ITR Service

Income Tax Return is a form through which taxpayers disclose their income and assets to the Income Tax Department of India. All taxpayers must file their ITR before the due date specified by the department each year. The tax paid by taxpayers depends on the category they fall under – based on their employment type, direct and passive income sources, investments.

Why income tax return filing is important?

Filing income tax returns is important in India for a number of reasons.

The primary purpose of income tax is to raise revenue for the government to fund its activities. By filing your tax return, you are fulfilling your legal obligation to pay taxes on your income.

To claim deductions and exemptions: Filing your tax return allows you to claim deductions and exemptions. This can reduce the amount of tax you owe.

There are a number of deductions and exemptions that you can claim on your income tax return. These can reduce the amount of tax you owe. Some common deductions and exemptions include:

• Medical expenses
• Education expenses
• Donations to charity
• Home loan interest
• Life insurance premiums

If you have overpaid your taxes during the year, you can file a tax return to claim a refund. The amount of your refund will depend on how much you overpaid and the deductions and exemptions you claim.

To build your credit score: Filing your tax return on time and in full can help to improve your credit score. A good credit score can make it easier to get loans, credit cards, and other forms of credit in the future.

To get a job: Some employers require job applicants to provide proof of income tax filing. This is to ensure that the applicant is a responsible taxpayer and has a history of paying their taxes.

To get a visa: Some countries require visa applicants to provide proof of income tax filing. This is to ensure that the applicant has a stable source of income and is not likely to become a financial burden on the country.

Overall, filing income tax returns is an important part of being a responsible citizen and taxpayer in India. It has a number of benefits, both financial and non-financial.

If you are a resident of India and have earned income during the year, you are required to file an income tax return. The deadline for filing your tax return is usually the July 31. You can file your tax return online or by mail.

If you need help filing your tax return, you can hire a tax professional. Tax professionals can help you to determine if you are required to file a tax return, and they can help you to calculate your taxes and file your return.

What are the Types of ITR Forms?

There are seven different types of ITR forms available to Indian taxpayers. These forms cater to individual taxpayers and organisations. The type of ITR form you must use will depend on whether you are an individual taxpayer or an organisation, your total income, as well as the sources of your income. Here is a list of 7 types of ITR forms:

1. ITR-1 or Sahaj

Individuals who fall under the following categories, should opt for ITR-1 form (also known as Sahaj).

• Salary and pension earners
• Income earned from other sources (except winning a lottery or horse racing)
• Agricultural income less than Rs. 5,000
• Payments received for a single house property with certain exclusions

2. ITR-2

Individuals and Hindu United Families (HUF) who fall under the following categories, should opt for ITR-2 form.

• Income exceeding Rs.50 Lakh
• Income received through salary, pensions, capital gains and other sources
• Income generated from foreign assets
• Agricultural income exceeding Rs.5,000

3. ITR-3

Individuals and Hindu United Families who fall under the following categories, should opt for ITR-3 form.

• Income from a business or profession
• Income received from being a partner in a firm
• Income received through salary, pension, capital gains and other sources
• Investments in unlisted equity shares
• Individual director in a company

4. ITR-4 or Sugam

Individuals, Hindu United Families, and firms with an income up to Rs.50 lakhs from businesses or a profession can opt for ITR 4 form. Moreover, those who have chosen the presumptive income scheme under Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act are eligible to file their returns using the ITR 4 form.

5. ITR-5

The ITR-5 form is meant for firms, Body of Individuals, co-operative societies, Limited Liability Partnerships, Association of Persons, local authorities, Artificial Judicial Persons, estate of insolvent, estate of deceased, and business trusts (not individual citizens).

6. ITR-6

The ITR-6 form is to be filed electronically by companies, except for those that claim an exemption under Section 11, which is income from a religious or charitable property.

7. ITR-7

Companies filing their return under below sections of the Income Tax Act can use ITR-7:

Section 139(4A): Individuals holding a property for charitable or religious purposes.

Section 139(4B): â€¯Political parties and affiliates.

Section 139(4C): â€¯Institutions or associations such as medical institutions, news agencies and establishments, educational institutions, think tanks, and agencies involved in scientific research.

Section 139(4D): â€¯Colleges and universities, or other institution where revenue and losses are not required to be reported as per the rules laid under this section of the Act.

Aspiring Home Loan borrowers must familiarise themselves with the Indian tax norms and fill the right ITR form, as lenders require borrowers to submit their income tax returns while availing of a Home Loan. The ITR form serves as an income proof and establishes their sources of income. This allows the lender to assess a borrower's creditworthiness.

What is Income Tax Slab?

An income tax slab is a set of income levels that are taxed at a fixed rate set by the government. The income tax slab system in India determines how much tax an individual must pay based on their taxable income. The government revises the income tax slabs on a regular basis to account for changes in inflation and the cost of living.

The income tax slabs are divided into different categories, such as individual taxpayers, Hindu Undivided Families (HUFs), firms, and companies. Different tax rates apply to different levels of taxable income within each category, with higher rates applied to higher levels of income.

New Income Tax Slab for FY 2024 - 2025

In the Union Budget for the fiscal year 2025-26, the Indian government introduced significant revisions to the income tax slabs under the new tax regime, aiming to provide relief to taxpayers and stimulate economic growth.

Additionally, the standard deduction has been increased from ?50,000 to ?75,000. This means that individuals with an annual income up to ?12,75,000 will not be liable to pay any income tax after accounting for the standard deduction.

These changes are part of the government's efforts to simplify the tax structure and provide substantial relief to the middle class, thereby encouraging increased consumption and investment.

It's important to note that these revised slabs apply only to taxpayers opting for the new tax regime. The old tax regime, with its existing slabs and deductions, remains available for those who prefer it. Taxpayers are advised to assess both regimes to determine which is more beneficial based on their individual financial situations.

For comprehensive details and personalized advice, consulting the official notifications from the Income Tax Department or a certified tax professional is recommended.

Income Tax Slab Rates for New VS Old Tax Regime.

For the fiscal year 2024-25 (Assessment Year 2025-26), the income tax slabs under the old tax regime in India are structured based on the taxpayer's age. The old tax regime allows individuals to claim various deductions and exemptions, such as those under sections 80C, 80D, House Rent Allowance (HRA), and others.

1. Individuals Below 60 Years of Age:

2. Senior Citizens (60 Years or Above but Below 80 Years):

3. Super Senior Citizens (80 Years or Above):

In addition to the above tax rates, a standard deduction of ?50,000 is available for salaried individuals and pensioners. Furthermore, taxpayers with an annual income up to ?5,00,000 are eligible for a rebate under Section 87A, which provides a rebate of 100% of income tax or ?12,500, whichever is less, effectively making their tax liability nil.

Please note that these rates are specific to the old tax regime. Taxpayers have the option to choose between the old tax regime and the new tax regime, which offers different tax slabs and does not allow certain deductions and exemptions. It's advisable to evaluate both regimes to determine which is more beneficial based on your financial situation.

For detailed information and personalized advice, consulting the official notifications from the Income Tax Department or a certified tax professional is recommended.

Which ITR Form to Use for a Home Loan.

Individuals who plan on filing an ITR for their Home Loan must select the ITR-1 form (also known as the SAHAJ form). It applies to salaried and professional borrowers repaying their Home Loans for a self-occupied property.

The form allows you to claim the Home Loan tax benefit of up to Rs.1.5 Lakh on the principal repayment, stamp duty and registration charges. One can also be eligible for deductions worth Rs.2 Lakhs on interest repaid annually underâ Section 24.

What Is Section 24 of the Income Tax Act?

Section 24 of the Income Tax Act, 1961 allows individuals to claim tax exemptions on the interest component of their Home Loans. The maximum deduction limit for the same is Rs. 1,50,000. One does not necessarily have to reside in the property to claim tax deductions. Deductions from income from house property are taken into account under certain circumstances, such as if the property is rented out or if an individual owns multiple properties. Use an Income tax calculator to calculate how much income tax you are liable to pay.

There are 3 main categories of deductions under Section 24 of the Income Tax Act, as listed below:

1. Standard Deductions

This allows for a 30% deduction on your Net Annual Value. Net Annual Value is Gross Annual Value Minus Municipal taxes like property tax, sewerage tax and so on. Where, Gross Annual Value is the higher of expected rent or actual rent received. Naturally, the Net Annual Value of a self-occupied house will be Zero and so will be the Standard Deduction.

2. Deduction on Interest on Housing Loan Under Section 24

Section 24 allows for deduction on the interest component of Home Loan up to Rs 2,00,000 in a financial year. The loan must be used to acquire, construct, repair, renew or reconstruct the property. The property must be acquired within 5 years from the day the loan was availed. The deduction is not applicable on any brokerage or commission paid to any middlemen or agents. The deduction is applicable on self-occupied or vacant properties only. For rented properties, the entire amount of interest is allowed as deduction without limit.

3. Municipal Deduction

One should pay an annual municipal tax to the government which is subtracted from the Gross Annual Value to obtain the property’s Net Annual Value. House owners who have paid the municipal tax in a given financial year can claim a deduction on municipal tax on that year.

Income Tax Benefits for a House Loan

Your Home Loan not only helps you secure the funds you need to buy a residential property of your choice, it also enables you to receive income tax rebates and exemptions. The Government of India extends these Home Loan tax benefits to incentivise and boost property purchase across the country. To ensure that you apply under the correct tax provision, you should know the different parameters that make you eligible for exemption.

One should identify which components of their Home Loans can be taxed and which can be eligible for a rebate. Simply put, you can avail of an exemption on your Home Loan principal and the interest payments under Section 80C and Section 24(B). Here is a glimpse of all the tax rebates offered on Home Loans before we go into further details.

Income Tax Rebate on Home Loan under Different Sections

Deductions on Interest Paid on Housing loan

Following are the ways in which you can save your Income Tax payable, on your Home Loan interest payments every year:

Section 24B

• The interest claimed under Section 24B can go up to Rs.2 Lakh for self-occupied properties.
• The interest paid on a Home Loan for a rented residential property can be claimed without any upper limit; claims can only go up to only Rs.2 Lakh under ‘Housing Properties’ in a year
• The interest claimed under Section 24B has to be calculated on an accrual basis, which means that even if you don’t actually pay the amount that year (in case of a moratorium), you can still claim the amount as a deduction.
• Joint Home Loan Borrowers can claim a rebate of up to Rs.2 Lakh each, provided they contribute to the EMI payments, and are the co-owners of the property.
• A certificate detailing the Home Loan interest calculations from the lender is mandatory to claim the deductions.
• In the case of an under-construction property, the construction work must be completed within 5 years of borrowing the Home Loan amount.
• Interest deductions on an under-construction property can begin from the year the construction has ended.
• The interest deduction will be restricted to Rs. 30,000 if the construction of the property is not completed within the first 5 years of borrowing the Home Loan.

Note that homebuyers who have funded the purchase of their property out of their own pocket are also eligible for claims under Section 24B (not applicable on self-occupied properties).

Section 80EE

• Tax benefits under Section 80EE can be claimed only after exhausting the interest waivers under Section 24B.
• The Home Loan interest rebates under 80EE can be claimed by first-time homebuyers only.
• The Home Loan amount cannot exceed a valuation of Rs.35 Lakh, and the property’s value cannot exceed Rs.50 lakhs.

Things You Must Keep in Mind Before Opting for the New Tax Slab

Here are a few things that you must keep in mind before opting to pay the income tax under the new tax slab (2023-2024):

• The new tax regime may affect the exemptions and deductions to which you are entitled. Make certain you understand how the new regime will affect your exemptions and deductions.
• If you are an individual or a member of a Hindu Undivided Family (HUF) and do not have any business income, you can exercise the option on or before for each previous year.
• As a taxpayer, once you select the next tax regime, you cannot switch to another option during the year.
• The new tax regime may affect the exemptions and deductions to which you are entitled. Make certain you understand how the new regime will affect your exemptions and deductions.
• It is crucial to calculate your tax liability under both the old and new tax regimes to determine which is more beneficial to you as the new tax slab may lead to a decrease or increase in your tax liability.

Conditions for Opting New Tax Regime

To be eligible for the lower income tax rates under the new regime, the following conditions must be met by the individual or HUF's total income:

• No business income is included.
• No exemptions or deductions from the Income Tax Act are taken into account.
• Losses, including carry forward and depreciation-related losses, are not offset.
• Capital losses from the sale of house property cannot be deducted.
• No exemptions or deductions for allowances or perquisites from any other law are taken into account.