taxes paid, which is used by the government to determine their tax liability. Filing an accurate and timely ITR Return is mandatory for all taxpayers in India.
ITR Form refers to the official form used by taxpayers in India to file their Income Tax Return (ITR) with the Income Tax Department. There are different types of ITR Forms available, based on the nature of the taxpayer’s income and the type of tax they are liable to pay. Some common ITR Forms include ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, and ITR 7. Each form is designed to capture specific types of income and tax liabilities, and taxpayers must choose the form that best suits their tax situation.
Kinds of ITR
There are 7 different types of ITR Forms in India, based on the nature of the taxpayer’s income and the type of tax they are liable to pay. The 7 types of ITR Forms are:
- ITR 1 (SAHAJ): For individuals having income from salary, one house property, and other sources (excluding winnings from lottery and horse races).
- ITR 2: For individuals and Hindu Undivided Families (HUFs) not having income from business or profession.
- ITR 3: For individuals and Hindu Undivided Families (HUFs) having income from a proprietorship firm.
- ITR 4 (SUGAM): For individuals and Hindu Undivided Families (HUFs) having income from a presumptive business.
- ITR 5: For firms, Association of Persons (AOPs), Body of Individuals (BOIs), and Local Authorities.
- ITR 6: For Companies other than companies claiming exemption under section 11.
- ITR 7: For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F).
ITR Calculation is the process of determining the amount of taxable income and taxes owed by an individual or a company, based on the information reported in their Income Tax Return (ITR). The calculation starts with the taxpayer’s total income, which includes their salary, rental income, capital gains, and other sources of income. The taxpayer can then claim deductions and exemptions, as per the provisions of the Income Tax Act, to arrive at their taxable income. The tax liability is calculated by applying the relevant tax rates to the taxable income.
ITR Calculation typically involves the following steps:
- Calculating Total Income: Summing up all sources of income, including salary, house property, capital gains, and others.
- Deductions and Exemptions: Deducting eligible expenses and exemptions from the total income, as per the provisions of the Income Tax Act.
- Taxable Income: Calculating the taxable income by subtracting deductions and exemptions from the total income.
- Tax Liability: Calculating the tax liability by applying the relevant tax rates to the taxable income.
- Advance Tax and TDS: Deducting any advance tax and TDS (Tax Deducted at Source) paid during the financial year from the tax liability.
- Refund or Demand: If the advance tax and TDS exceed the tax liability, a refund will be due. If the tax liability exceeds the advance tax and TDS, a demand notice will be issued.
ITR 2.0 refers to the latest version of the Income Tax Return (ITR) form for individuals and Hindu Undivided Families (HUFs) who do not have income from a business or profession. This form replaces the earlier ITR 2 form and has been updated to include additional disclosures and reporting requirements. The ITR 2.0 form requires taxpayers to provide details of their income from salary, house property, capital gains, and other sources, as well as any foreign assets or bank accounts held. Taxpayers must also provide details of their deductions and exemptions, such as investments in specified savings schemes, life insurance, and medical insurance. The ITR 2.0 form must be filed electronically on the Income Tax Department’s e-filing portal.