• Reports your income: You list all your taxable income sources on the ITR, including wages, salaries, investments, interest, and self-employment income.
• Calculates your tax liability: Based on your income and deductions, the ITR helps determine how much income tax you owe.
•  Claims a refund: If you’ve withheld more tax than you owe, you can claim a refund through your ITR.

Need to file an ITR

Whether you need to file an ITR depends on your specific tax situation. Here are some general guidelines:

• Income exceeds a certain amount: The minimum income threshold for filing an ITR varies depending on your age and filing status.
• Business income: If you run a business, you’ll likely need to file an ITR, regardless of your income level.
• Claimed deductions or tax credits: If you want to claim deductions or tax credits to reduce your tax liability, you’ll typically need to file an ITR.

Compliance and Responsibility:

• Fulfilling your tax obligation: Filing an ITR is a legal requirement for taxpayers who meet certain income criteria. It ensures you’re contributing your fair share to the government.

Financial Transparency:

• Accurate income reporting: An ITR provides a detailed record of your income sources and amounts for a particular tax year. This transparency helps the government track economic activity and tax collection.

Benefits for Taxpayers:

• Claiming deductions and tax credits: ITRs allow you to claim deductions for eligible expenses and tax credits that can reduce your overall tax liability.
• Proof of income: ITRs serve as a valid document for income verification. This can be useful for loan applications, visa processing, or other situations requiring income proof.
• Seeking tax refunds: If you’ve overpaid taxes through TDS (tax deducted at source), you can claim a refund through your ITR.

Essential Documents:

• PAN Card: This is mandatory for filing any ITR.
• Aadhaar Card: Linking your Aadhaar with your PAN is required for most taxpayersin India.

Income Documents:

• Form 16 (For salaried individuals): This TDS certificate from your employer details your salary income and tax deducted at source (TDS).
• Form 16A/B/C (For other income sources): These forms provide details on TDS deducted from other sources like interest income, rent receipts, etc.
• Bank Statements/Passbook: These can help verify income sources and amounts, especially for freelance income or business income.

Deduction/Investment Proofs (if applicable):

• Investment Proofs: Documents for tax-saving investments like PPF, ELSS mutual funds, life insurance premiums etc., if you want to claim deductions under relevant sections.
• Interest Certificates: Interest earned on fixed deposits, savings accounts, etc.
• House Rent Receipts (if applicable): If you pay rent and want to claim the HRA deduction.
• Medical Insurance Receipts: For claiming deductions under relevant sections for health insurance premiums.
• Capital Gains Statements: If you sold any capital assets like stocks or property during the year.

Other Documents (depending on your situation):

• Form 26AS/ AIS/TIS:  This is a tax information statement from the Income Tax Department summarizing your tax deducted at source (TDS) and other tax-related information.
• Home Loan Statement (if applicable): For claiming interest paid on your home loan.
• Rental Income Records (if applicable): If you receive rental income from property.
• Foreign Income Documents (if applicable): For reporting income earned from abroad.