Individual Income Tax Returns
This is the time of the year when every one is getting ready for Income Tax Return (ITR) filings and getting refund of the TDS deducted from them by their employers/ customers/ clients.
To start with the Income Tax Return Filings, an individual has to prepare details of incomes earned by him during the financial year. This can be identified from all the amount received by him either in the form of cash or in his/ her bank account.
Once the individual has the income details with him, it is to be categorised in Salary, Rental Income (Income from House Property), Profit & Gains from Business or Profession, Capital Gains or income from Other Sources.
Salary: amount received from your employer in the form of salary, bonus or perquisites etc. Reimbursement are not part of salary income.
House Property: rental amount received from the tenant. Refundable deposit does not form part of house property income.
Profit & Gains from Business or Profession: amount received from the client for providing services or profit earned from selling of goods. This may be for consultancy services or for retainership agreements or for Margin earned for supplying the goods to the customers etc.
Capital Gains: Profit/ loss earned from sale of capital assets (eg: Equity Shares, Mutual Funds, Land/ House etc)
Other Sources: Amount earned which can’t be categorised in above 4 categories form part of income from other sources. For eg: Interest Income from Savings account/ Fixed Deposits, LIC receipts, cash gifts received in excess of Rs 50,000/- etc.
Based on the categories of income, an individual is required to calculate his / her taxable income and if the Taxable income is more than minimum slab amount then he/ she is required to file the ITR.
Benefits of filing ITR:
1. You can claim refund of TDS deducted;
2. If you wish to apply for a loan in Future, ITR is a mandatory document;
3. If you have Business or Capital Gain Loss you can carry it forward to next year to setoff from that year’s gains.
Various ITR Forms are as follows:
ITR 1: If you have income from Salary + 1 House Property + Other Sources and total income is less than Rs 50 lakhs.
ITR 2: If your income from Salary + Capital Gains + more than 1 House Property + Foreign Income + Crypto Income + Other Sources and total income is more than Rs 50 Lakhs
ITR 3: If your income from Salary + Business / Profession + Capital Gains + more than 1 House Property + Foreign Income + Crypto Income + Other Sources and total income is more than Rs 50 Lakhs
ITR 4: If your income is less than Rs 50 Lakhs and you want benefit of Presumptive Taxation provision for Business Income + Salary + 1 House Property + Other Sources.
In our next blogs we will read about computation of income under these various Income Heads and various deductions available with us for Tax Planning and reducing our tax liabilities.
Please share your feedback and suggestions to us at info@efintax.in.
