How to File Your ITR Easily: Tips and Tricks for Indian Taxpayers

According to PIB data, almost 7.28 crore ITRs were filed in AY 2024-25. Among these, 43.82% were filed using the e-filing portal.

The ITR or Income Tax Return is a thorough statement that records the tax and income liability for a given financial year. This records the assessee’s (person or entity) total income and expense during the present financial year along with their assets, liabilities, and tax payable.

With several forms and steps available, people often get confused regarding how to file their ITR easily. Let’s take a look at how you can simplify the ITR process and file for annual taxes with ease.

Who Needs to File for ITR

If the annual income of any person exceeds the minimum exemption limit for tax-free income, they need to mandatorily file Income Tax Returns (ITR). The entities that fall under the income tax regimen are salaried individuals, freelancers, businesses, NRIs, etc.

Further, it is mandatory to file an ITR in the following cases:

• If you wish to claim income tax refunds.
• If you have foreign assets or income.
• The entity in question is a company or firm.
• To report professional or business turnover that is more than the prescribed limit.
• To disclose any losses that you need to carry forward.
• If you have deposits worth INR 1 crore or more in your current account.
• When there are deposits worth INR 50 lakhs in one or more savings accounts.
• More than INR 2 lakhs have been spent on foreign travel in the present year.
• If the expenditure on electricity is more than INR 1 lakh.

If the assessee has TCS or TDS more than the prescribed limits.

Understanding the Different ITR Forms

Once you know why you need to file the ITR, it is time to pick the right ITR form. This is determined based on the type of assessee you are.

If you are filing in the FY 2024-25 or AY 2025-26, which is the current assessment year for ITR, you will need to fill out one of the below:

ITR-1 or SAHAJ

This form is for individuals whose main income is from salary, pension, agriculture, one-house property, and other sources (lotteries). However, if your total income exceeds INR 50 lakh or agricultural income exceeds INR 5000, then you will no longer be able to opt for the ITR-1 form.

ITR-2

If you are one of the following, then you have to file this form:

• The Individual Director of a company
• Have income from Capital Gains
• Have foreign income
• Invested in unlisted equity shares
• A Resident who is not ordinarily resident in India
• Have an agricultural income of more than INR 5000
• An individual who has brought forward losses that need to be carried forward
• Have tax deductions under Section 194N
• Have payment or tax deductions deferred on ESOP

ITR-3

Currently, the ITR 3 is meant for individuals or a Hindu Undivided Family that earns from a proprietorship. To be eligible, you need to have:

• A business does not opt for presumptive income.
• A business where it is important to maintain records and get them audited.
• Investments in unlisted equity shares.
• Income as a partner in a firm.

ITR-4 or SUGAM

To file under the ITR-4, you have to be an individual, HUF, or partnership firm (other than LLPs). Further, the criteria are:

• Business income as per the presumptive income scheme (Section 44AD or 44AE).
• Professional income as per the presumptive income scheme (Section 44ADA).
• Income from salary/ pension/ house property/ others not exceeding INR 50 lakh.

If you have foreign assets or meet the criteria of ITR-2, then you are not eligible for the ITR-4.

ITR-5

The ITR-5 is meant for:

• Firms
• Limited Liability Partnerships
• Association of Persons
• Body of Individuals
• Artificial Juridical Person
• Estate of deceased
• Estate of insolvent
• Business trust
• Investment fund

ITR-6

This option is meant for companies other than those claiming an exemption under Section 11. Further, this form can be filed electronically only.

ITR-7

If a person or a company has to file for income tax under the below sections of the Income Tax Act, they will have to opt for the ITR-7:

• Property held by a trust or section 139(4A).
• Political parties or section 139(4B).
• Scientific research associations, news agencies, educational institutions, medical institutions, and others fall under section 139(4C).
• Universities and medical institutions that do not have to provide proof of income fall under section 139(4D).
• Business Trusts that do not have to provide proof of income fall under section 139(4E).
• Investment Funds that do not need to show proof of income fall under section 139(4F).

Documents You Need Before Filing ITR

To file for the ITR, one needs to collect all necessary documents. These include:

• PAN Card.
• Aadhaar Card.
• Form 16 for salaried employees.
• Bank account details and statements.
• Form 26AS and AIS to know the TDS deductions made.
• Home Loan Statement.
• Capital Gains Details.
• Detail of Tax Saving Instruments like FDs and investment proofs.
• Foreign Income.
• Business Income records.
• Dividend Income records.
• Interest certificates for those claiming tax benefits

Step-by-Step Guide to Filing ITR Online

Once you have all the documents in hand, it is time to start filing:

• Enter the pre-filling details such as the assessment year and applicant type.
• Choose the correct ITR form based on the criteria you meet.
• Select your reason for filing the ITR.
• Validate the pre-filled information.
• Claim deductions under Forms 80C, 80D, 80G, and more.
• Complete the E-verification process using Aadhaar OTP, Net Banking, electronic verification code (EVC), etc.

Once the filing is complete, you can get a copy of the Income Tax Return. Just click on View Returns, select the assessment year, and click on the ITR-V acknowledgement number of the document you wish to download.

This way, you can get access to your past ITR filings any time you want.

Tips to Avoid Common Mistakes While Filing ITR

Some of the most common mistakes made when filing Income Tax Return and ways to check them are:

Selecting the wrong ITR form

Read through the criteria applicable to each ITR form and use the one applicable.

Not declaring all sources of income

Failure to disclose all sources of income will lead to penalties and audits. If the mistake is deliberate, then the individual may face penal action.

Forgetting to verify the return after filing

Unless you e-verify, the ITR is treated as unfiled.

Claiming incorrect deductions

This can lead to scrutiny of your ITR and lead to the tax department sending you a notice. If not resolved at once, a person may face penal action.

Missing the ITR deadline

The penalty for late filing of itr is severe. Taxpayers who miss the ITR deadline will have to pay fines. They may also be charged interest on pending taxes.

Maximizing Tax Savings with Deductions & Exemptions

To save on income tax, individuals can take advantage of Section 80C. Under this, the various investment options you can use for tax savings are:

• ELSS (Equity Linked Saving Scheme)
• Fixed Deposits
• Life Insurance
• Public Provident Fund
• National Savings Scheme
• Unit Linked Insurance Plan

To add, the Section 80C is also applicable for investments made in government schemes such as:

• Senior Citizen Savings Scheme
• National Pension Scheme
• Sukanya Samriddhi Yojana
• Public Provident Fund

Further, you can also claim deductions and exemptions for home loan payments under Sections 80C, 24(b), and 80EEA. You may also claim health insurance premiums under Section 80D and donations made under Section 80E.

What Happens After Filing ITR

After you complete filing the ITR, the next steps are as follows:

• Check ITR status online to ensure it has been properly filed.
• Respond to a tax notice if you receive any.
• Make sure to revise your ITR if there is a mistake.
• Wait for your ITR refund; the tax refund timeline is usually 4-5 weeks.

Deadlines & Penalties: Why Timely Filing is Important

Sometimes, the Income Tax Department declares an income tax return filing extension date. In general, the last date for filing the ITR is as follows:

• 31st July is the income tax return filing last date for salaried employees.
• 31st October, if you are a business that requires an audit.
• 30th November for those businesses that have to report transfer pricing.
• 31st December is the last date to file revised returns and belated returns.

If a business or individual is unable to file the ITR in time, they will be subject to a penalty for late filing of the income tax return, such as late fees and interest on pending tax. This interest is charged on pending tax at 1% per month as per Section 234A. A late fee of INR 1000 is charged to those who have an income below INR 5 lakh, and INR 5000 is for those whose income crosses this threshold.

To prevent drawing any fines, individuals and businesses may opt to pay advance tax. This is equal to:

Income tax on estimated income - relief (Section 87A) + surcharge + Education cess + SHEC - other reliefs - TDS

If you opt to pay advance tax, then the advance tax due dates and amounts are:

• 15% before June 15th,
• 45% before September 15th,
• 75% before December 15th,
• and 100% before March 15th.

Should You File ITR Yourself or Hire a CA

Individuals like salaried employees and freelancers can file ITR on their own and with accuracy, especially if they know all their income sources and tax liabilities. While multiple online platforms are present to facilitate tax filing, it is important to file only from the official website of the Income Tax Department.

However, if you have multiple sources of income or exemptions, or are unable to identify what to report, you can get help from a CA. Further, it is also important for businesses to seek help from a tax expert or a CA.

In Conclusion

By using the right approach, ITR filing can be simplified. To prevent attracting any fines and penalties, it is best to start early and avoid last last-minute rush. Further, be sure to cross-check the documents that you file to ensure that there are no mistakes. Also, another advice is to go through the requirements for the current assessment year for ITR and check for any changes.

Use our guide and engage in the best practices for ITR filing.