Last week we covered the basic What, When and Why of filing Income Tax Returns. To recap, Income Tax is an annual tax paid to the Government of India on income earned by us during the previous Financial Year (2015-16 in this case). An Income Tax Return (ITR) is the set of documents we must file while paying this tax (or for claiming a refund, as the case may be), and the deadline for filing an ITR is July 31. Not filing your ITR by this deadline attracts a penalty of 1% per month.
Today, we’ll be going over some basic information about the kinds of ITR forms, and how you can file them as an individual.
Types of Income Tax Return Forms
There are 9 different Income Tax forms, one of which will be applicable to you depending on the source (or sources) of your income.
ITR-1 SAHAJ - Applicable to individuals having Income from Salaries, One house property, Other sources (Interest etc.)
ITR-2 - Applicable to individuals and Hindu Undivided Families (HUFs, these are joint families) not having Income from Business or Profession
ITR-2A - Applicable to individuals and HUFs not having Income from Business or Profession and Capital Gains and who do not hold foreign assets
ITR-3 - Applicable to individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship
ITR-4 - Applicable to individuals and HUFs having income from a proprietary business or profession
ITR-4S SUGAM - Applicable to presumptive business income tax return (can be opted when business turnover is under Rs 1 crore)
ITR-5 - Applicable to persons other than - (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7
ITR-6 - Applicable to companies other than companies claiming exemption under section 11 (covering income from property held for charitable or religious purposes)
ITR-7 - Applicable to persons, including companies, required to furnish return under sections 139(4A) (income from property held for charitable or religious purposes, where Section 11 is not applicable) or 139(4B) (political parties) or 139(4C) (certain specific institutions) or 139(4D) (universities/colleges) or 139(4E) (business trust) or 139(4F) (investment funds)
How can I file my returns as an individual?
a) External Help
There is always the tried and trusted way of paying a Chartered Accountant to do it for you. Having an experienced professional file your returns can reduce the scope for error. She may also be able to suggest ways to reduce your tax liability.
Hiring a professional’s services can be costly, though. Depending on the complexity of your income/deductions, and the CA’s experience, this can range from Rs. 500 to Rs. 3,000.
If you want to take things in your own hands, there are plenty of resources available that will guide you through the process.
The best and most comprehensive resource is the Income Tax Department’s own website. Each form comes with step-by-step instructions on how to fill it.
They even present detailed information on Tax Laws and Rules, so that you know what to keep in mind while filing your own returns.
Other sources of information include online portals such as ClearTax, H&R Block and BankBazaar. ClearTax and H&R Block also allow you to file your ITR through their portal for free if you file your returns by yourself. Personalized expert help is available at rates similar to what you would pay if hiring a CA directly.
In the next part of this series, we’ll cover in depth how to file an ITR-1 SAHAJ, which is applicable to individuals whose income is primarily from salary, one house, and bank interest.