Complete Guide to Income Tax Return (ITR) Filing

The Income Tax Return (ITR) is a statement through which an individual taxpayer discloses income, deductions, tax liability, payments made for taxes, and other specified details to the Income Tax Department.

In order to move to the Income-tax Act, 2025, it is necessary to use the proper terms. The New Act abolishes the Previous Year notion in favor of Tax Year and cancels the Assessment Year notion as of the Tax Years starting from 1 April 2026.

What is Income Tax Return (ITR)?

The Income Tax Return (ITR) is a statement filed by the taxpayer to the Income Tax Department providing prescribed details concerning income and tax during the relevant year.

Depending on the type of taxpayer and income type, the statement will provide the following details:

• Salary or pension
• Income from house property
• Income from business or profession
• Capital gains
• Income from other sources
• Deductions
• Tax Deducted at Source (TDS)
• Tax Collected at Source (TCS)
• Advance tax
• Self-Assessment tax
• Tax payable or refund

The relevant ITR form is determined depending on taxpayer residential status, income type, amount of income and other specified conditions.

Tax Year Under the Income-tax Act, 2025

The Income-tax Act, 2025 provides for Tax Year.

Tax Year means a period of 12 months which may be within a financial year. The period during which the income arises beginning with 1 April 2026 will be termed as Tax Year under the new Act.

Example:

1 April 2026 to 31 March 2027 = Tax Year 2026-27

It is not necessary for the businesses to make changes to their accounting year because the Tax Year is still within the financial year.

Who Should File an Income Tax Return?

An Income Tax Return is filed when it is required according to provisions and status of the taxpayer along with other conditions.

These conditions may be different for:

• Individuals
• Hindu Undivided Family (HUF)
• Firm
• LLP
• Company
• Trust
• Association of persons
• Other person covered under Income-tax Act

Taxpayer needs to ascertain his/her Income Tax filing requirements prior to filing return.

Types of Income that Needs to be Declared on ITR

Depending on the type of ITR, the income needs to be declared in various categories which can be:

Salary / Pension

Income earned from the salary and/or pension.

Income from House Property

Income earned from house property.

Income from Business / Profession

Income earned through business and/or profession.

Capital Gains

Gain made by selling capital asset(s).

Other Sources

Income such as interest, dividend, etc.

Documents needed for filing ITR

The taxpayer must gather all the documents before preparing the ITR.

It can include:

• PAN
• Aadhar
• Form 16
• Form 16A
• Form 26AS
• Annual Information Statement (AIS)
• Taxpayer Information Summary (TIS)
• Bank statement
• Interest statement
• Salary statement
• Capital gains statement
• Rental statement
• Home Loan Interest statement
• Investments
• Donations
• TDS certificate
• Previous year ITR
• Etc.

Form 26AS, AIS and TIS

Taxpayers need to examine the information provided in the tax information statements before filling out the return.

Form 26AS basically contains information related to taxes such as TDS and TCS.

AIS (Annual Information Statement) contains comprehensive information that is provided by the Income Tax Department.

TIS (Taxpayer Information Summary) contains a summary of the information provided in AIS.

These records need to be compared with the taxpayer’s books, salary statements, bank statements and other relevant supporting documents before filing the return.

Selection of the Correct ITR Form

Selection of the correct ITR form is a crucial step in filing returns.

Currently, the Income Tax Department provides various ITR forms depending on the taxpayer and type of income, namely, ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7.

Examples:

ITR-1 (Sahaj) – Applicable for eligible individual taxpayers satisfying prescribed conditions.

ITR-2 – Applicable for individuals and HUF having certain types of incomes except for business or profession.

ITR-3 – Applicable for individuals and HUF having income from business or profession.

ITR-4 (Sugam) – Applicable for eligible individual taxpayers, HUF and firms except LLPs satisfying prescribed conditions of presumptive taxation etc.

Step-by-Step Process of ITR Filing

Step 1: Gather Income Information

Gather information about salary income, income from business, interest income, capital gain income and other income information.

Step 2: Verify Form 26AS and AIS

Check the tax information including TDS, TCS, interest income and other information in the tax documents.

Step 3: Choose an ITR Form

Choose the appropriate ITR form according to the taxpayer’s income and the requirements.

Step 4: Determine Total Income

Calculate total income according to heads of income applicable to him/her and his/her applicable income tax regime.

Step 5: Take Benefit of Deductions and Other Benefits

Make deduction and take other benefit available to him/her in the applicable income tax regime and provision.

Step 6: Calculate Income Tax

Calculate the applicable income tax according to the applicable tax rate, deductions, rebates, TDS, TCS, advance tax etc.

Step 7: Pay Additional Income Tax, if Required

Pay additional income tax if it is payable by the taxpayer before filing ITR.

Step 8: File the ITR

The ITR can be filed through the Income Tax e-filing website of the government of India.

Step 9: Verify the Return

After filing, the taxpayer needs to do verification of return as per prescribed process.

Step 10: Maintain Acknowledgment and Records

The taxpayer is advised to keep ITR acknowledgment and relevant documents for future reference.

Old Tax Regime and New Tax Regime

If the taxpayer has the option to choose from the relevant tax regimes, he needs to compare the tax liability under both tax regimes before submitting the return.

Under the Income-tax Act, 2025, the new tax regime is prescribed under Section 202 and is still the applicable tax regime for certain taxpayers.

The taxpayer has to consider various factors such as tax rates, exemptions, deductions before choosing the appropriate tax regime.

ITR Filing and Refund Claim

Where the tax paid or deducted is more than the total tax liability, the taxpayer becomes eligible for claiming a refund as per the relevant provision of the law.

The taxpayer shall check the following things before claiming refund:

• TDS
• TCS
• Advance tax paid
• Self-assessment tax paid
• Total tax liability
• Bank Account details

Common Errors While Filing ITR

Some of the common errors are:

• Selection of incorrect ITR form
• Incorrect income reporting
• Failure to report interest income
• Not checking AIS
• Not checking Form 26AS
• Incorrect TDS details
• Incorrect Bank Details
• Incorrect Deduction claim
• No Reporting of capital gains
• Business income reported incorrectly
• Foreign income not reported where required
• Incorrect deductions claimed without documentation
• Return verification not done after filing

Need for Accuracy of ITR Filing

Filing of ITR accurately will enable the taxpayer to:

• Show the income correctly
• Pay the correct tax
• Take benefit of the eligible deductions
• Take advantage of the refund due
• Keep the correct tax documents
• Prevent any unnecessary discrepancies
• Respond appropriately to any tax communication
• Remain compliant with tax

ITR Filing by Businesses and Professionals

Business and Professionals may have other requirements depending on their activities, income, accounts and provisions.

They need to keep the following correct records:

• Book of Accounts
• Sale Entries
• Purchase Entries
• Expenses Entries
• Bank Statements
• TDS Entries
• GST Entries
• Capital Assets Entries
• Loan Entries
• Investments Entries

It would be necessary to find out the ITR that the person needs to file depending on his/her situations.

ITR Reconciliation

Before filing the return, the individual must reconcile the income and tax details with appropriate documents.

Following can be a useful approach to the process of reconciliation:

Books/Income Records → Bank Statements → Form 16/16A → Form 26AS → AIS/TIS → Tax Calculation → ITR

Conclusion

Income Tax Return filing is a significant aspect of tax compliance. A taxpayer must appropriately determine the ITR form, file all his income, check his tax details, make his deductions if any, determine the appropriate tax liability and do the verification.

Taxpayers within the scope of the Income-tax Act, 2025 must adopt the Tax Year concept along with the other provisions from the tax years starting on and after 1 April 2026 onwards. The previous years will continue according to the provisions of the old law.

Note: The provisions of the income-tax, ITR forms, tax rates, deduction etc. can change through amendments and other notifications. It is advised to check the provisions applicable to the particular Tax Year.