The income tax return due date is fast approaching (now extended to August 31). You have to report your incomes for the FY 2018-19 (AY 2019-20) and file your income tax return by the due date of August 31, 2019.
Failure to submit your return would attract a penalty of Rs 5,000 if the filing is completed by December 31, 2019, and Rs 10,000 for returns filed after December 31, 2019.
For a basic understanding, you are required to file an income tax return when your aggregate annual income is above Rs 2.5 lakh. The limit is Rs 3 lakh for individuals above 60 years and up to 80 years of age, and Rs 5 lakh for those above 80 years of age.
How do you report your income? Which income tax form should you use to file your tax returns for AY 2019-20 (FY 2018-19)?
1. ITR-1: An individual resident in India and having income from salary, one house property and other sources such as bank interest can use ITR-1 for filing their tax returns. Further, all these incomes can be reported for annual total income up to Rs 50 lakh. For this purpose, your 'total income' will be your aggregate annual income from all of the above sources reduced by your tax deductions such as:
a. Exempt salary allowances
b. Housing loan repayments (including interest payments)
c. Investments in provident fund, LIC premium paid, medical insurance and so on.
You can report your exempt incomes too in ITR-1 such as dividends, PPF interest, LIC maturity proceeds etc. These incomes do not form part of your aggregate annual income.
2. ITR-2: All individuals and Hindu Undivided Family (HUF) can file their returns in ITR-2. Where ITR-1 is a simple form applicable in limited cases mentioned above, individuals and HUFs in other cases (except income from business or profession) can file ITR-2. So, ITR-2 has to be filed in the below cases:
a. Individuals (both resident and non-resident) having total income above Rs 50 lakh;
b. Non-resident individuals have to compulsorily file their incomes in ITR-2; NRIs should disclose their days of stay in India, the country of their residence and their foreign taxpayer identification number.
c. Individuals who are Directors of a company (private or public) have to file ITR-2. Those carrying on business or profession should file ITR-3;
d. Individuals who have investments in unlisted equity shares in their name have to file ITR-2. Those carrying on business or profession should file ITR-3;
e. HUFs have to file ITR-2 (except those carrying on business or profession);
f. Individuals and HUFs who have income from Capital gains such as gains or losses from shares or securities or sale of immovable property;
g. Individuals having losses to report under house property or those who want to carry forward of such losses
h. Resident individuals who own more than one house property
i. Those holding foreign income and assets, and claiming credit for foreign taxes paid
3. ITR-3: ITR-3 is applicable to individuals and HUFs having income from business or profession. Every individual or HUF taxpayer even in case of total income below Rs 50 lakh, who has income from business or profession (including share of profit from a partnership or LLP) should file their tax return in ITR-3.
While filing ITR-3, the individual or HUF should report their trading, profit and loss account, turnover under GST law and balance sheet of their business.
The individual or HUF can report all incomes through ITR-3 such as salary, house property, business or profession, capital gains and other sources.
4. ITR-4: For resident individuals, HUFs and Partnership firms (other than LLP) having income from business or profession which is taxed on a presumptive basis can file their tax return in ITR-4. Further, ITR-4 can be used only for total income up to Rs 50 lakh.
Business taxpayers can file their business income under the presumptive basis by offering 8% (6% in the case of receipts from banking channels) of their turnover as profits from their business (available for turnover up to Rs 2 crore).
Professional taxpayers can file their professional income by offering 50% of gross receipts from their profession (available for gross receipts up to Rs 50 lakh).
5. ITR-5: Taxpayers who are AOP (Association of Persons), BOI (Body of individuals), LLP, co-operative societies, AJP (Artificial juridical person) and local authorities have to file their income tax return in ITR-5.
6. ITR-6: Corporate taxpayers other than those companies claiming an exemption for income from property held for charitable and religious purposes have to file their income tax return in ITR-6.
7. ITR-7: Taxpayers including corporates such as trusts, non-profit institutions, colleges, investment funds etc falling under section 139(4A) to 139(4D) have to file their income tax return in ITR-7.
Do note that for the purpose of filing your income tax returns your Aadhaar number must be quoted and linked to your PAN.
All taxpayers (except taxpayers above 80 years and filing ITR-1 or ITR-4) have to file their income tax returns online. Several tax filing platforms provide the facility to upload your form 16 for direct tax filing, minimising your time and effort. The facility of CA assisted tax filing is also provided to guide you through your income tax return filing.
(The author is Founder & CEO ClearTax)