ITR (Income Tax Return)

What is ITR - Meaning and Definition?

Income Tax Return (ITR) is a document that taxpayers in India are supposed to submit to the Income Tax Department. The document details their income and the taxes they owe to the government for a specific financial year – running from April 1 to March 31.

The ITR serves multiple purposes. While it is primary purpose is to calculate and show the tax liabilities of an individual, it can also help one get refunds for any overpaid taxes. It covers multiple income sources that contribute to one’s wealth such as salaries, business profits, capital gains, and other earnings like dividends and interest.

Types of ITR forms

• For the ease of tax-paying and to enable organizations to manage the taxes with compliance on their payroll processing system software, the Income Tax Department has established seven types of ITR forms. Each of these is designed to cater to different taxpayers and income types. These include:

• ITR-1 (Sahaj): This form is meant for individuals with income up to ₹50 lakh from salary, one house property, or other sources.

• ITR-2: This form caters to individuals and Hindu Undivided Families (HUFs) without any stated business income.

• ITR-3: The ITR-3 form serves the purpose of individuals and HUFs with stated business or professional income.

• ITR-4 (Sugam): For residents with income up to ₹50 lakh from business or profession under specified sections such as:

• a) Rental income from the properties owned by the individual

• b) Earnings from salary or retirement benefits.

• c) Profits derived from business or professional services

Key Points to Note

• ITR Filing is mandatory for anyone whose total income goes beyond the exemption limit, which varies based on age. For example, individuals below the age of 60 must file if their taxable income exceeds ₹2.5 lakh. Senior citizens enjoy higher thresholds in this regard.

• The deadlines for submitting Income Tax Returns (ITRs) in India differ based on the category of taxpayer. Typically, individuals who do not require audit filings must submit their ITRs by July 31. Those subject to tax audits have until September 30, while entities engaged in international transactions have an extended deadline of November 30.