What is Income Tax and Income Tax Return?
Income Tax is a tax levied and collected by the Central Government on an income of a person. Income-tax is calculated at specified rates on the total income of a person and paid directly to the Central Government. The provisions relating to the income-tax are governed by the Income Tax Act, 1961. An income tax return is a document that you file online to the state tax board reporting your income, profits, and losses of your business and other deductions as well as details about your tax refund or tax liability.
There are different categories of tax slabs. Firstly, for the people who are less than 60 years of age, secondly for the people who are aged between 60 to 80 years and thirdly for the people who are above 80 years of age.
How to file Income Tax Return?
The first and the most important step for filing the income tax return is to choose the right form as per your category. The form is selected as per various factors such as type of income, kind of residency, type of entity (companies, undivided family property), etc. The wrong choice here will necessitate repeated filing. There is a total of 7 kinds of the form named as ITR 1 to ITR 7:
1. ITR 1 or SAHAJ Form
This form is to be selected by the persons whose total income through pension/salary/property from a single household is less than 50 lakhs. It also covers income generated through games such as horse-races and lottery.
2. ITR 2
This form is to be filed by Hindu Undivided Family and individuals who do not have income through income or profession.
3. ITR 3
This form is to be filed by individuals and HUFs having income from a proprietary business or profession.
4. ITR 4
The ITR 4 applies to individuals and HUFs, Partnership firms (other than LLPs) which are residents having income from a business or profession. It also includes those who have opted for the presumptive income scheme as per Section 44AD, Section 44ADA, and Section 44AE of the Income Tax Act.
5. ITR 5
The person who cannot use fill this form is:
d. Those who are filing the return using ITR 7.
So, we can say that people who can use this form to fill their return are:
b. Limited Liability Partnership (LLP)
c. Association of Persons (AOP)
d. Body of Individuals (BOI)
e. Artificial juridical person
f. Private Discretionary Trust
g. Cooperative society
h. Registered societies
i. Local authority.
6. ITR 6
It is to be filed by all companies except those claiming an exception under Section 11 of the Income Tax Act. The exception of Section 11 can be claimed by charitable/religious trust.
7. ITR 7
It is to be filed by persons including companies who are required to furnish return under section 139(4A) or 139(4B) or 139(4C) or 139(4D) or section 139(4E) or section 139(4F) of the Income-tax Act, 1961.
After the form is filled as per the respective category, the required documents are to be uploaded and be checked by regularly logging into the portal.