💰 Income Tax Return (ITR) Filing – Complete Guide

1️⃣ What is Income Tax Return (ITR)?

ITR is a form submitted to the Income Tax Department declaring your income, expenses, deductions, and tax liability.

Filing ITR is mandatory for individuals, businesses, and entities meeting specific income thresholds.

Governed by the Income Tax Act, 1961.

Purpose: Compute tax liability, claim refunds, maintain financial compliance, and serve as proof of income.

2️⃣ Who Should File ITR?

Mandatory filing if any of the following applies:

Income exceeds the basic exemption limit:

FY 2025–26: ₹3 lakh (individual <60 years), ₹5 lakh (senior citizen 60–80 years), ₹10 lakh (super senior >80 years)

Business or professional income

Capital gains from sale of property, stocks, or mutual funds

Income from more than one source

Foreign income or assets

Claiming refund of TDS (Tax Deducted at Source)

Individuals holding foreign assets or bank accounts

Optional filing: For lower income taxpayers claiming refunds or carrying forward losses.

3️⃣ Types of ITR Forms

Form

Applicability

ITR-1 (Sahaj)

Individuals (salary, pension, one house property, up to ₹50 lakh income)

ITR-2

Individuals & HUFs (no business income, capital gains, foreign assets)

ITR-3

Individuals & HUFs (with business/professional income)

ITR-4 (Sugam)

Individuals, HUFs, Firms (presumptive business income up to ₹50 lakh)

ITR-5

Partnership firms, LLPs, Association of Persons

ITR-6

Companies (except exempted companies)

ITR-7

Trusts, NGOs, political parties, institutions

Choose correct form to avoid processing issues.

4️⃣ Documents Required for Filing ITR

Document

Purpose

PAN Card

Identification

Aadhaar

Linking & verification

Form 16

Salary income, tax deductions by employer

Form 16A

TDS on other income

Form 26AS

Tax credit statement (TDS, advance tax, self-assessment tax)

Bank Statements

Income from interest, dividends, other sources

Investment Proofs

80C, 80D deductions (insurance, PPF, ELSS, NPS)

Loan Certificates

Home loan interest for 24b deduction

Property Details

Rental income, capital gains

Business Books

For professionals/business owners (Profit & Loss, Balance Sheet)

5️⃣ Step-by-Step ITR Filing Process (India)

Step 1 – Collect Documents

Gather PAN, Aadhaar, Form 16, Form 26AS, bank statements, investment proofs.

Step 2 – Choose Correct ITR Form

Based on income sources and legal status.

Step 3 – Compute Total Income & Tax

Include salary, business/professional income, capital gains, other income.

Claim deductions under Chapter VI-A (e.g., 80C, 80D, 80G).

Step 4 – Pay Tax (if any)

Self-assessment tax: Pay pending tax, if not deducted at source.

Challan 280 used for manual payment.

Step 5 – File ITR Online/Offline

Online: Income Tax e-Filing Portal

Offline: Using Java/Excel utilities for ITR forms.

Step 6 – Verify ITR

Mandatory verification within 120 days:

e-Verify via Aadhaar OTP, Net Banking, Bank Account, or Demat

Physical verification via sending signed ITR-V to CPC Bangalore

Step 7 – Acknowledgment & Refund

ITR-Acknowledgment generated after verification.

Refunds (if any) credited to bank account within 30–60 days.

6️⃣ Income Tax Deductions & Exemptions

Section

Description

80C

Life insurance, PPF, NSC, ELSS, principal repayment of home loan (max ₹1.5 lakh)

80D

Health insurance premiums

80G

Donations to charitable organizations

80TTA/80TTB

Interest on savings account / deposits (senior citizens)

HRA

House Rent Allowance exemption

Standard Deduction

₹50,000 for salaried individuals

Proper documentation is essential to claim deductions.

7️⃣ Advisory Draft – ITR Filing

1. Advisory Letter to Client

To: [Client Name]

Date: __________

Subject: Advisory on Income Tax Return (ITR) Filing

Dear [Client Name],

This advisory is regarding filing your Income Tax Return (ITR) for FY [20XX–XX].

Recommended Actions:

Collect all income and deduction proofs (Form 16, Form 26AS, bank statements, investment certificates, loans).

Determine appropriate ITR form based on your income sources and business status.

Calculate total income, tax liability, and claim eligible deductions under Chapter VI-A.

File ITR online via Income Tax Portal or offline using utility forms.

Verify ITR within 120 days using e-Verification or sending signed ITR-V to CPC, Bangalore.

Maintain records of all documents and acknowledgment for future reference or audits.

Benefits include legal compliance, refund claims, financial proof for loans, and avoiding penalties.

Warm regards,

[Consultant Name]

[Designation / Organization]

2. Engagement Letter Draft

To: [Client Name]

Date: __________

Subject: Engagement for Income Tax Return Filing Services

Dear [Client Name],

This letter confirms our engagement to assist your organization/individual in filing Income Tax Return (ITR) for FY [20XX–XX].

Scope of Services:

Collection and review of income & deduction documents

Computation of taxable income & tax liability

Filing ITR online/offline

Assistance in ITR verification & follow-up for refunds

Advisory on deductions, exemptions, and compliance

Client Responsibilities:

Provide complete and authentic documents

Inform us of any income or financial transactions during the financial year

Accepted By:

Name: __________

Signature: __________

Date: __________

Warm regards,

[Consultant Name]

[Designation / Organization]

8️⃣ Penalties for Non-Filing or Late Filing

Offense

Penalty

Failure to file ITR

₹5,000 (if income < ₹5 lakh), ₹10,000 (if income > ₹5 lakh)

Late filing (after due date)

5–10% of tax payable

Under-reporting / Non-payment

Interest + Penalty under Sections 234A, 234B, 234C

Incorrect ITR

Possible scrutiny by Income Tax Department

9️⃣ Additional Practical Tips

File ITR well before due date (usually 31st July for individuals) to avoid penalties.

Use Form 26AS to reconcile TDS before filing.

Keep digital copies of all documents for 6 years.

Claim all eligible deductions to reduce tax liability legally.

Use professional help for business, capital gains, or foreign income.

10️⃣ Useful Links

Income Tax e-Filing: https://www.incometax.gov.in

Form 26AS & Tax Credit: https://incometaxindiaefiling.gov.in/e-Filing/Services/TaxCredit

ITR Forms & Utilities: https://www.incometax.gov.in/pages/downloads/income-tax-return.aspx

11️⃣ Due Dates for ITR Filing (Detailed)

Category

Due Date

Individuals (No Audit)

31st July

Businesses (Tax Audit applicable)

31st October

Transfer Pricing cases

30th November

Belated / Revised Return

31st December

Updated Return (ITR-U)

Within 24 months from end of relevant AY

Missing due dates may lead to penalties, interest, and loss of certain benefits.

🔹 12️⃣ Belated, Revised & Updated Returns (ITR-U)

Belated Return

Filed after original due date

Penalty applicable under Section 234F

Filed before 31st December

Revised Return

Filed to correct errors or omissions

Can revise original or belated return

Allowed before 31st December

Updated Return (ITR-U – Section 139(8A))

Filed within 24 months

Used to disclose additional income

Extra tax + additional penalty payable

Refund or loss carry-forward not allowed

🔹 13️⃣ Advance Tax & Self-Assessment Tax

Advance Tax

Applicable if tax payable exceeds ₹10,000

Paid in installments during the year

Mandatory for business owners and professionals

Self-Assessment Tax

Paid before filing ITR if tax remains unpaid

Includes interest under Sections 234A, 234B, 234C

🔹 14️⃣ Common Mistakes to Avoid While Filing ITR

Choosing incorrect ITR form

Mismatch of income with Form 26AS/AIS

Ignoring interest income from savings & FD

Non-reporting of exempt income

Failure to verify ITR within time

Incorrect bank details for refund

🔹 15️⃣ ITR Filing for Special Categories

Students

Internship income, interest income, or refund cases

Homemakers

Interest, rental income, or capital gains taxable

Freelancers & Gig Workers

Treated as professionals

Eligible for presumptive taxation (Section 44ADA)

NRIs

Only income earned or accrued in India taxable

Residential status impacts tax liability

🔹 16️⃣ Income Tax Notices & Scrutiny (Awareness)

Common reasons:

High-value transactions

Mismatch between declared income and AIS/26AS

Non-filing despite taxable income

Types:

Intimation u/s 143(1)

Scrutiny notice u/s 143(2)

Demand notice u/s 156

Timely response is mandatory.

🔹 17️⃣ Importance of ITR as Legal & Financial Proof

ITR is required for:

Bank loans and credit cards

Home and vehicle loans

Visa and immigration

Government tenders

Startup funding & investments

🔹 18️⃣ Tax Audit Applicability (Brief)

Business turnover crossing prescribed limits

Professionals exceeding gross receipt limits

Mandatory under Section 44AB

Audit report must be filed before ITR.

🔹 19️⃣ Post-Filing Compliance & Record Keeping

Download and store ITR acknowledgment

Track refund status

Respond to department communications

Preserve documents for minimum 6 years