Filing an Income Tax Return (ITR) is an important compliance requirement under the Income Tax Act. It enables individuals and entities to declare their income, report taxes paid, and claim refunds where applicable. Timely filing helps avoid penalties, ensures faster processing of refunds, and also serves as an official financial record for availing loans, obtaining visas, and fulfilling other financial requirements. Terminologies used in ITR filing Non-Audit Tax Filing A non-audit case is when a taxpayer’s accounts are not required to be audited under the Income Tax Act. This generally includes: Individuals and HUFs with income from salary, pension, house property, capital gains, or other sources. Small businesses and professionals who opt for the presumptive taxation scheme (Sections 44AD, 44ADA, 44AE) and whose turnover does not cross the limit requiring audit Financial Year (FY) The Financial Year is the year in which you earn your income. For example, if you earn income between 1 April 2024 and 31 March 2025, that period is called Financial Year 2024–25 (FY 2024–25). Assessment Year (AY) The Assessment Year is the year immediately after the Financial Year, in which you file your Income Tax Return (ITR) and the government assesses (checks) the income earned in the previous year. For example, income earned in FY 2024–25 will be reported and assessed in Assessment Year 2025–26 (AY 2025–26). Importance of Filing ITR What is ITR and Who Should File? An ITR (Income Tax Return) is a form to declare your income and taxes. You should file if: Your income is above the basic exemption limit. You want to claim refunds (for excess TDS deducted). You need proof of income for bank loans, visa applications, or financial transactions. Filing ITR goes beyond a statutory requirement and plays a vital role in strengthening both personal financial credibility and the nation’s economy. It reflects rising incomes, employment, and the growing formalisation of the economy. For individuals, regular filing helps build creditworthiness, which is essential for availing loans, securing visas, and entering business contracts. It also enables taxpayers to claim refunds for excess taxes paid and ensures the carry-forward of losses for future setoffs. For the government, ITR data is an important tool for policy planning, subsidy targeting, and broadening the tax base. It provides valuable insights into income patterns and economic activity, aiding in better governance. Subsequently, timely and accurate ITR filing contributes to a transparent, documented, and accountable economy, strengthening both compliance and financial inclusion. Late Filing Fees The Central Board of Direct Taxes (CBDT) releases a timeline every year as the due date for non-audit taxpayers, including most individuals, Hindu Undivided Family (HUFs), and other entities not subject to audit. A late filing fee is levied if the return is furnished after the specified due date. A fee of ₹5,000 is payable for returns filed after the due date. However, in cases where the total income does not exceed ₹5 lakh, the late fee is restricted to ₹1,000. In addition, a delay in filing attracts 1% interest per month on the pending tax amount, in addition to the late filing fee. Categories of ITR The Income Tax Department notifies different ITR forms each year to suit various categories of taxpayers. Selecting the correct form is essential, as filing in an incorrect form may render the return defective. For FY 2024–25 (AY 2025–26), the following forms are applicable to non-audit taxpayers, including individuals and small entities: ITR-1 (Sahaj) – For Salaried Individuals A salaried individual, as per the Income Tax Department, is a taxpayer whose income is earned from an employer in the form of salary, wages, allowances, perquisites, or pension and is chargeable under the head “Income from Salary.” Who Can Use ITR-1? ITR-1 can be used by individuals who: Are Resident Individuals (Not Ordinarily Resident) Have a total income up to ₹50 lakh Have income from: Salary or Pension, One House Property, Other Sources (bank interest, family pension), Agricultural income up to ₹5,000 Who Cannot Use ITR-1? ITR-1 cannot be used by individuals who: Have total income exceeding ₹50 lakh Have income from more than one house property Have income under the head Capital Gains (including short-term gains or long-term gains u/s 112A exceeding ₹1.25 lakh) Are Directors in a company Have held any unlisted equity shares at any time during the previous year Have any asset (including financial interest in any entity) located outside India Have signing authority in any account located outside India Have income from any source outside India Have income from business or profession Have deferred tax on ESOPs(Employee Stock Options) Have income on which tax has been deducted u/s 194N Have any brought forward loss or loss to be carried forward under any head of income ITR-2 – For Individuals/HUFs (No Business/Profession Income) Individuals are natural persons who earn income from salary, pension, house property, capital gains, business/profession, or other sources and are taxed in their personal capacity. HUFs (Hindu Undivided Families) are separate entities under income tax law consisting of all persons lineally descended from a common ancestor, including their wives and unmarried daughters. An HUF can earn income from property, business, or other sources, and it is taxed as a distinct “person” under the Income Tax Act. Who Can File: Individuals and Hindu Undivided Families (HUFs) who are not eligible to file ITR-1 (Sahaj) Taxpayers not having income from “Profits and Gains of Business or Profession” Taxpayers not having income in the nature of interest, salary, bonus, commission, or remuneration received from a partnership firm Cases where the income of another person (such as spouse, minor child, etc.) is required to be clubbed with the taxpayer’s income, provided the income to be clubbed falls under the eligible categories for ITR-2 Who Cannot File: Individuals and Hindu Undivided Families (HUFs) whose total income for the year includes income from “Profits and Gains of Business or Profession”, and Income is in the nature of interest, salary, bonus, commission, or remuneration received from a partnership firm ITR-3 – For Individuals & HUFs With Business/Profession Income Who Can File: Individuals and Hindu Undivided Families (HUFs) having income under the head Profits and Gains of Business or Profession Individuals and HUFs whose income is chargeable to tax under the head “Profits and gains of business or profession” received from a partnership firm. Who Cannot File: Those eligible for ITR-1, ITR-2, or ITR-4 ITR-4 (Sugam) – For Presumptive Income Presumptive income, as per the Income Tax Department of India, refers to income that is calculated on a presumptive basis instead of maintaining detailed books of accounts. Under the presumptive taxation scheme, the Income Tax Act allows certain taxpayers (small businesses, professionals, and transporters) to declare income at a prescribed rate of turnover or receipts, without the need to maintain regular accounts or undergo audits. Who Can File: ITR-4 can be filed by: Individuals, Hindu Undivided Families (HUFs), and Firms (other than LLPs) who are residents Those who have income from business or profession calculated on a presumptive basis Along with business income, they can also have salary or pension, income from one house property, income from other sources (such as bank interest, family pension, or dividend), and agricultural income up to ₹5,000 Who Cannot File: You cannot use ITR-4 if you: Earn more than ₹50 lakh in a year Are a Director in a company Own more than one house property Have capital gains (profit from selling shares, property, etc.), including long-term gains above ₹1.25 lakh under Section 112A Have held unlisted company shares at any time during the year Own assets outside India or have foreign income Have authority to operate a bank account outside India Have deferred tax on ESOPs Have any brought forward loss or loss to be carried forward under any head of income Old vs New Tax Regime (For FY 2024-25 / AY 2025-26) When filing an Income Tax Return (ITR), taxpayers are required to choose between the Old Tax Regime and the New Tax Regime. This choice determines how income will be taxed and whether deductions and exemptions can be claimed. The Old Regime continues the traditional system of higher tax rates but provides a wide range of exemptions and deductions under the Income Tax Act, making it more suitable for individuals who plan their finances through investments and savings. In contrast, the New Regime, introduced in the Union Budget 2020, aims to simplify taxation by offering reduced slab rates with minimal exemptions. It is especially helpful for taxpayers who prefer a straightforward system without the need for detailed tax planning or documentation. From FY 2023–24 onwards, the New Regime has been made the default option, though taxpayers retain the flexibility to opt for whichever system benefits them more. Feature Old Tax Regime New Tax Regime Tax Rates Higher slab rates Lower slab rates Exemptions & Deductions Standard Deduction ₹50,000, plus a wide range of exemptions like investments, insurance, home loan interest etc. Limited (Standard Deduction ₹75,000, Employer’s NPS contribution, Family pension deduction) Investments (80C) Investments in PF, LIC, ELSS, PPF, etc. – up to ₹1.5 lakh - Medical Insurance (80D) Medical Insurance – up to ₹25,000 (₹50,000 for senior citizens) - Rebate Taxable income up to ₹5 lakh → Nil tax Taxable income up to ₹7 lakh → Nil tax Default Option Optional (must be chosen by taxpayer) Default regime from FY 2023–24; option to switch to Old Regime if beneficial How to File Your ITR Log in at incometax.gov.in using PAN/Aadhaar & password Go to → e-File > Income Tax Return > File Income Tax Return Select your Assessment Year eg. AY 2025–26 Choose your applicable form Review pre-filled details (salary, TDS, bank interest) Add missing income/deductions & select tax regime (Old/New) Submit return Timely and accurate filing of returns continues to play an important role in strengthening financial credibility for individuals and in supporting effective governance for the country. Rising ITR filings demonstrate the success of government initiatives aimed at ease of compliance, transparency, and expanding taxpayer participation in India’s economic growth. Source : PIB