ITR Filing
Meaning, Process & How It Works in India
4 min readITR filing is the act of reporting your total income, deductions, and tax liability to the Income Tax Department for a financial year, and it is mandatory for every individual or business whose income crosses Rs.4,00,000 under the new regime for FY 2025-26 as per the Income Tax Act, 1961. Think of it as the annual true-up between what your employer already deducted as TDS and what you actually owe.
What Is ITR Filing?
Most SME employees assume monthly TDS settles the matter. It does not. If you earned FD interest, sold mutual funds, or collected rent on the side, TDS only covers salary. The return reconciles the rest.
What Are the Types of ITR Forms?
The department splits returns into seven categories.
| ITR Form | Who Files It |
|---|---|
| ITR-1 (Sahaj) | Salaried individuals, income up to Rs.50 lakh |
| ITR-2 | Capital gains, foreign income, multiple properties |
| ITR-3 | Business or profession income (individuals/HUFs) |
| ITR-4 (Sugam) | Presumptive taxation under Section 44AD/44ADA |
| ITR-5 | Partnerships, LLPs, associations |
| ITR-6 | Companies |
| ITR-7 | Trusts, political parties, institutions |
If you run payroll for a 40-person restaurant in Koramangala, Bangalore, most of your staff will file ITR-1. You, as the proprietor with turnover under Rs.3 crore, probably file ITR-4.
How Does ITR Filing Work?
Everything happens on the Income Tax e-Filing portal. Roughly four stages.
Your employer hands you Form 16 after March, usually by 15th June. That is your salary certificate showing TDS already deducted. Without this document, you are guessing.
Log in, pick the right form, and check whether pre-filled data from Form 26AS and AIS matches your Form 16. This is where most people trip up. Even Rs.2,300 in FD interest the bank reported but you forgot can flag the return.
Add any income beyond salary. A garment store manager in Vastrapur, Ahmedabad, who earns Rs.48,000 a year from a rented flat, would need ITR-2 instead of ITR-1.
Verify via Aadhaar OTP (fastest), net banking, or signed ITR-V posted to CPC Bengaluru within 30 days. Then wait for the Section 143(1) intimation.
What Does an ITR Filing Look Like?
Here is an illustrative scenario (not real employee data). A kitchen supervisor at a QSR chain in Aundh, Pune, draws a gross salary of Rs.5,64,000 per annum and opts for the new regime in FY 2025-26.
| Component | Amount |
|---|---|
| Gross salary | Rs.5,64,000 |
| Less: Standard deduction | (Rs.75,000) |
| Net taxable income | Rs.4,89,000 |
| Tax on Rs.4,00,001 to Rs.4,89,000 at 5% | Rs.4,450 |
| Add: 4% cess | Rs.178 |
| Total tax liability | Rs.4,628 |
| Less: Section 87A rebate (income under Rs.12 lakh) | (Rs.4,628) |
| Tax payable | Nil |
Zero tax owed. But she still has to file ITR-1. Skip the return because the number reads nil and a notice from CPC Bengaluru shows up three months later. Not worth the hassle.
Why Does ITR Filing Matter for Indian Businesses?
Rs.200 per day. That is the penalty under Section 234E of the Income Tax Act for late TDS returns, and it adds up fast when you are juggling 50 or 100 employees. Section 192 requires employers to deduct correctly, deposit by the 7th of the next month, and issue Form 16 on time.
But the real pain is not the penalty; it is the July reconciliation. At Petpooja, across 30,000+ Attendo clients, we see the same thing every year: HR teams spend days matching salary structures against Form 16 data because their Excel sheets drifted from what was actually deposited. Once the payroll is automated, the TDS math stays consistent month to month and Form 16 data lines up on its own.
How Attendo (formerly Petpooja Payroll) Handles ITR-Related Compliance
Every salary run through Attendo already factors in the employee’s chosen regime, slab rates, and declared investments. When March ends, Form 16 data is ready to pull without anyone rebuilding it from a spreadsheet. If you are also sorting out PF and ESI compliance alongside income tax, the PF & ESI compliance checklist covers what to file and when.
Frequently Asked Questions
What is the due date for ITR filing in India?
31st July for individuals, 31st October if audit is required. Belated returns go until 31st December, but Section 234A interest kicks in from the original due date. Check with your CA before assuming the extended deadline applies.
Can an employee skip ITR filing if TDS is already deducted?
Short answer: no. TDS only covers salary income. If the employee earns anything on the side, FD interest, rent, capital gains, the return is what brings all the numbers together.
What happens if an employer issues Form 16 late?
Rs.200 per day under Section 234E, uncapped until it equals the TDS amount. Meanwhile, every employee waiting on that Form 16 cannot file their own return accurately.
Is ITR filing mandatory for businesses below the tax threshold?
Strictly, no. But try applying for a business loan without filed returns. Most banks want two to three years of ITRs before they approve anything. A filed return also helps with visa processing and GST registration.
What is the difference between ITR filing and TDS filing?
TDS filing is what the employer does quarterly, reporting how much was deducted from each employee. ITR filing is what the individual does annually, reporting total income from all sources and claiming any refund owed.
Which ITR form should a restaurant owner use?
Depends on the structure. Sole proprietor under Rs.3 crore? ITR-4 with presumptive taxation. Pvt. Ltd.? ITR-6. Partnership or LLP? ITR-5.