Income Tax Return: An Overview
 

What is Income Tax Return?

An Income tax return (ITR) is a form used to file information about your income and tax to the Income Tax Department. The tax liability of a taxpayer is calculated based on his or her income. In case the return shows that excess tax has been paid during a year, then the individual will be eligible to receive an income tax refund from the Income Tax Department.

As per the income tax laws, the return must be filed every year by an individual or business that earns any income during a financial year. The income could be in the form of a salary, business profits, income from house property or earned through dividends, capital gains, interests or other sources.

Tax returns have to be filed by an individual or a business before a specified date. If a taxpayer fails to abide by the deadline, he or she has to pay a penalty. 

ITR-5 Form

This income tax return is meant for firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals), Artificial Juridical Persons (AJP), Estates of the deceased, Estates of insolvent, Business trusts and investment funds.

Who is eligible to file the ITR-5 Form?

This form can be used by a person being a firm, LLP, AOP, BOI, an artificial juridical person referred to in section 2(31)(vii), the estate of deceased, the estate of insolvent, business trust and investment fund, cooperative society and local authority. 

However, a person who is required to file the return of income under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) shall not use this form.

Key changes in the ITR-5 Form in AY 2022-23

The key changes in the ITR-5 Form in AY 2020-21 are summarised below:

Necessary changes in the ITR form for the increase in the Tax Audit limit to Rs 10 crores (where cash transactions are less than 5% of the total transactions) from 5 crores are incorporated.
From AY 2021-22, the dividend received is taxable in the hands of the receiver. Necessary changes for the same are made in the ITR form.
TDS deduction for cash withdrawals under Section 194N is not allowed to be carried forward to subsequent years. The ITR-5 form has been changed as per the amendments accordingly.

Penalty for Late Filing Income Tax Return

Taxpayers who do not file their income tax return on time are subject to penalties and charged interest on the late payment of income tax. Also, the penalty for late filing income tax returns on time has been increased recently. The penalty for late filing income tax return is now as follows:

Late Filing between 1st August and 31st December - Rs.5000  
Late Filing After 31st December - Rs.10,000  
Penalty if taxable income is less than Rs.5 lakhs - Rs.1000