It’s is mandatory for individuals, NRIs, partnership firms, LLPs, Companies, Trust to file income tax returns each year. Individuals and NRIs are required to file income tax return, if their income exceeds the exemption limit. Partnership firms are required income tax return – irrespective of amount of income or loss. All companies are mandatorily required to file income tax return. Finally, it is mandatory for most types of trust to file income tax every year, while some types of trusts are required to file return of income if its gross total income exceeds the exemption limit.
Income tax return form is e-filed – manual filing is permissible only for senior citizens. Income tax returns do not have the ability to accept any attachment while e-filing or manually filing. Therefore all relevant documents pertaining to the income tax filing like proof of investment, TDS certificates, pay slip, rent receipt, etc. must be retained by the taxpayer and should be readily available if requested by tax authorities during assessment, inquiry, etc.
Top Income Tax Return Types
ITR 1 (SAHAJ)
Income Tax Form ITR-1 (SAHAJ) is for individuals having income from salaries, one house property and other sources like interest (excluding winning from lottery and race horses)., etc., This is the most used income tax return type.
ITR-1 form should not be filed for below cases:
- Income that exceeds Rs. 50 Lakhs
- Assessee has Taxable Capital Gains
- Assessee has any of the below sources of income :
- Income from foreign assets
- Agricultural income that exceeds Rs. 5000
- Income from Business or Profession
- Income from more than one house property
ITR-1 form must be filed by individuals and HUFs on or before 31st July of every year.
This form must be filed by individuals and HUFs who are not eligible to file ITR-1 Sahaj form, because of following reasons:
- Income exceeding Rs. 50 Lakhs
- Having foreign assets / income
- Having agricultural income which is more than Rs. 5,000,
- Having taxable capital gains
- Having income from business or profession as a partner
- Having more than one house property
ITR-2 form should not be filed by any individual who has income under the head of Business or Profession from a proprietorship. ITR-2 form can also not be filed by a company or LLP or other types of legal entity.
ITR-2 form must be filed by individuals and HUFs on or before 31st July of every year.
INCOME TAX NOTICE
Income tax notices are sent by the Income Tax Department for various reasons like not filing income tax return, defect in filing of tax return or other instances where the tax department requires additional information or documents. On receiving an income tax notice, there is no reason to be alarmed or frightened. However, the taxpayer must take steps to understand the nature of notice, the request or order in the notice and take steps to comply.
Some of the common clauses under which an assessee may receive notices from the income tax department
Notice u/s 143(1) – Intimation
This is one of the most commonly received income tax notice. The income tax department sends this notice seeking a response to the errors/ incorrect claims/ inconsistencies in an income tax return that was filed. If you want to revise the return after receiving this notice, it must be done within 15 days. Else, the tax return will be processed after making necessary adjustments mentioned in the 143(1) tax notice.
Notice u/s 142(1) – Inquiry
This notice is addressed to the assessee when the return is already filed and further details and documents are required from the assessee to complete the process. This notice can also be sent to necessitate a taxpayer to provide additional documents and information.
Notice u/s 143(2) – Scrutiny
An income tax notice under Section 143(2) is issued if the tax officer was not satisfied with the documents and information that was submitted by the taxpayer. Taxpayers who receive notice under Section 142(2) have been selected for a detailed scrutiny by the Income Tax department and will have to submit additional information.
Notice u/s 139(1) – Defective Return
An income tax notice under Section 139(1) would be issued if the income tax return filed does not contain all necessary information or incorrect information. If tax notice under Section 139(1) is issued, you should rectify the defect in the return within 15 days.
Notice u/s 156 – Demand Notice
This type of income tax notice is issued by the Income Tax Department when any tax, interest, fine or any other sum is owed by the taxpayer. All demand tax notice will stipulate the sum which is outstanding and due from the taxpayer.