Guide to Filing Indian Income Tax Returns
Filing an income tax return (ITR) in India requires taxpayers to follow a clear sequence: calculating net taxable income, selecting the correct ITR form, settling any outstanding tax, and verifying the submission. The tax department processes the filing and issues an intimation notice, either confirming alignment with their records or flagging discrepancies that may lead to refunds or additional payments.
Taxable income is divided into five categories: salary, house property, capital gains, business or professional earnings, and other sources. Salary income includes wages and pensions, with exemptions such as house rent allowance (HRA) and leave travel allowance (LTA) reducing the taxable amount. Employers provide Form 16, which details salary and tax deductions. A standard deduction is available for income from salary.
Income from house property is taxed differently depending on whether the property is self-occupied, rented, or deemed rented. For rented properties, a 30% standard deduction applies to gross rental income, alongside deductions for municipal taxes and home loan interest. Self-occupied properties are taxed only if they generate income, while deemed rented properties—those not rented but owned by taxpayers with more than two homes—are taxed as if they were rented.
Capital gains arise from selling assets like real estate, stocks, or gold. Tax treatment depends on the holding period: equity shares and equity-oriented mutual funds held for over one year qualify for long-term capital gains tax, while shorter holding periods incur short-term capital gains tax. House property sales require a two-year holding period for long-term classification, with tax rates varying by asset type and duration.
Business or professional income must be reported separately, with allowable expenses such as operating costs, depreciation, and professional fees reducing taxable income. Freelancers and consultants fall under this category. The fifth category, “other sources,” includes income not covered elsewhere, such as interest from fixed deposits, dividends, or family pensions.
Old vs. New Tax Regimes: Key Differences
Taxpayers can now choose between the old and new income tax regimes. The old regime retains existing tax slabs and allows deductions. The new regime offers lower rates but eliminates most deductions, including HRA and home loan interest.
To file an ITR, taxpayers need documents including Form 16 (salary TDS), Form 26AS (tax credit statement), bank interest certificates, and Aadhaar-linked bank details. The new portal provides pre-filled data, but verification remains essential to avoid errors. Common mistakes, such as incorrect income reporting or missed deductions, can be corrected by filing a revised return under Section 139(5) of the Income-tax Act, 1961. The last date for filing a revised ITR is December 31, unless extended by the government.
Choosing the Right ITR Form
The correct ITR form depends on income sources. ITR-1 applies to salaried individuals with one house property and other income, but capital gains require ITR-2. Higher income brackets or complex assets may necessitate ITR-3 or ITR-4. The portal guides users through form selection based on declared income types.
Verification is the final step before the tax department processes the return. Taxpayers can verify their return electronically using Aadhaar OTP, net banking, or digital signature certificate. Verification confirms the authenticity of the filed details, preventing processing delays. The department then reviews the submission, cross-checking reported income against TDS certificates and bank transactions to ensure alignment before finalizing the assessment.
