Income tax filing for individuals in India is a crucial annual obligation, governed by the Income Tax Act, 1961. The process involves declaring your income from various sources, claiming eligible deductions and exemptions, calculating your tax liability, and submitting the appropriate Income Tax Return (ITR) form to the Income Tax Department.
Why File Income Tax Returns?
Legal Obligation
If your gross total income exceeds the basic exemption limit (which varies based on age and residential status), filing is mandatory.
Claim Refunds
If excess tax has been deducted (TDS) or paid (advance tax), filing allows you to claim a refund.
Carry Forward Losses
To carry forward business losses or capital losses to future years for set-off against future income.
Loan and Visa Applications
ITRs serve as proof of income and financial standing, often required for loan applications (home loan, personal loan), credit card applications, and visa applications.
Build Financial History
Regular filing helps in building a financial record.
Avoid Penalties
Timely filing prevents late filing fees and interest charges.
Key Factors Determining the Correct ITR Form for Individuals
The Income Tax Department has seven ITR forms (ITR-1 to ITR-7), but for individuals, typically ITR-1, ITR-2, ITR-3, or ITR-4 are applicable. The choice depends on.
Residential Status
Resident, Resident but Not Ordinarily Resident (RNOR), or Non-Resident (NRI).
Sources of Income
- Salary/Pension
- House Property (number of properties, rental income, self-occupied, loss)
- Capital Gains (from sale of shares, mutual funds, property, etc.)
- Business or Profession (including presumptive income)
- Other Sources (interest, dividends, family pension, winning from lottery/horse races, etc.)
- Agricultural Income
- Foreign Income/Assets
Total Income
Whether your total income exceeds ₹50 lakh.
Director/Unlisted Shares
Whether you are a director in a company or hold unlisted equity shares.
Presumptive Taxation
Whether you opt for a simplified presumptive taxation scheme for business/professional income.
Common ITR Forms for Individuals
Who is Eligible
Resident Individuals (not RNOR or NRI) with a total income up to ₹50 lakh from:
- Salary or Pension
- One House Property (excluding cases of brought forward loss or loss to be carried forward)
- Other Sources (Interest, Family Pension, Dividend, etc., but excluding winnings from lottery/horse races)
- Agricultural income up to ₹5,000.
- New for AY 2025-26: Long-Term Capital Gains (LTCG) from the sale of listed equity shares/equity mutual funds under Section 112A, provided this LTCG does not exceed ₹1.25 lakh.
Who Cannot File
- Total income exceeds ₹50 lakh.
- Is a Resident but Not Ordinarily Resident (RNOR) or Non-Resident (NRI).
- Has income from more than one house property.
- Has income from business or profession (even if presumptive).
- Has taxable capital gains (other than the limited LTCG mentioned above).
- Is a Director in a company.
- Has held unlisted equity shares at any time during the previous year.
- Has any foreign assets or income from any source outside India.
- Has agricultural income exceeding ₹5,000.
Who is Eligible
Individuals and Hindu Undivided Families (HUFs) who are NOT eligible to file ITR-1 and do NOT have income from “Profits and Gains of Business or Profession.” This typically includes:
Who Cannot File
Those having income from “Profits and Gains of Business or Profession” (even if presumptive).
Who is Eligible
Individuals and Hindu Undivided Families (HUFs) who have income from “Profits or Gains of Business or Profession.” This is typically for:
- Proprietors of a business.
- Individuals carrying on a profession (e.g., doctors, lawyers, consultants, freelancers).
- Partners in a partnership firm (where partnership income is already taxed in the firm’s hands, but the partner’s remuneration/interest from the firm is taxable for the partner).
- Those who also have income from salary, house property, capital gains, or other sources (including winning from lottery/horse races, foreign assets, etc.).
Who Cannot File
Individuals or HUFs who are eligible to file ITR-1, ITR-2, or ITR-4.
Who is Eligible
Resident Individuals and Hindu Undivided Families (HUFs) whose total income does not exceed ₹50 lakh and who opt for the presumptive taxation scheme under:
- Section 44AD: For businesses with turnover up to ₹3 crore (if 95% digital, else ₹2 crore), declaring 6% (digital) or 8% (cash) of turnover as profit.
- Section 44ADA: For specified professionals with gross receipts up to ₹75 lakh (if 95% digital, else ₹50 lakh), declaring 50% of gross receipts as profit.
- Section 44AE: For the business of plying, hiring, or leasing goods carriages (owning not more than 10 vehicles).
- They can also have income from salary/pension, one house property, and other sources (excluding winnings from lottery, horse races, etc., and income taxable at special rates).
- New for AY 2025-26: Long-Term Capital Gains (LTCG) from the sale of listed equity shares/equity mutual funds under Section 112A, provided this LTCG does not exceed ₹1.25 lakh.
Who Cannot File
- Total income exceeds ₹50 lakh.
- NRIs or RNORs.
- Those with income from a business or profession but not opting for the presumptive scheme (they use ITR-3).
- Those who declare profit lower than the presumptive rates (and their total income exceeds the basic exemption limit), as they would require a tax audit and would need to file ITR-3.
Due Date for Individual Income Tax Filing (AY 2025-26 / FY 2024-25)
For the Assessment Year 2025-26 (i.e., for income earned during the Financial Year April 1, 2024, to March 31, 2025)
- The due date for filing ITR for individuals whose accounts are not required to be audited (which includes most salaried individuals, pensioners, and those filing ITR-1, ITR-2, or ITR-4) has been extended to September 15, 2025.
- For individuals whose accounts are required to be audited (typically those filing ITR-3 due to high turnover or declaring lower than presumptive profit), the due date is October 31, 2025.
- For individuals involved in international/specified domestic transactions requiring a transfer pricing report, the due date is November 30, 2025.
Documents Required for Individual Income Tax Filing
Having these documents ready will streamline your filing process:
PAN Card and Aadhaar Card
Mandatory for identification and linking.
Form 16
Issued by your employer (if salaried). This contains details of your salary income, allowances, deductions claimed through employer, and TDS.
Form 16A/16B/16C
- Form 16A: For TDS on income other than salary (e.g., interest from fixed deposits, professional fees, rent if TDS deducted).
- Form 16B: For TDS on sale of immovable property.
- Form 16C: For TDS on rent by individuals/HUFs under Section 194-IB.
Form 26AS / Annual Information Statement (AIS) / Taxpayer Information Summary (TIS)
- These are crucial consolidated statements available on the e-filing portal, showing all tax deducted/collected at source, advance tax paid, self-assessment tax paid, and other financial transactions reported by various entities. Always reconcile your income and TDS with these forms.
Bank Statements/Passbook
For interest income from savings accounts, fixed deposits, and to verify other income/expenses.
Investment Proofs for Deductions (if opting for Old Tax Regime)
- Section 80C: PPF, ELSS, Life Insurance Premium, Home Loan Principal, Tuition Fees, etc.
- Section 80D: Health Insurance Premium.
- Section 80E: Interest on Education Loan.
- Section 80G: Donation Receipts.
- Section 80TTA/TTB: Interest on Savings Account (80TTA for individuals below 60, 80TTB for senior citizens).
Home Loan Statement/Interest Certificate
From your bank, showing principal and interest components paid.
Rent Receipts
If claiming House Rent Allowance (HRA) exemption and not submitted to employer, or claiming deduction under Section 80GG.
Capital Gains Statement
If you have sold shares, mutual funds, or property, you’ll need contract notes, broker statements, purchase deeds, sale deeds, etc., to calculate capital gains/losses.
Details of Other Income
Dividend statements, family pension statements, details of winning from lottery/horse races, etc.
Details of Foreign Assets/Income
If applicable (for ITR-2 and ITR-3 filers).
Aadhaar-PAN Linkage
Ensure your PAN and Aadhaar are linked, as it’s mandatory for e-filing.
How to File ITR Online (Common Steps)
Visit the Income Tax e-filing Portal
Go to www.incometax.gov.in.
Log in
Use your User ID (PAN), password, and captcha. If new, register first.
Navigate to E-File
Go to “e-File” > “Income Tax Returns” > “File Income Tax Return.”
Select Assessment Year
Choose “Assessment Year 2025-26.”
Select Filing Mode
Choose “Online.” (You can also download the offline utility, fill it, generate XML, and upload).
Select Status
Choose “Individual.”
Select ITR Form
Select the correct ITR form (ITR-1, ITR-2, ITR-3, or ITR-4) based on your eligibility.
Select Reason for Filing
Choose the applicable reason (e.g., “Taxable income is more than the basic exemption limit,” “Claiming refund,” etc.).
Proceed with Online Filing
- Many fields (personal details, salary, TDS, bank interest) will be pre-filled based on your Form 26AS, AIS, and Form 16. Verify all pre-filled data meticulously.
- Enter any missing income details or make corrections if pre-filled data is inaccurate.
- Enter details of deductions and exemptions you wish to claim (if opting for the old tax regime).
- Provide details of all your active bank accounts (mandatory).
Compute Tax
The system will automatically calculate your tax liability or refund.
Preview and Submit
Review the entire ITR form for accuracy. Correct any errors.
E-Verify Your Return
This is the most crucial step. Your ITR is not considered filed until it is e-verified. Common methods include:
- Aadhaar OTP (most common and easiest).
- Net banking.
- Demat account.
- Bank ATM.
- Sending a signed ITR-V (acknowledgment) copy to CPC, Bengaluru, within 30 days of filing (less common now).
It is always advisable to file your ITR well before the due date to avoid last-minute rush, technical glitches, and potential penalties. If your income sources are complex, or you are unsure about choosing the correct ITR form or claiming deductions, Contact our tax experts.