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Why Filing ITR is Beneficial

Filing an Income Tax Return provides several crucial advantages. It enables you to claim tax refunds if excess tax has been deducted from your salary or income sources. An ITR serves as proof of income, which is essential for loan approvals from banks and financial institutions. Filing ITR ensures compliance with tax laws, helping you avoid penalties and legal consequences. It builds financial credibility with banks and NBFCs. Most importantly, if you’ve incurred losses during the financial year (such as capital losses or business losses), filing ITR allows you to carry forward these losses to offset against future income, thereby reducing your tax liability in subsequent years.

At RLFinTax.com, we help thousands of taxpayers understand these benefits and file their returns efficiently to maximize their financial gains.

ITR Forms: Types, Applicability, and When to File

There are seven different ITR forms (ITR-1 to ITR-7), each designed for specific taxpayers based on their income sources, amount, and legal status. Choosing the correct form is critical because using the wrong form can render your return invalid or defective, leading to delays, notices, or penalties.

ITR-1 (Sahaj Form)

Applicable to: Salaried individuals, pensioners, and those with income from one house property and other sources.

Eligibility Criteria:

• Resident individuals (other than not ordinarily resident)
• Total income not exceeding Rs. 50 lakh
• Income from salaries, one house property, and other sources (interest, dividends)
• Long-term capital gains under Section 112A up to Rs. 1.25 lakh
• Agricultural income up to Rs. 5,000
• No income from business or profession

ITR-2

Applicable to: Individuals and HUFs not having income from business or profession.

Eligibility Criteria:

• Resident and non-resident individuals
• Those with income from multiple sources (salary, house property, capital gains, foreign income/assets)
• No business or professional income
• Can have complex capital gains from various sources including cryptocurrency

ITR-3

Applicable to: Individuals and HUFs having income from profits and gains of business or profession.

Eligibility Criteria:

• Those declaring actual income from business/profession
• Self-employed individuals, consultants, doctors, lawyers, and traders
• Partners in firms
• Required to maintain detailed books of accounts

ITR-4 (Sugam Form)

Applicable to: Small business owners and professionals opting for presumptive taxation.

Eligibility Criteria:

• Individuals, HUFs, and firms (except LLPs) with total income up to Rs. 50 lakh
• Income from business/profession computed under Sections 44AD, 44ADA, or 44AE
• Presumptive taxation schemes for small taxpayers
• Turnover not exceeding Rs. 2 crore (Rs. 3 crore in special cases)

ITR-5

Applicable to: Partnerships, LLPs, and other entities.

Eligibility Criteria:

• Partnership firms
• Limited Liability Partnerships (LLPs)
• AOPs (Association of Persons)
• BOI (Body of Individuals)

ITR-6 and ITR-7

Applicable to: Companies and trusts/charitable organizations respectively.

Due Dates for ITR Filing

Adhering to due dates is crucial as delays attract penalties and other consequences.

For FY 2025-26 (AY 2026-27)

• General ITR Filing Deadline: 31st July 2026 (for individuals and non-audit cases)
• For Tax Audit Cases: 30th September 2026 (extended from 31st October in prior year)
• For Transfer Pricing Cases: 30th November 2026
• For Companies: 31st October 2026 (standard domestic companies)

Belated Return Filing

• Deadline for Belated Returns: 31st December of the assessment year (31st December 2026 for AY 2026-27)
• Filing after the due date but before 31st December is considered a belated return
• Penalties and interest charges apply to belated returns

Updated Return (ITR-U)

• Can be filed within 48 months (4 years) from the end of the relevant assessment year
• Available until 31st March 2030 for AY 2026-27

Tax Slab Rates

New Tax Regime (Default Option for FY 2025-26)

The new tax regime continues to be the default option for all individuals, HUFs, AOPs, and BOIs. However, you can still opt for the old regime if it’s more beneficial. Significant changes have been introduced for FY 2025-26.

Income Slabs and Tax Rates:

Key Benefits in New Regime:

• Basic Exemption Limit Increased: From Rs. 3 lakh to Rs. 4 lakh
• Standard Deduction for Salaried Individuals: Rs. 75,000
• Enhanced Rebate under Section 87A: Up to Rs. 60,000 (increased from Rs. 25,000) 
  • Income up to Rs. 12 lakh is effectively tax-free due to this rebate
  • Salary up to Rs. 12.75 lakh is effectively tax-free (with standard deduction of Rs. 75,000)
• Simplified filing with fewer deductions
• Health and Education Cess: 4% on total tax

Old Tax Regime

The old regime allows various deductions and exemptions but has higher tax rates. It’s more beneficial for those with significant investments and deductions. No changes have been made to the old tax regime for FY 2025-26.

For Individuals Below 60 Years:

For Senior Citizens (60 to 80 Years):

For Super Senior Citizens (Above 80 Years):

Available Deductions Under Old Regime:

• Section 80C: Up to Rs. 1.5 lakh (life insurance, PF contributions, ELSS)
• Section 80D: Health insurance premiums (Rs. 25,000 for individuals, Rs. 50,000 for senior citizens)
• Section 80CCD(1B): Additional Rs. 50,000 for NPS contributions
• Section 80CCD(2): Employer’s contribution to NPS
• Section 24(b): Home loan interest
• Standard Deduction for Salaried Individuals: Rs. 75,000
• Section 80E: Education loan interest (no upper limit)
• Rebate under Section 87A: Rs. 12,500 for income up to Rs. 5 lakh

New Deduction for FY 2025-26: Section 80CCD(1B) now includes NPS Vatsalya – parents can claim an additional deduction of up to Rs. 50,000 for contributions to NPS Vatsalya account for their children (over and above the Rs. 1.5 lakh limit under Section 80C).

Penalties for Late Filing

Understanding the penalty structure is essential to avoid financial losses.

Late Filing Penalties (Section 234F)

Interest on Late Payment (Section 234A)

• Rate: 1% per month or part of a month on unpaid tax
• Calculated From: Day immediately following the due date until the date of payment
• Impact: Longer delays result in higher interest liability

Other Consequences of Late Filing

• Loss of Loss Carry Forward: Capital losses and business losses cannot be carried forward if the return is filed late (exception: losses from house property)
• Mandatory New Tax Regime: Late filers are mandatorily taxed under the new tax regime, regardless of their preference
• No Tax Deductions: Certain deductions and benefits are not available after the due date
• Delayed Refunds: Refunds are processed slower for late filers
• Loan and Visa Issues: Delays can cause problems with bank loan approvals and visa processing

Surcharge and Health and Education Cess

In addition to income tax and any applicable penalties, taxpayers must pay:

Surcharge Rates (For FY 2025-26):

Note: Maximum surcharge is capped at 25% under the new tax regime. Under the old regime, it can go up to 37% for income above Rs. 5 crore.

Special Rate: 15% surcharge cap on dividends (for residents), long-term capital gains, and short-term capital gains (under section 111A).

Health and Education Cess:

4% on the total amount of income tax plus surcharge (applicable under both regimes)

Important Changes for FY 2025-26

• Revised Tax Slabs: Basic exemption limit increased to Rs. 4 lakh under new regime
• Enhanced Rebate: Rebate under Section 87A increased to Rs. 60,000, making income up to Rs. 12 lakh tax-free
• Effectively Tax-Free Salary: Salary up to Rs. 12.75 lakh is tax-free for salaried individuals under new regime (with standard deduction)
• Updated Return Timeline Extended: ITR-U can now be filed within 48 months (4 years) instead of 12 months
• NPS Vatsalya Deduction: New deduction of Rs. 50,000 for parents investing in NPS Vatsalya for children
• TDS/TCS Threshold Limits Increased: Enhanced limits to reduce compliance burden
• Form 10-IEA Requirements: Those switching from new to old regime must file Form 10-IEA
• Capital Gains Rate Changes: LTCG rate increased from 10% to 12.5%, STCG from 15% to 20% (effective July 23, 2024)
• NPS Withdrawal Exemption: All withdrawals from NPS are exempt from tax from August 29, 2025
• Start-up Benefits Extended: Tax benefits under Section 80-IAC extended until 2030

Who Must File ITR?

• Individuals with income above Rs. 4 lakh under new regime (Rs. 2.5 lakh for old regime – Rs. 3 lakh for senior citizens, Rs. 5 lakh for super senior citizens)
• All companies, firms, and LLPs regardless of income
• Residents with assets outside India
• Non-residents earning income in India
• Those wishing to claim a tax refund
• Those with losses to carry forward to future years
• Individuals with income taxable at special rates (capital gains, online gaming income, etc.)

Documents Required for ITR Filing

• Aadhaar number and PAN (Permanent Account Number)
• Form 16 (for salaried employees) – typically issued by June 15, 2026
• Bank statements and investment proofs
• Rent receipts (for house property income)
• Capital gains documentation (including cryptocurrency transactions)
• Business records and books of accounts (for business income)
• TDS certificates (Form 26AS, AIS, TIS)

How to File ITR

• Visit the Official Portal: Log in to the Income Tax e-filing portal (www.incometax.gov.in)
• Download Utility: Download the ITR offline utility or file directly online
• Fill Required Information: Enter personal and financial details accurately
• Attach Documents: Upload supporting documents as required
• Verify Return: Verify through Aadhaar OTP, net banking, or by sending ITR-V to CPC Bengaluru
• Submit: Submit the verified return before the due date

For step-by-step guidance and personalized support with your ITR filing, RLFinTax.com offers comprehensive resources and expert assistance to make the process seamless and hassle-free.

Tax Refund Processing

• Refunds are typically processed within 20-45 days depending on verification and bank processing time
• Early filing increases chances of quicker refund processing
• Online e-verification is faster than manual verification through ITR-V

Revised and Updated Returns

• Revised Return (Section 139(5)): Can be filed before 31st December of the assessment year (31st December 2026 for AY 2026-27)
• Updated Return (ITR-U): Can be filed within 48 months (4 years) from the end of the relevant assessment year for correcting errors made in the original filing (extended from 12 months)

Conclusion

Filing your Income Tax Return on time is not just a legal obligation but also a strategic financial decision. It protects your interests by ensuring compliance, enabling loss carry-forward benefits, and building financial credibility. Choose the correct ITR form based on your income source, file before the due date to avoid penalties, and maintain all supporting documents.

For FY 2025-26, take advantage of the enhanced tax benefits: With income up to Rs. 12 lakh being effectively tax-free under the new regime and salary up to Rs. 12.75 lakh being tax-free for salaried individuals, more taxpayers will benefit from zero tax liability. Whether you’re a salaried individual, business owner, or professional, timely ITR filing ensures peace of mind and better financial planning for the future.

About RLFinTax.com

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Need Professional Tax Assistance? Contact the experts at RLFinTax.com for personalized tax planning, ITR filing support, and comprehensive financial consulting services tailored to your needs.

Disclaimer: This article is for informational purposes only and should not be considered as professional tax or legal advice. Tax laws are subject to change. For specific tax situations, kindly consult with a qualified tax professional or chartered accountant. RLFinTax.com recommends always verifying the latest tax information from the official Income Tax website (www.incometax.gov.in).

Last Updated: November 2025