An Income Tax Return (ITR) is a form or document that individuals, businesses, or entities file with the tax authorities to report their income, deductions, and tax liabilities for a specific financial year. It is a legal requirement in many countries, including India, for taxpayers to file their ITR annually. The purpose of filing an ITR is to provide the tax authorities with information about an individual’s or entity’s income and taxes paid, enabling the calculation of the tax liability or refund owed.
In an ITR, taxpayers typically report various types of income, such as salary, business income, capital gains, rental income, and interest income. They also declare deductions, exemptions, and credits that they are eligible for, which can reduce their taxable income and overall tax liability. Once the ITR is filed, the tax authorities review the information provided, assess the tax liability, and may issue refunds if applicable.
Filing an accurate and timely ITR is crucial for taxpayers to comply with tax laws, avoid penalties, and ensure the correct calculation of their tax liabilities or refunds. The process and specific forms for filing an ITR vary across countries, and taxpayers are often required to keep supporting documents and records to substantiate the information provided in their returns.