Income Tax Return Filing FAQ’s

What is ITR-1 and its applicability?

ITR-1, also known as SAHAJ, is for individuals with an income of less than Rs. 50 lakhs from salary, pension, or one house property.

Who should file ITR-2?

ITR-2 is meant for individuals who are NRIs, company directors, shareholders of private companies, or have capital gains, income from foreign sources, more than one house property, or income exceeding Rs. 50 lakhs.

What is ITR-3 used for?

ITR-3 is designated for individuals who are professionals or running a sole proprietorship business in India, detailing their professional income and business profits.

Who is eligible to file ITR-4?

Taxpayers under the presumptive taxation scheme with business income below Rs. 2 crores or professional income below Rs. 50 lakhs can file ITR-4.

What entities need to file ITR-5?

ITR-5 is for partnership firms, LLPs, AOPs, and BOIs to report their income and tax computations.

Who must file ITR-6?

ITR-6 is specifically for companies registered in India, excluding those claiming exemption under section 11 (income from property held for charitable or religious purposes).

What is the purpose of ITR-7?

ITR-7 is filed by trusts, political parties, scientific research institutions, and colleges or universities claiming exemptions under various sections of the Income Tax Act.

What is the income threshold for individual tax filing?

Individuals and NRIs need to file an income tax return if their annual income exceeds Rs. 2.5 lakhs.

Are proprietorship and partnership firms required to file income tax returns?

Yes, all proprietorship and partnership firms must file income tax returns, regardless of their income or loss levels.

What is the penalty for late filing of income tax returns?

The penalty is Rs. 5000 for filing between August 1st and December 31st, and Rs. 10,000 for filing after December 31st. For incomes below Rs. 5 lakhs, the penalty is Rs. 1000.

What is the due date for individual tax return filing?

The due date for individual taxpayers is July 31st of every year.

What triggers the need for a tax audit?

Businesses with turnover exceeding Rs. 1 crore and professionals with gross receipts over Rs. 50 lakhs must undergo a tax audit.

How does the presumptive taxation scheme affect tax audits?

Under section 44AD, if a taxpayer’s sales or turnover exceeds Rs. 2 crores while under the presumptive taxation scheme, a tax audit is required.

What are the top income tax deductions for the year?

Major deductions include Section 80C (up to Rs. 1.5 lakhs on specified investments), Section 80D (for medical insurance), Section 80EE (additional interest on housing loan), Section 80E (interest on loan for higher education), and Section 80G (donations to specified entities).

How can Varana FA assist with income tax e-filing?

Varana FA provides e-filing services with expert support. Taxpayers can upload their Form-16, and Varana FA will handle the filing and provide an acknowledgement within 1-2 business days.

What is the maximum deduction under Section 80C?

Up to Rs. 1.5 lakhs can be claimed under Section 80C for specified investments like PF, PPF, LIC premiums, housing loan principal repayment, etc.

What expenses are deductible under Section 80D?

Deductions under Section 80D can be claimed for medical insurance premiums paid by cheque and preventive health checkup fees up to Rs. 5000.

What is the Section 80EE deduction?

Section 80EE allows for an additional deduction on interest paid on housing loans up to Rs. 1 lakh for first-time homeowners under specific conditions.

How does Section 80E benefit taxpayers?

Section 80E allows individuals to deduct the interest paid on loans for higher education for a maximum of 8 years or until the interest is fully repaid, whichever is earlier.

What are the conditions for claiming Section 80G deductions?

Donations to certain funds and charitable institutions are eligible for deductions under Section 80G, subject to a ceiling of 10% of Gross Taxable Income and provided the donation is not in cash exceeding Rs. 2000.

What is the significance of the ITR-6 form?

ITR-6 is exclusively for companies that are registered in India, detailing their income, profits, and losses. It is not applicable to companies claiming tax exemption under section 11 (related to income from property held for charitable or religious purposes).

How does the ITR-7 form differ from others?

ITR-7 is used by entities like trusts, political parties, scientific research institutions, colleges, or universities that claim exemptions under sections like 139(4A), 139(4B), 139(4C), and 139(4D), focusing on income from property held for charitable or religious purposes, among others.

When is it mandatory for LLPs and companies to file income tax returns?

LLPs and companies are required to file income tax returns irrespective of their turnover or profit, ensuring compliance with statutory requirements.

What is the due date for income tax return filing for companies?

For companies and taxpayers requiring a tax audit, the income tax return filing due date is September 30th of each year.

What are the consequences of not adhering to the tax audit requirements?

Failure to comply with tax audit requirements can lead to penalties under the Income Tax Act, including penalty under section 271B, which can be up to 0.5% of the total sales, turnover, or gross receipts.