Income Tax Return
(ITR) Filing
Income Tax Return
(ITR) Filing
Income Tax Returns: (ITR)
To start with, first of all, let us understand what an income tax return is, then we will cover who should file it, rates of income tax and benefits of filing the same.
What is Income Tax Return?
It is a return of income to be filed with the income tax department to disclose the total income received from all sources during a financial year and pay tax on the income earned as per the provisions of the Income Tax Act. The period from April to March is considered as a Financial Year.
Who should file?
Every individual whose total income during the financial year exceeds the basic exemption limit i.e. Rs. 2.50 lakhs is required to file his/her income tax return.
If conditions mentioned under the seventh proviso to section 139(1) is applicable to you, then also it is mandatory to file your ITR.
Every Partnership Firm/LLP/Company is required to file their Income Tax Return Mandatorily.
What is the Rate of Income Tax?
The rate of Income Tax is different for Individuals, Partnership Firms & Company.
For Individuals, Income Tax is levied as per slab rate. In the Budget of 2020, Govt. introduced a new tax regime under section 115BAC which gives the taxpayers an option to select new scheme with lower tax rates. We shall discuss tax rates under both the regimes in brief:
Income Tax Slab Rate for FY 2023-24 (AY 2024-25):
Slab Rates under Old & New Regimes:
|
Sr. |
Old Regime |
New Regime |
||
|
Income Slab |
Rate of Tax |
Income Slab |
Rate of Tax |
|
|
1. |
Upto Rs. 2.5 lakhs |
NIL |
Upto Rs. 3 lakhs |
NIL |
|
2. |
Rs. 2.5 lakhs to Rs. 5 lakhs |
5% |
Rs. 3 lakhs to Rs. 6 lakhs |
5% |
|
3. |
Rs. 5 lakhs to Rs. 10 lakhs |
20% |
Rs. 6 lakhs to Rs. 9 lakhs |
10% |
|
4. |
Above Rs. 10 lakhs |
30% |
Rs. 9 lakhs to Rs. 12 lakhs |
15% |
|
5. |
Rs. 12 lakhs to Rs. 15 lakhs |
20% |
||
|
6. |
Above Rs. 15 lakhs |
30% |
||
Note:
- For Senior Citizens i.e. above 60 years of age, income is exempt upto Rs. 3 lakhs (Under Old Scheme);
- For Super Senior Citizens i.e. above 80 years of age, income is exempt upto Rs. 5 lakhs (Not applicable in new regime);
- Under Old Regime, Rebate of Rs. 12,500/- is available if your total taxable income does not exceed Rs. 5 lakhs. This means your income is upto Rs. 5 lakhs you pay 0% tax.
- Under New Regime, Rebate of Rs. 25,000/- is available if your total taxable income does not exceed Rs. 7 lakhs. This means your income is upto Rs. 5 lakhs you pay 0% tax.
For Partnership Firm/LLP: Tax rate is @ 30% flat.
For Companies: 25%/22%/15% as per applicable criteria.
Note: Surcharge is levied if income above Rs. 50 lakhs as per applicable rates.
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Which Regime to Choose?
As you know that the government has given the option of new tax rate from the financial year 2020-21 which is made applicable from the assessment year 2021-22.
Is this new tax regime beneficial for you if you are a salaried employee?
Older scheme is more beneficial for you if you are getting certain deductions in your salary such as – HRA, leave travel, interest on housing loan, and deductions under section 80C, 80D such as PF, insurance premium, medi-claim etc. Because all these deductions are not available in the new scheme.
But if you do not have any such deductions and you don’t want to invest money in 80C investment instruments, then the new scheme will be beneficial for you.
Note: To know which scheme is beneficial for you, you need to check your income & deductions.
Our Experts can help you to choose the right
scheme to optimise your tax!
Can We Change the Tax Regime Once Selected?
Lets divide the answer to this question in two parts.
For Person having Income Other than Business Income (Ex: Salaried Class)
If you have income from salary / house rent income / capital gains / other sources such as interest / dividends etc. except income from business / profession, then you can select the Tax Regime every time upon filing of ITR each year.
For Salaried class, you have to inform your employer your preferred Tax Regime at the start of the Financial Year for TDS deduction. Else your TDS will be deducted as per New Tax Regime.
For Person having Income from Business / Profession
If you have income from business / profession and if you shift from Old Tax Regime to New Regime then you get only 1 chance to return back to Old Regime, after that you cannot change Tax Regime.
For Example (For Person having Business Income):
In FY 2021-22 you were in old regime, in FY 2022-23 you shifted to new regime, now if you choose to go back to old regime in FY 2023-24 then from next year onwards you cannot shift to new tax regime as you have already utilized 1 chance of changing the regime.
Benefits of Filing Income Tax Return:
One should file their income tax return even if there is no tax payable by him, as there are many benefits of filing income tax return. Let us discuss them in brief:- To Avail Loans Easily: Banks asks for 1 to 3 years of ITR for passing loans. As ITR is considered as an income proof of the applicant. So it is better to file your ITR even if there is no tax payable, you may not need any kind of loan right now, but in future you may need it for buying a house, a vehicle, etc. If ITR is filed properly then your loans will be sanctions seamlessly!
- For Claiming Refund of Tax Deducted (if any): If tax has been deducted from your income or business transactions, then you can claim refund of tax by filing your income tax return.
- For Visa Approval: Most embassies and consulates asks for Income Tax Return copies as it is considered as your income proof and also to assure that you are capable enough to bear the costs of travelling.
- To Carry Forward any Losses: If you have incurred any losses such as capital gains loss, business loss, etc. then you can carry forward the same to set off against the income of next year. To claim & carry forward such losses you need to file income tax return within the due date.
- To Avoid Penalties for Non-Compliance: If you are liable to file your income tax return and you have not filed the same, then a penalty can be levied upto Rs. 5,000/- for filing your ITR late.
- Treated as your Income Proof: An income tax return is considered as a valid income proof as you self-declare your income to the income tax department and pay the requisite taxes.
Documents required to file your Income Tax Return (ITR):
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- Advice you on which scheme to select based on your income details;
- Claim Income Tax Refund (if any);
- Provide Consultation for various investment arenas to save taxes;
- File your Income Tax Return with e-verification.
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