Income Tax Returns The Income Tax Act, 1961, and the Rules, 1962, compel citizens to file returns with the Income Tax Department at the end of each financial year. These returns must be filed before the specified due date. Every income tax return form applies to a certain section of the assessee. Only those forms filed by qualified assessees are processed by the Income Tax Department of India. It is, therefore, necessary to know which particular form is appropriate in each case. Income tax return forms vary depending on the source of income and the criteria of the assessee's category.
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What is an income tax return?
Income tax return is a form in which assessee records his taxable and exempt income, deductions and other information to the Income Tax Department. These processes call income tax return filing. There are different types of forms i.e. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7. Certain losses can not be carried forward in belated return.
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What is taxable income?
Taxable income is an income that is used to calculate the tax of an individual or a company in a tax year. It is generally described as adjusted gross income or total income.
Taxable income includes wages, salaries, income from house property, bonuses and tips, as well as investment income and unearned income.
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What is exemption income?
Exempt income refers to certain types or amounts of income not subject to income tax like Agricultural income, Interest income on savings bank, Shares from a partnership firm, Long-term capital gains, Allowance for foreign services, Income from gratuity, Amount received under voluntary retirement, scholarships and awards, etc. Section 10 of the Indian Income Tax Act of 1961 determines which types of income are exempt from income tax as well as the circumstances for each. Congressional action plays a role as well, as what is exempted and the threshold amounts are often tweaked or changed entirely.
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What is the deduction?
A tax deduction reduces a person's tax liability to their taxable income. Deductions are typically incurred, especially to produce additional income. Tax deductions are a form of tax incentive with discounts and credits.
Major deduction
Section 80C: Section 80C is the most commonly used option to save tax. Here, a person or a HUF who invests or spends on prescribed tax-saving avenues can claim a deduction of Rs. 1.5 lakh for a tax deduction.
Following expenditures/investment included:
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Life insurance premium
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Tuition fees for children
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Employee Provident Fund (EPF)
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Principal payment on home loans
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Infrastructure bonds
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Equity Linked Savings Scheme (ELSS)
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Annuity/ Pension Schemes
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Contribution to PPF Account
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Sukanya Samriddhi Account
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NSC (National Saving Certificate)
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Fixed Deposit (Tax Savings)
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Post office time deposits
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National Pension Scheme