File Income Tax Return (ITR)
Income Tax E-Filing Registration is performed by a taxpayer to register with the free governmental facility, namely the Income Tax E-Filing website, that allows taxpayers to file the Income Tax returns online. The Income Tax E-Filing website, which is completely free for all taxpayers, is used by all types of taxpayers in India to file income tax returns. Salaried individuals and taxpayers who have opted for a presumptive taxation scheme offered by the Act can easily file ITR-1 return, ITR-2 return and ITR-4 return through the income tax e-filing website.
In addition to filing income tax return, a taxpayer can also use the income tax e-filing website to view e-filed returns, check ITR status, respond to income tax notice and know tax refund status. Hence, any person having a taxable income of more than Rs.2.5 lakhs must be aware of the procedures for using the income tax e-filing website and have an account with the E-filing website maintained by the Income Tax Department. In this article, we discuss the procedure for completing income tax e-filing registration and obtaining a user id and password for tax return filing using the income tax e-filing website.
Advantages of Income Tax Return
Filing income tax returns offers several advantages for businesses, some of which are outlined below:
Refund Claims: Accurate and timely filing can lead to potential refunds, which can be beneficial for improving cash flow within the business.
Carry-forward of Losses: Losses incurred in one financial year can be carried forward and adjusted against future profits, reducing tax liabilities.
Loan Applications: Having proper and up-to-date income tax returns can serve as evidence of financial stability, increasing the chances of obtaining loans or credit from financial institutions.
Evidence for Transactions: Filed tax returns can provide solid proof of the business's financial transactions and activities, which can be helpful for legal or contractual purposes.
Compliance with Law: Filing tax returns ensures compliance with tax regulations, helping businesses avoid penalties or legal issues.
Transparency: Transparent financial records through tax returns can enhance the business's credibility, fostering trust among customers, partners, and stakeholders.
Audit Preparedness: Filed returns provide a basis for accurate financial statements, preparing the business for potential tax audits.
Business Growth: Accurate financial reporting through tax returns can assist in making informed business decisions, aiding in growth and expansion strategies.
Avoiding Notices: Timely and accurate filing reduces the likelihood of receiving notices or queries from tax authorities.
Availing Tax Benefits: Filing returns on time enables businesses to avail themselves of various tax benefits and deductions legally, optimizing their tax liabilities.
Who Should File a Business Tax Return?
Filing a tax return is mandatory for all eligible businesses operating within the framework of Indian tax regulations. The need to file a business tax return is contingent upon the structure of the business:
1. Sole Proprietorship
2. Partnership Firm
3. Limited Liability Partnership (LLP)
4. Companies – Private Limited Company, One Person Company
Documents Required for Income Tax e-Filing
In case individuals wish to file ITR online, the below-mentioned documents will be required:
1. The Permanent Account Number (PAN) of the individual.
2. The Aadhaar number of the individual. The Aadhaar number must be linked with the PAN.
3. The bank account details (bank account number, IFSC code, and bank branch) of the individual.
In case individuals file their ITR based on their salary, the below-mentioned documents are needed:
Form 16- In case House Rent Allowance (HRA) is being claimed, the rent slips must be given.
Salary Slips
In case individuals wish to claim deductions, the below-mentioned documents are required:
1. Proof of income such as capital gains income and house property income.
2. Any details about investments that are liable for deductions.
3. Details of home loans and insurance
4. Deposit account and savings account interest certificates
Benefits of e-Filing Income Tax Returns
The main benefits of efiling Income Tax Returns are mentioned below:
Tracking the status: Individuals who e-file the ITR can easily check the status online. Earlier, it was time-consuming to check the status and the status would only be sent by post. However, e-filing ITR enables the individual to check the progress of the application with ease.
Processing of refund: In case individuals e-file their ITR, the process to receive the refund is easy and is much quicker. Earlier, the refund process was not very convenient and was very time-consuming. However, individuals can update the bank details online and receive the refund much quicker
Reduction of errors: Due to the number of calculations that must be made when computing ITR, it is common that errors are made. However, when e-filing ITR, there is a mechanism where the computation of ITR is done by the system, therefore reducing the number of errors.
E-Verification: The verification of ITR can be done online if individuals e-file their ITR. Earlier, the ITR would have to be sent to the CPC in Bengaluru.
Convenient: The process of e-filing ITR is very convenient, easy, and the process takes very less time. Earlier, the process to file ITR was very tedious as individuals had to visit the Income Tax Department. However, the process to e-file ITR can be done from the comforts of an individual’s home.
Access to documents: In case individuals e-file the ITR, they will have to upload the necessary documents online. Therefore, individuals will be able to view the documents at any given time. The manual process of e-filing ITR does not provide such benefits.
Procedure of filing Income Tax Return
Here's a step-by-step guide on how to e-file a company tax return in India:
Step 1: Registration on the E-filing Portal
Visit the Income Tax Department's e-filing portal at https://www.incometaxindiaefiling.gov.in and register as a company by providing the necessary details, including the company's Permanent Account Number (PAN), password, and contact information. If already registered, simply log in using the PAN and password.
Step 2: Download the Relevant ITR Form
Download the applicable Income Tax Return (ITR) form for filing the company's tax return. Companies typically use Form ITR-6 for this purpose.
Step 3: Prepare and Validate the ITR Form
Fill in the ITR form with the company's financial information, income, expenses, taxes paid, and other relevant details. Validate the form to check for any errors or discrepancies.
Step 4: Calculate Tax Liability
Compute the total tax liability based on the applicable tax rates and deductions. Ensure accurate calculations of income tax payable
Step 5: Pay Tax Due (if applicable)
If there is any tax payable after considering tax deducted at source (TDS) and advance tax payments, pay the balance amount using the available online payment options.
Step 6: Generate XML File
Save the validated ITR form as an XML file on your computer.
Step 7: E-filing the ITR
Log in to the e-filing portal using the company's credentials. Under the "e-File" tab, select "Upload Return" and choose the relevant assessment year and ITR form. Upload the saved XML file.
Step 8: Verify the Return
After successful upload, verify the return using one of the available methods - Digital Signature Certificate (DSC) or Electronic Verification Code (EVC). If using DSC, select the DSC and proceed with the verification process.
Step 9: Acknowledgment and Verification
Upon successful verification, the system will generate an acknowledgment form (ITR-V) containing an acknowledgment number. Download and keep a copy of the ITR-V for record purposes.
Step 10: Sending ITR-V (if applicable)
If the return is not verified using DSC, the taxpayer must sign the ITR-V acknowledgment and send it by post to the Centralized Processing Centre (CPC) in Bengaluru within 120 days from the date of e-filing. By following these steps, companies can easily e-file their income tax returns in India. E-filing ensures a faster and hassle-free tax return filing process, reducing the need for physical paperwork. It is advisable to file the tax return within the due date to avoid any penalties or interest for late filing. Seeking assistance from a professional tax consultant or a Chartered Accountant can also ensure accurate compliance and a smooth e-filing process.