Income Tax

Anyone earning an income above a certain amount is subject to income tax. The income could be from salary, rent, and interest income from savings, income from mutual funds, sale of property or business or professional income. Income tax rates are decided at the start of the financial year in the Union Budget. The tax paid on these incomes is called the income tax.


Income Tax Return is a Form to be filed as a statement of income earned. It is arranged in such a way that calculating tax liability, scheduling tax payments or requesting refunds for the overpayment of taxes becomes convenient for the taxpayers. They must, first, determine the type of Income Tax Return (ITR) Form they need to fill before actually filing their Returns. Which Form is to be filled, depends on the income that the taxpayer earns. Its purpose is to report income and taxes paid thereon to the government.

There are 8 types of Income Tax Return Forms, currently.

ITR Forms for individuals:

  1. ITR – 1 (Sahaj) – For individuals earning income from salaries, one house property, interest income, agriculture, other sources, etc.
  2. ITR – 2 – For Individuals and HUFs (Hindu Undivided Families) having income other than from profits and gains of business or profession. It may be from capital gain, lottery or foreign assets, etc.
  3. ITR – 3 – For individuals and HUF with income from profits of a business or profession.
  4. ITR – 4 and 4S(Sugam)In case the presumptive income method is applicable to you, you must file ITR4S. However, businesses or profession which is covered under presumptive income under section 44AD and section 44AE where the Turnover/Gross Receipts exceeds Rs 1 crore must file ITR4.

ITR Forms for non-individuals:

  1. ITR – 5 – Entities other than,- (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7
  2. ITR – 6 – All companies except those that claim tax exemption as per Section 11
  3. ITR – 7 – Persons incl. companies required to furnish returns under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) only.

The appropriate ITR form for filing of returns must be selected. Failure can result in your return not getting processed by the Income Tax department. Which form is to be selected depends on the sources from which income is earned in the financial year and the category.
All incomes that are taxable and/or tax-exempt are to be reported using the correct ITR form applicable. If the ITR is filed in the wrong type of Form, then the return will be termed as “defective”. Then, you will have to file a revised return using the correct form, within a certain time frame.
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A common mistake taxpayers make is failing to disclose all the sources of their income. The income must be disclosed whether it is taxable or exempt. All incomes, not only the primary one earned from employment, profession or business, are to be reported but also the savings account interest, fixed deposit interest, rental income from house property, income from short-term capital gains and any other source. Not reporting such incomes might attract a notice from the Income Tax department.

As per Section 234F of the Income Tax Act, if you file after 31st July but before December, a penalty of Rs. 5000 will be levied. For returns filed after December, the penalty will be Rs. 10,000.However, to provide relief to small taxpayers; the IT department has stated a maximum penalty of only Rs. 1,000 provided your total income is less than Rs 5 lacks.

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  • Get assistance in preparing the Income tax returns
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