Everything you should know about ITR filing

Filing your income tax return (ITR) is essential for everyone who earns and does business in India. It also contributes to the country’s development while ensuring that one complies with the law.

Tax filing complexities might sometimes feel overwhelming, but you can understand them better provided there is correct enlightenment.

This article explores all you must understand concerning income tax return filing in India, including its importance, the process involved and advantages that could come from it, especially on loans.

What is ITR filing?

ITR filing is the process by which taxpayers declare their income, deductions, and tax payments to the Income Tax Department of India. ITR filing serves as a record of your earnings and the taxes you've paid over a financial year. Filing your ITR is not just a statutory obligation but also a reflection of your financial transparency.

Also Read: Income Tax Return - New Tax Regime vs. Old Tax Regime

Why is ITR filing important?

• Legal compliance: Tax filing ensures adherence to the laws set by the government. Non-compliance can lead to penalties and legal complications.
• Financial documentation: An ITR serves as proof of income, which is essential for various financial transactions.
• Loan approvals: Lenders often require ITRs to assess an applicant's financial stability before sanctioning loans.

Who should file an income tax return?

In India, the following entities are mandated to file an income tax return:

• Individuals: Earning above the basic exemption limit.
• Companies: Irrespective of profit or loss.
• Firms and LLPs: Regardless of income.
• Trusts and associations: Subject to specific conditions.

Benefits of filing ITR

• If excess tax has been deducted, you can file an income tax return. This allows you to claim refunds.
• Consulates may require ITR receipts for visa approvals.
• ITRs might be necessary when applying for government contracts.

Steps to file income tax return online

The following steps will guide you through the process of filing income tax returns:

Step 1: Register on the e-filing portal

Visit the Income Tax Department's official website and register using your PAN (Permanent Account Number).

Step 2: Choose the appropriate ITR form

Select the form that matches your income sources.

Step 3: Fill in the details

Enter your personal and income information accurately.

Step 4: Compute tax liability

Calculate your tax based on the details provided.

Step 5: Pay any due tax

If there's an outstanding amount, pay it before filing.

Step 6: Submit and verify

After submission, verify your return through methods like Aadhaar OTP or net banking.

Also Read: Is ITR for Home Loan Required? - 2025

Common mistakes to avoid in tax return filing

• Incorrect personal details: Ensure your name, PAN, and contact information are accurate.
• Mismatched income declarations: Cross-verify your income details with Form 16 or 26AS.
• Overlooking deductions: Claim all eligible deductions to reduce tax liability.
• Missing deadlines: Timely filing prevents penalties and interest charges.

ITR filing and loan applications

ITR filing plays a pivotal role when applying for various loans:

• Home loans: Lenders assess your ITR to gauge repayment capacity.
• Education loans: ITRs of parents or guardians may be required to evaluate financial support.
• Business loans: Consistent ITRs reflect business stability, aiding loan approvals.

Tax benefits associated with loans

Certain loans offer tax deductions, making them financially advantageous:

• Deductions under Sections 80C and 24(b) for principal and interest payments, respectively, for home loans.
• Interest paid is deductible under Section 80E for educational loans.
• Interest can be claimed as a business expense, reducing taxable income. This is applicable to business loans.

The Bottom Line

Filing your income tax return is more than a legal formality; it's a testament to your financial responsibility. It opens various financial opportunities, including loan approvals and tax benefits. Staying informed about the latest regulations and ensuring timely compliance will keep you in good legal standing and enhance your financial well-being.

Explore your options today if you're considering leveraging tax benefits through loans. Apply for a loan with favorable tax implications and move towards achieving your financial goals.

If you want to check your eligibility for a loan, use a loan eligibility calculator. This free online tool will take in all the necessary information and let you know the amount you can borrow through a loan.

FAQs

Q.1. What should one know before filing ITR?

A. One should know income sources, deductions, applicable tax slabs, required documents, filing deadlines, and the correct ITR form before filing. Ensure that your personal details like PAN, permanent address, contact details, bank account details, and other information are correct.

Q.2. Can I fill my ITR myself?

A. Yes, you can file your ITR using the Income Tax Department’s e-filing portal, provided you understand tax rules and requirements. The pre-filling and filing of ITR-1 service is available to registered users on the e-Filing portal.

Q.3. How much salary is required for ITR filing?

A. Individuals must file income tax returns if their gross income exceeds ₹2.5 lakh per financial year. For senior citizens (60-79 years), the limit is ₹3 lakh, and for super senior citizens (80+ years), it is ₹5 lakh.

Q.4. Do I need to file ITR if TDS is deducted?

A. If a person has Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) equal to or more than INR 25,000, ITR filing is mandatory. For senior citizens, this threshold is set at INR 50,000.

Q.5. Is ITR filing difficult?

A. Filling an ITR for the first time has become simpler and easier, thanks to the internet and e-filing measures through the e-Filing portal. Anyone can easily do it nowadays.

Disclaimer:

The contents of this article are for information purposes only and not a financial advisory. The information is subject to update, revision, and amendment and may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Godrej Capital or its Affiliates to any requirements. Godrej Capital or its Affiliates shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any decisions, financial or otherwise based on the contents and information mentioned. For more information, please visit www.godrejcapital.com.