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Income Tax Return

Income Tax Return is the form in which assessee files information about his Income and tax thereon to Income Tax Department. Various forms are ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7. When you file a belated return, you are not allowed to carry forward certain losses.

The Income Tax Act, 1961, and the Income Tax Rules, 1962, obligates citizens to file returns with the Income Tax Department at the end of every financial year. These returns should be filed before the specified due date. Every Income Tax Return Form is applicable to a certain section of the Assessees. Only those Forms which are filed by the eligible Assessees are processed by the Income Tax Department of India. It is therefore imperative to know which particular form is appropriate in each case. Income Tax Return Forms vary depending on the criteria of the source of income of the Assessee and the category of the Assessee.

WHO is Required to File income tax returns ?

Every individual who is less than 60 years of age and has an annual income more than Rs 2.5 lacs has to file income tax return. For senior citizens having age less than 80 years the limit is Rs 3.00 lacs and for senior citizens having age of 80 years or more limit is Rs 5.00 lacs. Hence as per the provision of the income tax act 1961 any individual having income more than above said limits of 2.5 lacs\ 3.00 lacs\ 5.00 lacs \ during financial year is required file his income tax return mandatory.
However, in addition to the above said criteria there are following list of criteria which mandate the filing of income tax return.

  • It is mandatory for a company\ partnership firm to file income tax return irrespective of his income.
  • It is compulsory to file return of income for every assesse who wants to claim income tax refund.
  • It is mandatory to file income tax returning for Indian resident having interest in property\ business outside India.
  • Filing of income tax return is compulsory for charitable trust, Societies, NGO’s, Political parties, medical institutions & hospitals etc.
  • Filing of income tax return in compulsory if any person has entered in to any transaction under the annual information return.

Due Dates of Filing Income Tax Returns (AY 2020-21)

Particulars AY: 2020-21Due Date
Individuals, HUF, BOI, AOP (Income Tax Return by Assesse whose Books of Account are not required )30 November 2020
Due date of filing the Income Tax Return by businesses whose Books of Account are not required to be audited30 November 2020
Due date of filing the Income Tax Return by businesses whose Books of Account require an audit31 October 2020

Penalty on late filing of ITR

As per the new law from this year, Individuals will have to pay late fee after last date to file income tax return for the FY 2019-20

  1. Rs 5000 if tax is filed after due date of 30th November but on before 31 December of that assessment year (in this case 31 December 2020)
  2. Rs 10,000 if tax is filed after 31 December but on or before 31 March of the relevant assessment year (in this case from 1 January to 31 March 2021.
  3. Rs 1000 if total income does not exceeds Rs 5,00,000

ITR- 1

ITR -1  Form is a simplified one-page form for individuals having income up to Rs 50 lakh from the following sources :

  1. Income from Salary/Pension
  2. Income from One House Property (excluding cases where loss is brought forward from previous years)
  3. Income from Other Sources (excluding winning from Lottery and Income from Race Horses)

In the case of clubbed Income Tax Returns, where a spouse or a minor is included, this can be done only if their income is limited to the above specifications.

Who is Eligible to File ITR -1 for AY 2020-21?

  • An individual having income above Rs 50 lakh cannot use this form.
  • An individual who is either a director in a company and has held any unlisted equity shares at any time during the financial year cannot use this form.
  • Residents not ordinarily resident (RNOR) and non-residents cannot file returns using ITR -1
  • Also, individuals  who have earned income through the following means are not eligible to file form ITR 1 :
  • More than one House Property
  • Lottery, Racehorses, Legal Gambling etc.
  • Taxable capital gains (Short term and Long term)
  • Agricultural income exceeding Rs. 5,000
  • Business and Profession
  • Individual who is a Resident and has assets (including financial interest in any entity) outside India or signing authority in any account located outside India.
  • Individual claiming relief of foreign tax paid or double taxation relief under section 90/90A/91.
  •  

FAQ

I earn income over Rs 50 lakhs. Which ITR form should I file this year ?

If you have income above Rs 50 lakhs , you can file ITR 2 ,ITR 3 or ITR 4 (Sugam) depending upon your source of income. If you are salaried individual having income above Rs 50 lakhs, you should file ITR 2. And if you are having income from  business or profession, then you should file ITR 3. In case you are following presumptive income u/s 44AD /44AE, then you should file ITR 4 (sugam).

Do I need to report exempt LTCG in ITR-1?

You  need to report exempt LTCG in ITR 1 provided it is exempt under Section 10(38). If you have taxable LTCG, you may use the other forms as applicable. Also it is mandatory to e file tax returns for those whose LTCG exceeds Rs 2.5 lakhs even if your income is below taxable limit.

Can I file ITR-1 with exempt agricultural income?

Yes .you can if the agricultural income does not exceed Rs 5000.And If the agricultural income is more than Rs 5000, then you should file ITR 2.

How to report bank accounts in ITR-1?

The details of all the savings and current accounts held at any time during the previous year must be provided. However, it is not mandatory to provide details of dormant accounts which are not operational for more than 3 years. The account number should be as per Core Banking Solution (CBS) system of the bank. It is to be provided in the Part E – other information of the ITR form.

Do I need to include dividend income from Mutual Funds?

Yes.Dividend income from mutual funds is exempt under sec 10(35).It is to shown in Part D  under the head Exempt Income(others)

ITR- 2

ITR Form 2 is for Individuals and HUF receiving income other than income from “Profits and Gains from Business or Profession”. Thus persons having income from following sources are eligible to file Form ITR 2:

  • Income from Salary/Pension
  • Income from House Property(Income Can be from more than one house property)
  • Income from Capital Gains/loss on sale of investments/property (Both Short Term and Long Term)
  • Income from Other Sources (including winning from Lottery, bets on Race Horses and other legal means of gambling)
  • Foreign Assets/Foreign Income
  • Agricultural Income more than Rs 5000
  • Resident not ordinarily resident and a Non-resident

A Director of any company and an individual who is invested in unlisted equity shares of a company will be required to file their returns in ITR-2.

Who Cannot File ITR- 2 For AY 2020-21?

  • Any individual or HUF having income from Business or Profession
  • Individuals who are eligible to fill out the ITR-1 Form

FAQ

How do I file ITR-2 when I have sold a house?

Yes you can. Read our guide to understand the process in depth. .

I am supposed to file ITR-2 and not ITR-1 if my maximum exempted income exceeds Rs. 5000. I am confused – what qualifies as exempt income?

Certain income is exempt under section 10 of the Income Tax Act. Exempt income includes – Allowances which may be exempt to a certain extent, for example, HRA, LTA, transport allowance etc. Gratuity, leave encashment, pension may be exempt under section 10 of the Act.

ITR-3

The ITR 3 is applicable for individual and HUF who have income from profits and gains from business or profession. The persons having income from following sources are eligible to file ITR 3 :

  1. Carrying on a business or profession (both tax audit and non-audit cases)
  2. The return may include income from House property, Salary/Pension, capital gains and Income from other sources

NOTE: (1) The due date for filing ITR-3 in case of a taxpayer subject to tax audit has been extended to 30 November from 31 October for the AY 2020-21 (FY 2019-20). The due date for filing tax audit report is extended to 31 October from 30 September. (2) The threshold limit of Rs 1 crore for a tax audit is proposed to be increased to Rs 5 crore with effect from AY 2020-21 (FY 2019-20) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.

ITR- 4

ITR 4 is to be filed by the individuals/HUF/ partnership firm whose total income of AY 2020-21 includes : a. Business income under section 44AD or 44AE b. Income from profession calculated under section 44ADA c. Salary/pension having income up to Rs 50 lakh d. Income from One House Property having income up to Rs 50 lakh (excluding the brought forward loss or loss to be carried forward cases under this head); e. Income from Other Sources having income up to Rs 50 lakh (Excluding winning from lottery and income from horse races). Note : 1. Freelancers engaged in the above profession can also opt for this scheme if their gross receipts don’t exceed Rs 50 lakhs

Who Is Not Required To File ITR 4 For AY 2020-21?

  • An individual having income from salary, house property or other sources above Rs 50 lakh cannot use this form.
  • An individual who is either a director in a company and has invested in unlisted equity shares cannot use this form.

ITR-5

This form can be used a person being a firm, LLPs, AOP, BOI, artificial juridical person referred to in section 2(31)(vii),estate of deceased, estate of insolvent, business trust and investment fund, cooperative society and local authority.

However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4C) or 139(4D) shall not use this form.

Key Changes In The ITR-5 Form In AY 2020-21

The key changes in the ITR-6 Form in AY 2020-21 are summarised below:

  • In the details of investments in unlisted equity shares, the name, type of company, PAN, movement in the quantity and investment throughout the financial year should be provided.
  • A separate schedule 112A for the calculation of the long-term capital gains on the sale of equity shares or units of a business trust which are liable to STT.
  • The details of tax on secondary adjustments to transfer price under section 92CE(2A).
  • The details of tax deduction claims for investments or payments or expenditure made between 1 April 2020 until 30 June 2020.

ITR-6

Companies other than companies claiming exemption under section 11 must furnish their income tax return in ITR-6 Form.

What are the companies claiming exemptions under section 11?

Companies claiming exemption under section 11 are those whose income from property is held for charitable or religious purposes.

Key Changes In The ITR-6 Form

The key changes in the ITR-6 Form in AY 2020-21 are summarised below:

  • A separate schedule 112A for the calculation of the long-term capital gains on the sale of equity shares or units of a business trust which are liable to STT.
  • The details of tax on secondary adjustments to transfer price under section 92CE(2A).
  • The details of tax deduction claims for investments or payments or expenditure made between 1 April 2020 until 30 June 2020.

ITR-7

ITR-7 is filed when persons including companies fall under section 139(4A) or section 139 (4B) or section 139 (4C) or section 139 4(D) of The Income Tax Act 1961

Who is eligible to file the ITR-7 Form?

  • Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
  • Return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount which is not chargeable to income-tax.
  • Return under section 139(4C) is required to be filed by every
  • scientific research association ;
  • news agency ;
  • association or institution referred to in section 10(23A);
  • institution referred to in section 10(23B);
  • fund or institution or university or other educational institution or any hospital or other medical institution.
  • Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish return of income or loss under any other provision of this section.
  • Return under section 139(4E) must be filed by every business trust which is not required to furnish return of income or loss under any other provisions of this section.
  • Return under section 139(4F) must be filed by any investment fund referred to in section 115UB. It is not required to furnish return of income or loss under any other provisions of this section.

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