Income Tax Return Filing

The Importance of Income Tax Return Filing in India

Online Legal India LogoBy Online Legal India Published On 20 Jan 2023 Category Income Tax

The framework in which the assessee provides data about their income and expenses to the Income Tax Department is known as Income Tax Return Filing. You are not authorised to carry over particular losses when documenting a late return.

Income Tax Return Filing in India

The Income Tax Act of 1961 & the Income Tax Rules of 1962 requires citizens to file income tax returns with the IT Department at the end of each fiscal year. These gains must be written before the specified deadline. Each Income Tax Return Form is relevant to a certain group of taxpayers. The Income Tax Department of India only handles Forms that competent Assessees record. Following that, it is critical to understand which specific structure is appropriate for each case. Income Tax Return Forms differ depending on the Assessee's revenue and categorization.

Importance of Income Tax Return Filing in India

The importance of Income Tax Return Filing is stated below-

Your capital losses and gains will be adjusted

If the value or offer market speculation has been your most important contributing strategy, then a handy recording of ITR will be highly beneficial to you. If your total yearly pay is less than the basic exclusion level, then filing an ITR is usually not required; nonetheless, your capital losses can be offset against your capital gains. Furthermore, by doing so, you may ensure that your losses (if any) are carried forward for the next eight consecutive years, depending on whether you have registered your return for that specific Fiscal Year.

It will be straightforward to obtain your tax refunds if you file income tax returns

After a certain type of tax is deducted (such as the 80C and 80D deductions), a tax refund can be sought only if an income tax return for that fiscal year is submitted. As a result, if you are an NRI and pay TDS on your rental payment, or if TDS is taken from your bank accounts' fixed deposits, you must file your returns in order to be eligible for a refund. Once you have finished that year's ITR filing, you must claim your refund online using the site.

Loans are simple to obtain if your tax returns have been correctly completed

Your income tax return filing, in addition to being another vital business record, acts as evidence of income because it reveals all of your earnings in a single year. As a result, NBFCs and other financial institutions aggressively seek this paperwork when you request a certain loan amount. Therefore, filing a return despite a reduced taxable income will be beneficial.

Claiming your tax deductions is simple

If you earn more than Rs.3 lakh (the basic exemption limit) and try to claim multiple exemptions to decrease your income to that level, you must file your ITR for that fiscal year. Moreover, even if you have no tax due, you must still file a tax return if you wish to claim any future deductions. Therefore, it is also critical to understand when to file an income tax return.

It will be considerably easier to acquire assets/foreign assets

Anyone who owns a foreign asset is required by law to file their income tax filings accurately online. This rule also applies to any transportable property you hold, such as a bank account. Failure to comply with this rule may result in significant fines and is also regarded as a serious economic offence.

Different Forms of Income Tax Return Filing Online

The different forms of Income Tax Return Filing online are-


This Income Tax Return Form is for a resident whose total compensation for the fiscal year 2021-22 includes the following:

  • Salary or pension pay
  • Pay from single-house property (unless in cases when losses from previous years are indicated); or
  • Other Sources of Income (barring Winning from the Lottery and Income from Race Horses)
  • Farming pays up to Rs.5000 per month.

The following person cannot use the form of ITR-1

  • Complete pay surpassing Rs.50 lakh
  • Rural pay surpassing Rs 5000
  • if you have available capital additions
  • If you have pay from the profession or business 
  • Having pay from more than one house property
  • If you are a Director in an organisation
  • If you held an interest in unlisted value shares at any time during the fiscal year,
  • Possession of resources (keeping in mind the monetary premium for any factor) outside of India) If you are a resident, ensure to retain a marking expert for any records located outside of India.
  • If you are a resident not ordinarily occupant (RNOR) and a non-occupant,
  • Having unfamiliar resources or paying
  • If you are liable for repaying someone else, which expenditure is subtracted from the possession of the other party.

Income Tax Return or ITR-2

It is essential to understand how to file ITR 2 online since it is for the use of a person or a Hindu Undivided Family whose total income for the AY 2021-22 includes:

  • Pay comes from either a pension or a wage.
  • Pay from your house or property
  • Pay from many sources (counting Winnings from the Lottery and Income from Race Horses).
  • If you are a director in a firm,
  • If you held an interest in unlisted value shares at any time during the fiscal year
  • Being a resident who is not generally occupied (RNOR) or a non-occupant
  • Capital Gains Compensation
  • Unusual Assets/Foreign Pay
  • More than Rs 5,000 is paid in rural areas.

The following people are not permitted to possess this specific return form:

This Return Form will only be used by some whose total pay for the fiscal year 2021-22 includes income from a business or profession. In addition, you may need to use ITR-3 or ITR-4 to declare certain types of income.

ITR-3 form

A person or a Hindu Undivided Family who has paid from exclusive business or is engaged in property business should use the current ITR3 Form. People who earn money from the following sources are eligible to file ITR 3:

  • A component of a business or a certain speciality.
  • If you work as an Individual Director in an organisation.
  • If you held an interest in unlisted value shares at any point during the fiscal year.
  • The return might include earnings from real estate.
  • Salary/pension, as well as income from other sources.
  • Pay someone off as a business accomplice.

ITR-4 or Sugam

The current ITR 4 applies to individuals & HUFs, as well as Partnership businesses (other than LLPs), who are occupiers and whose total compensation includes:

  • Business pay, as suggested by a prospective pay conspire in area 44AD or 44AE
  • Proficient pay as indicated by potential pay conspire under section 44ADA
  • Up to Rs.50 lakh in compensation or annuity pay
  • Pay from a single house property not exceeding Rs.50 lakh (barring how much presented misfortune or misfortune to be conveyed forward)
  • Pay from many sources having to pay a maximum of Rs.50 lakh (barring pay from lottery and race-horses)

The following persons are not permitted to possess under this return form:

  • If your total salary exceeds Rs 50 lakh,
  • Having income from more than one residential property
  • If you have any presented tragedy or misfortune to be transported forward under any pay head.
  • Claiming any unknown resource
  • If you need to identify an expert in any record that is located outside of India,
  • Having income from any other source 
  • If you are a Director in a firm,
  • If you held an interest in unlisted value shares at any time during the fiscal year,
  • Being a non-occupant and an occupant not customarily inhabitant (RNOR)
  • Having unfamiliar resources or paying
  • If you are assessable in relation to someone else's salary, which duty is deducted from the possession of the other individual.

ITR stands for Income Tax Returns and may be found. It is a framework in which citizens submit data about their acquired pay and charges to the personal duty office. The Income Tax Act of 1961 governs all ITR structures and procedures to be used. This page provides in-depth information and comprehension of the ITR definition and types of ITR structures.

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Anjali Malhotra


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