💰 INCOME TAX RETURN (ITR) – COMPLETE GUIDE FOR INDIVIDUALS

1️⃣ What is an Income Tax Return (ITR)?

An Income Tax Return (ITR) is a form that taxpayers submit to the Income Tax Department of India declaring:

• Income earned during a financial year

• Taxes paid

• Eligible deductions and exemptions

Purpose of ITR filing:

1. Compute tax liability accurately

2. Claim refunds for excess TDS/advance tax

3. Serve as legal proof of income

4. Maintain financial compliance for loans, visas, and other financial transactions

Governing Law: Income Tax Act, 1961

2️⃣ Who Should File ITR?

Filing ITR is mandatory for individuals in the following cases:

A. Income exceeds basic exemption limit

B. Income from other sources

• Business or professional income

• Capital gains from sale of property, shares, mutual funds

• Income from multiple sources

• Rental income

C. Foreign income/assets

• Individuals with income or assets abroad

• NRIs earning in India and abroad

D. Claiming tax refund

• Tax deducted at source (TDS) exceeding tax liability

E. Other mandatory scenarios

• Individuals who hold foreign bank accounts or financial assets

• Individuals applying for loans/visas requiring proof of income

Optional Filing:

• Income below exemption limit, but claiming:

  • TDS refund

  • Losses carry forward (for set-off in future years)

3️⃣ Types of ITR Forms for Individuals

✅ Choose the correct form to avoid rejection or scrutiny.

4️⃣ Types of Income for ITR Filing

A. Income from Salary / Pension

• Salary, allowances, perquisites, bonuses

• Pension income

B. Income from House Property

• Rent received from let-out property

• Self-occupied property (deduction for home loan interest under Section 24b)

C. Income from Business or Profession

• Profit earned by a business or professional practice

• Can be normal method or presumptive scheme under Section 44AD/44ADA

D. Capital Gains

• Short-term and long-term capital gains from:

  • Sale of property

  • Sale of shares or mutual funds

• Exemptions under Sections 54, 54EC, 54F

E. Income from Other Sources

• Interest on savings account, fixed deposits, recurring deposits

• Dividends (if taxable)

• Winning from lotteries, game shows, or competitions

5️⃣ Documents Required for ITR Filing

6️⃣ Step-by-Step ITR Filing Process

Step 1 – Collect Documents

• Gather PAN, Aadhaar, Form 16/16A, bank statements, investment proofs

Step 2 – Choose Correct ITR Form

• Based on sources of income and financial status

Step 3 – Compute Total Income & Tax

• Salary + business/professional income + capital gains + other sources

• Deduct eligible exemptions and deductions under Chapter VI-A

Step 4 – Pay Tax (if any)

• Self-assessment tax if tax not deducted at source

• Payment via Challan 280

Step 5 – File ITR Online/Offline

• Online: Income Tax e-Filing portal

• Offline: Java/Excel utilities for ITR forms

Step 6 – Verify ITR

• Mandatory within 120 days

• e-Verification: Aadhaar OTP, net banking, bank account, Demat

• Physical Verification: Send signed ITR-V to CPC Bangalore

Step 7 – Acknowledgment & Refund

• ITR-Acknowledgment generated after verification

• Refund credited to bank account within 30–60 days

7️⃣ Income Tax Deductions & Exemptions

Proper documentation is essential to claim deductions.

8️⃣ Deadlines for ITR Filing

9️⃣ Penalties for Late Filing / Non-Filing

🔟 Advisory Draft – ITR Filing for Individuals

To: [Client Name]
Date: __________

Subject: Advisory on Income Tax Return (ITR) Filing – Individual

Dear [Client Name],

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

Recommended Actions:

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

2. Determine the appropriate ITR form based on your income sources.

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

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

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

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

Benefits: Legal compliance, refund claims, financial proof for loans, and avoiding penalties.

Warm regards,
[Consultant Name]
[Designation / Organization]

1️⃣1️⃣ Additional Practical Tips

1. File ITR well before due date to avoid penalties.

2. Use Form 26AS to reconcile TDS before filing.

3. Keep digital copies of all documents for 6 years.

4. Claim all eligible deductions to legally reduce tax liability.

5. Take professional help if having business income, capital gains, or foreign income.

1️⃣2️⃣ Useful Links

• Income Tax e-Filing Portal: 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

🔹 Additional / Advanced Information for Individual ITR Filing

1️⃣ ITR Filing for NRIs (Non-Resident Indians)

• NRIs must file ITR if:

  • Income earned in India exceeds exemption limits

  • Tax deducted at source (TDS) needs refund

  • Capital gains from Indian property, shares, or mutual funds

• Special rules:

  • Foreign income is taxable only if it is received/earned in India

  • NRIs cannot claim exemptions like HRA (unless salary is in India)

• Must quote PAN for all transactions

2️⃣ ITR Filing in Case of Capital Gains

• Short-Term Capital Gains (STCG) vs Long-Term Capital Gains (LTCG)

• Exemptions under:

  • Section 54 – Sale of house property, reinvest in new property

  • Section 54EC – Invest in specified bonds (NHAI, REC)

  • Section 54F – Sale of long-term asset, investment in residential property

• Reporting capital gains separately is mandatory

3️⃣ Filing ITR for Individuals with Business / Professional Income

• Individuals under presumptive taxation scheme (Section 44AD/44ADA/44AE)

  • Declare income as per presumptive percentage (e.g., 8% / 6% / 50%)

  • Avoid maintaining detailed books of accounts

• If actual income < presumptive income → can still declare actual income

• If income exceeds ₹2 crore → mandatory audit under Section 44AB

4️⃣ Filing ITR for Foreign Assets / Overseas Income

• Individuals holding foreign bank accounts, securities, or assets must disclose:

  • Income from foreign sources

  • Tax paid abroad (foreign tax credit)

• Non-disclosure may lead to heavy penalties under Section 271

5️⃣ ITR Filing for Loss Carry Forward / Set-off

• Loss from house property or capital gains can be carried forward for 8 years

• Loss from business can be carried forward for 8 years if audit done

• Mandatory to file ITR before due date to claim loss carry forward

6️⃣ ITR for Individuals with Multiple Jobs

• Income from multiple employers must be consolidated

• TDS may have been deducted separately → must reconcile with Form 26AS

• Claim tax credits correctly to avoid excess taxation

7️⃣ ITR Filing for Senior Citizens

• Special rules:

  • Basic exemption limit higher: ₹5 lakh (60–80 yrs), ₹10 lakh (>80 yrs)

  • Deduction under Section 80TTB for interest income up to ₹50,000

  • Can claim deduction under Section 80D for health insurance of self/spouse/parents

8️⃣ ITR & Digital Transactions

• Individuals investing in mutual funds, stocks, cryptocurrencies, or high-value transactions must report in ITR

• Failure to report may attract scrutiny / penalty under section 271

• PAN linkage is mandatory for these transactions

9️⃣ Common Mistakes to Avoid in ITR

1. Not reconciling Form 26AS before filing

2. Wrong ITR form selection

3. Missing deductions under Chapter VI-A

4. Incorrect bank account / IFSC for refunds

5. Not verifying ITR within 120 days → ITR remains invalid

6. Not reporting all sources of income, including interest, dividends, or gifts

🔟 ITR Filing in Case of Inheritance / Gifts

• Gifts received beyond ₹50,000 per year (from non-relatives) are taxable

• Income from inherited property must be disclosed

• TDS may be applicable for rental income from inherited property

1️⃣1️⃣ Advisory Draft – Advanced Tips

To: [Client Name]
Date: __________

Subject: Advisory on Advanced ITR Filing – Individual

Dear [Client Name],

This advisory covers detailed ITR filing guidance for individuals, including advanced scenarios such as:

• Income from multiple sources and jobs

• Capital gains and exemptions

• Foreign assets and income disclosure

• Loss carry forward and set-off

• Presumptive business / professional income

• Senior citizens’ benefits and deductions

Recommended Actions:

1. Consolidate all income, including salary, business, capital gains, interest, and foreign income.

2. Check Form 26AS for TDS credit and reconcile discrepancies.

3. Choose the correct ITR form based on income sources.

4. Claim eligible deductions and exemptions under Chapter VI-A and special provisions.

5. File ITR online and verify within 120 days.

6. Maintain all records for at least 6 years for audit or future reference.

Warm regards,
[Consultant Name]
[Designation / Organization]