Income Tax Return for Individuals

Introduction

Income Tax Return is a form in which an Assessee files his information about Income and tax payable to the Income Tax Department. According to the income tax laws, Income Tax Return must be filed every year by a person or business that makes any income in the form of a salary, business gains, earning from house property or gains from dividends, capital or other sources during a financial year.

Due Date to file ITR
The Income Tax Act 1961 obligates citizens to file returns for every financial year within the specified due date. The due date to file Income Tax Return for the individuals who do not need to get their ITR audited under any law is 30th July and for those who need to get their ITR audited under law, the due date is 30th November which may be extended by the department. However, this is changeable on the issuance of directive to this effect by the Income Tax Department or the Ministry of Finance, India.

Updated Due date for F.Y. 2019-20 i.e. A.Y. 2020-21 is 30th November for those whose Audit is not compulsory and 31st October for those whose audit is require.
Belated return for F.Y. 2018-19 is 30th September.

Conditions that mandate the filing of Income Tax Returns for Individual

• When the gross annual income exceeds the specified limit.
• When the gross annual income of an individual exceeds the specified limit, it becomes mandatory for him to file an Income Tax Return.

The prescribed limit for the same is given below as per the different age of the individuals in a tabulated manner:

If your gross annual income is more than-

• When there is more than one source of income such as capital gains, house property etc.
• When the taxpayer wants to behest for an income tax refund from the IT department
• When there is earning from or investment made in foreign assets during the FY.
• When the taxpayer want to apply for a visa or a loan
• When the taxpayer is a firm or company or a firm (regardless of gain or loss)

Types of ITRs

There are seven types of returns viz. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7 to be filled by the individual based on a few circumstances like the source of income, total amount of income in F.Y. etc. Let us have deeper dive into these circumstances and type of ITR that is suitable for them.

ITR-1 OR SAHAJ
Suitable for: Resident individual whose source of total income for the A.Y. 2018-19 includes:

• Salary or Pension
• One House Property (other than the case when loss is carried forward from preceding years)
• Other Sources (other than winning from Lottery and Horse Races)
• Agriculture (up to INR 5000)

Conditions when use ITR 1 Form is restricted

• Total income surpassing the limit of INR 50 lakh
• Agricultural income surpassing the limit of INR 5000
• Availability of taxable capital gains
• In the presence of income from business/profession
• In the presence of income from more than one house property
• When the taxpayer is company’s director
• When the investments are made in unlisted equity shares at any point of time in the financial year
• When the resident taxpayer owns assets that draws financial interest, outside India (that includes signing authority in any account outside the country).
• When the resident taxpayer is not ordinarily resident (RNOR) and non-resident
• When the taxpayer owns foreign assets/foreign income
• When the taxpayer is assessable w.r.t income of another person on which tax is deducted in other person’s hand.

ITR-2
Suitable for: Individual or a Hindu Undivided Family (HUF) who are not involved in carrying out any business or profession but the source of total income for the AY 2018-19 includes:

• Salary or Pension
• House property
• Other sources including gain from lottery and racing horses
• Capital gains from property
• Foreign income/ foreign assets
• Loss when the investment is sold out
• Resident who is not ordinarily resident and a non-resident as well
• Agricultural income surpassing the limit of INR 5,000
• Director at Listed Company & Unlisted Company
• When the investment is made in unlisted equity shares at any point of time in the F.Y.

Note: Total income from the first four sources must be above 50 Lakhs) When the income of another individual like spouse or child is clubbed together with assesses income, ITR 2 is allowed to be used when income comes under any of the above-mentioned categories.

Ineligibility to file ITR 2
An individual whose total income for the AY 2018-19 encompasses Income from Business or Profession are not eligible to file ITR 2.

ITR-3
Suitable for: Individual or Hindu Undivided Family whose source of income is proprietary business or profession i.e. the individuals or HUFs whose source of income includes:

• Income from Business or Profession
• When the taxpayer is an Individual Director in any company
• When investment is made in unlisted equity shares at any point of time during the F.Y.
• Income may include Income from House property, Salary/Pension, other sources, bonus, interest, commission or remuneration from the partnership firm
• Taxpayers registered under presumptive taxation scheme and having a turnover above 2 crore.
• HUFs and Individuals who are partners in a business but do not perform business operations under proprietorship.

ITR-4 or Sugam
Suitable for: Individuals & HUFs who are residents with profession or business as a source of income. Partnership firms (except LLPs) and individuals who are registered under the presumptive income scheme as per Section 44AD, 44ADA and 44AE of the Income Tax Act are also eligible to file ITR-4.

Note: When the turnover of the business surpasses the limit of INR 2 crore, the taxpayer becomes ineligible to file ITR-4, instead he needs to file ITR-3. Ineligibility to file ITR 4

Ineligibility to file ITR 4
Following conditions knocks the eligibility to file ITR-4

• When the total income surpasses the limit of INR 50 lakh
• When income is from more than a single house property
• When the loss has been/is to be carried forward under any head of the income
• When the taxpayer owns any foreign asset
• When the taxpayer has signing authority in any account in foreign country
• When the taxpayer has source of income in foreign country
• When the taxpayer is company’s director
• When the taxpayer have/had made investments in unlisted equity shares at any point of time in the financial year
• When the taxpayer is a resident not ordinarily resident (RNOR) and non-resident
• When the taxpayer has foreign assets or income
• When the taxpayer is assessable w.r.t income of another individual in concern of which tax is taken away in the part of the other individual.

ITR-5
Suitable for: Firms, AOPs (Association of persons), LLPs, BOIs (Body of Individuals), Estate of deceased, Artificial Juridical Person (AJP), Estate of insolvent, Investment Fund and Business Trust.

ITR-6
Suitable for: Companies that are not claimant u/s 11 of the Income Tax Act, 1961 or companies other than those which need to file ITR in Form ITR-7.

ITR-7
Suitable for: Tax assessee who needs to file ITR under the subsections of Section 139 of the Income Tax Act, 1961 viz. section- 139(4A), 139(4B), 139 (4C) and 139 (4D).

An Overview: Types of ITRs and Relevance

So, ITR 1, ITR 2, ITR 3 and ITR 4 are the only ITR forms for individuals. Now we will discuss the process to download the ITR Forms.

Download & File the ITR forms

• ITR forms are downloadable from the official website of the Income Tax Department - https://www.incometaxindia.gov.in/pages/downloads/income-tax-return.aspx).
• Individuals may opt for an ITR among ITR-1, ITR-2, ITR-3, ITR-4, and ITR-7, based on the type of income he/she makes.
• The Income Tax Returns are available in the PDF format and can be filed on the official website of Income Tax, following the instructions available on the same website - https://www.incometaxindiaefiling.gov.in/home

Everyone is not well-acquainted with the ITR filing process, understanding that the IT Department has presented a few simple steps to file ITR on its official website. However, yet it remains a complicated process so to make it a smooth sailing process, some CA consultancies or companies that CA/CS services file the ITR on behalf of the Assessee by charging a nominal fee.

However, it is a duty of the assessee to choose right for right services. For more information, get in touch with us. Happy to help

Income Tax Returns for Companies

Introduction

Filing an income tax return is an important process for the company through which it reports its income and tax paid thereon to the Income Tax department.

All companies registered in India, be it a private limited company, company, limited company, one person and section 8 company have to mandatorily file an income tax return and MCA annual return every year.

The income tax return must be filed by the companies regardless of profit or loss. So, even dormant companies, who have not executed any transaction, need to file an income tax return every year.

ITR for Companies

Income Tax Return has to be filed in Form ITR -6 by private limited companies, one-person companies and limited companies before the due date to file the ITR for a company i.e. on or before the 30th of September.

Companies other than companies who are eligible to claim exemption u/s 11 companies have to file their income tax return in ITR-6 Form. Companies who earn income from properties which are held by them for charitable or religious purposes are eligible to claim exemption u/s 11. So, the companies which do not claim an exemption for income earned from property held by them for charitable and religious purposes, are eligible to file ITR.

Due Date to File ITR for Companies

30th of September is the due date to file an income tax return by the companies registered in India. Unlike MCA annual returns, even if companies are registered from January to March, they must file income tax returns on or before 30th September of the same calendar year. Businesses which do not need to get their accounts audited have to file ITR on or before July 31.

ITR to Be Filed

Companies registered in India and engaged in a business for profit must file Form ITR 6. Hence, limited companies, private limited companies and one person companies must file Form ITR6. ITR 7 must be filed by Section 8 Company i.e. Companies carrying operations for non-profit purposes.

Annexures Required
Any annexures including the TDS certificate, bank statement, investment proof need not be submitted while filing ITR-6. However, assesses must cross-check the taxes deducted/paid/collected/paid by them (or on behalf of them) with the Tax Credit Statement Form 26AS.

ITR Form 6: Structure

There are two parts in ITR Form 6- Part A which has 8 sub-sections and Part B which has two sub-sections. Besides, there are a number of schedules in this form.

Part A: General Information: Enter personal details like Name, Address, Email address, Aadhaar number, PAN details.

• B/S: Enter the details about the balance sheet of the firm or LLP.
• P&L: Enter the details of the company's profit and loss.
• Manufacturing Account: Enter the details of manufacturing account/open inventory for the year.
• Trading Account: Enter the details about revenue from operations.
• OI: Enter the information required in this section.
• QD: Enter the quantitative details about trading & manufacturing accounts.
• OL: Enter the details about the company’s receipt/payment under liquidation.

Part B

• TI: Calculation of total income by summing up income from house property, gains from business, capital gains & other income and deducting the allowed deductions to calculate the taxable income.
• TTI: Calculation of tax liability based on the income and applicable rate. An array of schedules come with this form. Some of the crucial ones are as follows:
• Schedule HP: Enter the details about income from house property.
• Schedule BP: Enter the details about income from the business.
• Schedule DPM: Enter the depreciation for any machinery or/& plant possessed.
• Schedule DOA: Enter the depreciation for any other assets.
• Schedule DCG: Enter the details regarding capital gains from the sale, in case of sale of any depreciable asset at any point of time during the year.
• Schedule CG: Enter the details regarding capital gains.

ITR-6: Return Filing

Income Tax Return-6 must be e-filed or furnished in an electronic mode, alongside The verification with Class 2 Digital Signatures, to the Income Tax Department. Offline filing of ITR Form 6 is not permissible by the Income Tax Department.

Preparatory Actions to File ITR- 6

• Keep your profit and loss statement, balance sheets and book of accounts ready.
• Go through the detailed instructions to file Form 6 given on the official website of the Income Tax Department.
• Be ready to fill both the parts- Part A and B along with the schedules.
• Note that Form 6 is an annexure-less form so no document needs to be attached with it.
• Download Form ITR-6

Steps to File ITR-6
Form 6 is downloadable from the official e-filing portal of the Income Tax department. However, it is not necessary to download the form because the income tax mandates the complete e-filing of the form in real-time along with verification using the digital signature. Steps to e-file the Form ITR-6

• Step 1: Go to the e-filing portal of the Income Tax department.
• Step 2: Choose the ITR Form 6 after checking your eligibility to file this return form.
• Step 3: Enter the details required in the sequence mentioned above.
• Step 4: Sign the verification form using Digital Signature and Submit.

Points to ponder:

• After entering the details in the Form, the tax is calculated after considering all the taxes paid in advance and once the return filing process is completed, the tax is settled which means in case of additional payment of tax, the refund is initiated by the Income Tax department.
• It is only in case of Form 6 that online verification is permitted. So, the ITR-6 has to be filed online as well as verified online using a digital signature.

For a hassle-free and easy return filing, you can get in touch with us. Our competent team provides all-inclusive techno-based compliance management services that include financial statement preparation, ITR filing and MCA annual return filing.