Filing your income tax return (ITR) in India is a crucial responsibility for every taxpayer. It ensures the government collects its revenue from income generated within the country. If you are new to the taxation scene of India, this could be taxing - pun intended-, however, it only takes a little if you know the dynamics and have professional aid by your side! 

As one of the best financial consultants, we, at YS Financials also offer tax management services in India. As a part of our comprehensive suite, our services also include Income Tax Return filing with the sole objective of helping you stay a fully compliant and law-abiding citizen of the nation. To help you understand how Income Tax returns in India work, here is the latest 2024 edition- especially if you have missed your deadline. 

This comprehensive guide, designed for the 2024 assessment year (AY 2024-25), will equip you with the knowledge to ensure a smooth ITR filing process.

However, to begin with, let us understand Income Tax and ITR in India. 

Understanding Income Tax in India:

Income tax is a levy on the income individuals or businesses earn during a financial year. The Income Tax Department categorises income into various heads - salary, house property, business/profession, capital gains, etc. The total taxable income is calculated by adding income from all heads and subtracting any exemptions allowed under the Income Tax Act.

Two tax regimes are available for individuals: the old tax regime and the new tax regime. The old regime offers a wider range of deductions and exemptions, while the new regime features lower tax rates. Choosing the right regime depends on your circumstances.

Tax Deducted at Source (TDS) is the tax deducted by payers (employers, banks, etc.) on certain types of income like salaries and interest earned. This TDS is pre-deposited with the government on your behalf and reflected in your Form 16 or other income certificates. You can claim credit for this TDS when filing your ITR.

Who Needs to File an ITR?

Not everyone in India needs to file an ITR. However, it's mandatory for individuals whose total income exceeds a certain limit in a financial year. As per the latest regulations for AY 2024-25, you must file an ITR if your:

• Salary income exceeds Rs. 3 lakh
• Income from other sources (house property, interest, etc.) exceeds Rs. 1 lakh (even if your total income is below Rs. 5 lakh)
• Are a business owner or professional with income
• Have incurred capital gains during the year
• Are a resident Indian (not ordinarily resident) with foreign assets or income

Note: It is important to file ITR even if you are not eligible for tax and fall under nil tax slab. This helps you document your income for the years, which can further be used for different purposes that require financial statements including loans. 

Types of ITR Forms and When to Use Them:

The Income Tax Department offers various ITR forms, each catering to different income profiles and complexities. Here's a quick overview:

• ITR-1 (Sahaj): This simplest form is for resident individuals with income from salary, pension, one house property, and other sources (interest, etc.) up to Rs. 50 lakh.
• ITR-2: This form applies to individuals and Hindu Undivided Families (HUFs) without income from business or profession.
• ITR-3: This form is for individuals and HUFs with income from business or profession.
• ITR-4 (Sugam): This simplified form is for individuals, HUFs, and firms (other than LLPs) with business income up to Rs. 50 lakh and total income up to Rs. 50 lakh.

Statistics show that over 6.4 crore ITRs were filed in India for AY 2022-23, with ITR-1 being the most commonly used form (around 40%). Choosing the correct ITR form is crucial, so consult a tax professional if you're unsure.

The deadlines for filing ITRs for AY 2024-25 are:

• July 31st for most salaried individuals and individuals with income from one house property. 
• October 31st for businesses, individuals with income from more than one house property, or those claiming foreign tax credit.

While July 31st was the deadline for most individuals to file their income tax returns (ITRs) without late fees or penalties, there are certain categories of taxpayers who can file their ITRs after the deadline with additional charges:

1. Individuals with losses: If you've incurred losses in the financial year, you can file your ITR after July 31st without penalty. However, you'll need to claim a carry forward of losses in your future returns.
2. Individuals under audit: If your income tax returns are subject to scrutiny or audit, you can file them after the deadline without penalty.
3. Individuals with revised returns: If you need to file a revised return due to errors or omissions in your original return, you can do so within a specific time frame after the original due date.

Note: The specific rules and penalties for late filing can vary depending on the circumstances and the type of taxpayer. It's advisable to consult with a tax professional or refer to the official income tax department website for accurate and up-to-date information.

According to a statement by Ministry of Finance, as of August 28, 2024, over 7.4 crore income tax returns (ITRs) have been filed for the financial year 2023-24 (Assessment Year 2024-25). This number is expected to increase as the deadline for filing ITRs approaches.

• As of July 31, 2024: More than 7.28 crore ITRs were filed. 
• As of August 22, 2024: About 7.42 crore ITRs were filed.

(Please note that these numbers are based on the information available as of August 28, 2024, and may change.)

Documents Required for ITR Filing:

To file your ITR, you'll need documents like:

• Salary slips or Form 16
• Bank statements
• Investment proofs for tax deductions
• Property documents (if applicable)

Filing Your ITR Late: A Step-by-Step Guide:

If you've missed the July 31st deadline for filing your Income Tax Return (ITR), don't panic. While you'll likely face penalties, it's still possible to file. Here's a general guide:

1. Determine the Penalty:

• Late Fee: A late fee is typically charged for every day the return is delayed beyond the due date. The amount can vary depending on the assessed income.
• Interest: If you've not paid the advance tax or self-assessment tax as required, you might incur interest on the unpaid amount.

2. Gather Necessary Documents:

• PAN Card: Your Permanent Account Number is essential for filing the ITR.
• Form 16: This form provides details of your salary income and TDS deducted.
• Form 26AS: This form summarises your tax-related transactions, including TDS, TCS, and self-assessment tax.
• Other Income Documents: If you have other sources of income (rental income, capital gains, etc.), gather relevant documents.
• Deductions and Exemptions: Prepare documents to support any deductions or exemptions you're claiming.

3. Choose the Right ITR Form:

• ITR-1: For individuals whose total income is up to ₹500,000 and have only salary income and house property income.
• ITR-2: For individuals and Hindu Undivided Families (HUFs) with income from salary, house property, capital gains, other sources, and agricultural income.
• ITR-3: For individuals and HUFs with income from business or profession.
• ITR-4: For individuals and HUFs under the presumptive taxation scheme.

4. Prepare Your Return:

• Fill in the Form: Accurately enter your personal details, income sources, deductions, and tax liabilities.
• Verify Details: Double-check the entered information for errors.
• E-Verify: Choose the e-verification option for quicker processing. You'll receive an OTP on your registered mobile number or email.

5. Pay Taxes and Penalties:

• Calculate Tax Liability: Determine the total tax you owe, including any penalties.
• Make Payment: Use online banking, debit/credit card, or NEFT/RTGS to pay the taxes and penalties.

6. Submit the Return:

• Upload Documents: If required, upload supporting documents.
• Submit Online: Submit your ITR electronically through the Income Tax e-Filing portal.

Remember: While filing late might incur penalties, it's important to avoid further complications by filing accurately and on time in the future. If you're unsure about any aspect of the process, consider consulting with a tax professional. Get in touch with us Today. 

Tax Planning Strategies to Minimise Tax Liability:

Tax planning is the process of legally reducing your tax liability. Here are some effective strategies to consider:

• Utilise Tax-Saving Investments: Invest in options like Equity Linked Savings Schemes (ELSS), Public Provident Fund (PPF), and National Pension System (NPS) to avail deductions under Section 80C (up to Rs. 1.5 lakh in AY 2024-25).

Here are some detailed insights on effective tax planning tools that salaried individuals can use to minimize their tax liability:

Investment-based Deductions under Section 80C

• Equity Linked Savings Schemes (ELSS): These funds offer a lock-in period of three years and potential capital gains tax benefits.
• Public Provident Fund (PPF): A long-term, secure investment option with a guaranteed interest rate and tax-free maturity proceeds.
• National Pension System (NPS): A retirement savings scheme that offers tax benefits on contributions and returns.
• Life Insurance Premiums: Premiums paid towards qualified life insurance policies are deductible under Section 80C.
• Home Loan Principal Repayment: The principal component of your home loan repayment is deductible under Section 80C.

Other Deductions

• Health Insurance Premiums: Premiums paid for health insurance plans for self, spouse, and dependent children are deductible under Section 80D.
• Medical Expenses: Medical expenses incurred for self, spouse, and dependent children can be claimed as a deduction under Section 80DD.
• Disability Benefits: If you or your dependent has a disability, you can claim a deduction under Section 80DD.
• Donation to Charitable Trusts: Donations to eligible charitable trusts can be claimed as a deduction under Section 80G.
• Rent Paid: If you pay rent for a house in which you reside, you can claim a deduction under Section 80GG.

Tax-Saving Investments for Specific Purposes

• Sukanya Samriddhi Account: A government-backed scheme for the future education and marriage of a girl child.
• Senior Citizen Savings Scheme (SCSS): A fixed deposit scheme designed for senior citizens.
• Five-Year Tax-Saving Fixed Deposits: These deposits offer a fixed interest rate and tax benefits.

Other: 

• Consider Tax-Efficient Mutual Funds: Invest in mutual funds that have a history of generating tax-efficient returns.
• Claim Deductions for Expenses: Claim deductions for medical expenses, home loan repayments, education expenses for children, etc., as allowed under the Income Tax Act.
• Review Your Tax Regime: Analyse the benefits of both old and new tax regimes and choose the one that minimises your tax burden.

Benefits of Professional ITR Filing Services:

Filing your ITR yourself is possible, but it can be time-consuming and complex. Professional financial consultancies like YS Financials offer several advantages:

• Accuracy and Efficiency: Our experienced professionals ensure your ITR is filed accurately and efficiently, minimising errors and potential penalties.
• Maximising Deductions: We can help you identify and claim all eligible deductions and exemptions for maximum tax savings.
• Avoiding Errors: Our expertise helps you avoid common filing mistakes that could delay processing or lead to penalties.
• Potential Tax Refunds: We can ensure you receive any tax refunds you may be entitled to.

We know it is complex, but worry not!

Contact YS Financials, your finance and tax management partner! 

Filing your ITR on time is essential to avoid penalties and interest charges. This guide has equipped you with the basic knowledge of income tax and ITR filing in India. Remember, tax laws can be intricate, and seeking professional guidance can save you time, and money, and ensure efficient tax management.

YS Financials offers a comprehensive suite of ITR filing, tax planning, and wealth management services. Contact us today for a consultation and explore how we can empower you to navigate the Indian tax landscape with confidence.