The Income Tax Return (ITR) is a document that taxpayers in India file with the Income Tax Department to declare their income earned, deductions claimed, taxes paid, and tax liability for a financial year. The ITR form comprises various sections that help taxpayers provide relevant information to the Income Tax Department.
Part A – General Information:
This section requires the taxpayer to provide basic information such as their name, address, PAN, and contact details. It also asks for bank account details through which the taxpayer wants to receive any refunds.
Part B – Gross Total Income:
This section requires taxpayers to provide details of their total income earned during the financial year. This includes income from salary, house property, capital gains, business or profession, and other sources. The taxpayer needs to provide relevant details such as the amount of income earned, taxes deducted at source, and any exemptions or deductions claimed.
For example, Mr. X is a salaried employee and earns a total income of Rs.10 lacs during the financial year. His employer deducts TDS (tax deducted at source) of Rs.1 lac from his salary. Mr. X also has a house property and earns rent of Rs.2 lacs annually. He can claim a deduction of Rs.1.5 lacs towards interest paid on his home loan. Therefore, his total annual gross income will be Rs.10 lacs + Rs.2 lacs – Rs.1 lac – Rs.1.5 lacs = Rs.9.5 lacs
Part C – Deductions and Total Taxable Income:
This section allows the taxpayer to claim deductions under various sections of the Income Tax Act. Some of the popular deductions include Section 80C (investment in tax-saving instruments), Section 80D (health insurance premium paid), Section 80G (donations made to charitable institutions), and Section 80TTA (interest earned on savings account).
For instance, if Mr. X invests Rs.1.5 lacs in a tax-saving mutual fund scheme under Section 80C, he can claim a deduction of Rs.1.5 lacs from his total gross income. If he has also paid a health insurance premium of Rs.25,000/- for himself and his family members, he can claim a deduction of Rs.25,000/- under Section 80D. Therefore, his total taxable income for the year will be Rs.9.5 lacs – Rs.1.5 lacs – Rs.25,000/- = Rs.8.25 lacs.
Part D – Computation of Tax Payable:
This section requires taxpayers to compute their tax liability based on their taxable income. The taxpayer must provide details of the tax deducted at source, advance tax paid, and self-assessment tax paid. The section also allows the taxpayer to claim a rebate under Section 87A, which is available to taxpayers with a total income of up to Rs.5 lacs.
For example, if Mr. X’s tax liability for the year is Rs.65,000/-, and his employer has already deducted TDS of Rs.1 lac from his salary, he can claim a refund of Rs.35,000/-. He can do this by providing the details of his tax deducted at source, advance tax paid, and self-assessment tax paid in this section of the ITR form.
Part E – Other Information:
This section requires the taxpayer to provide additional information, such as details of any assets held outside India, any income earned from foreign sources, and any tax credits claimed. This section also provides details of any tax deducted at source on income earned from countries with which India has a Double Taxation Avoidance Agreement (DTAA).
For instance, if Mr. X has earned an interest income of Rs.50,000/- from a bank account held in the USA, he must provide details of this income in this section. If the USA and India have a DTAA, Mr. X can claim a credit for the taxes paid in the USA on this income, thereby avoiding double taxation.
Part F – Verification:
This is the final section of the ITR form and requires the taxpayer to sign and date the form. The taxpayer must also declare that the information provided in the form is truthful and accurate to the best of their belief and knowledge.
In conclusion, the ITR form consists of various sections that help taxpayers provide relevant information to the Income Tax Department. Understanding these sections and their significance is crucial for taxpayers to ensure the accurate filing of their income tax returns. By providing accurate information, taxpayers can avoid penalties, interest, and legal consequences for incorrect or false information. Therefore, it is advised to seek expert advice or consult the Income Tax Department’s website for any doubts or clarifications while filing the ITR.