Definition: Income Tax in India & How to File ITR?
Income tax in India is the money people and businesses give to the government based on their earnings.
A Income Tax Return (ITR) is a form you fill out each year. It tells the government:
- How much money you earned.
- How much tax you already paid.
- If you owe extra tax or the government owes you a refund.
Steps to file ITR simply:
- Collect documents
Get your income proof like salary slips, bank statements, and Form 16 (from your employer). - Choose the right ITR form
Pick the form that fits you—e.g., ITR‑1 for a salaried employee or ITR‑2 for those with investments or rent income. - Fill in your details
Enter income amounts, deduct investments (like insurance or pension), and calculate your total taxable income. - Claim deductions
Use Sections like 80C (for savings, PPF, investments), 80D (for health insurance), etc., to reduce your tax. - Pay any tax due
If you owe tax, pay it online using Challan 280 before filing. - File online on the IT portal
Use the Income Tax Department’s e‑filing website. Upload your form and documents. - E‑verify your return
After filing, confirm it via Aadhaar OTP, net banking, bank account, or by sending a signed ITR‑V to CPC, Bengaluru. - Get the acknowledgment
You’ll get an email/SMS once it’s processed. If you get a refund, it will reach your bank account.
Why it matters
- Legal requirement: Filing on time keeps you away from penalties.
- Financial record: Helps you apply for loans, visas, or credit cards.
- Catches mistakes: If too much tax was paid, filing helps you get a refund.
Simple Example:
Meet Asha, a teacher in Delhi.
- Salary: ₹6 lakh/year
- Paid ₹60,000 tax through TDS (Tax Deducted at Source)
- Invested ₹1 lakh in tax-saving funds under 80C
When she files her ITR:
- Reports her ₹6 lakh income
- Claims deduction of ₹1 lakh, so taxable income = ₹5 lakh
- Tax due on ₹5 lakh = ₹31,000 (approx)
- Since she paid ₹60,000 via TDS, she gets back ₹29,000 as a refund.
