ITR Filing for Business, Proprietorship, Salaried & Self Employed Individuals

ITR filing can be a very complicated process for businesses, salaried and senior citizens. You have to be aware of many tax brackets and rules before you set out to file your income tax returns. However, once you understand how to do it, it becomes easy to complete it!

In this article, we will discuss how to file ITR for self-employed people, senior citizens, and business owners.

What is ITR filing?

ITR filing refers to the filling up of the appropriate income tax form to declare the income tax you have paid in that year. Depending on the category of salaried or self-employed, there are various forms that you have to file. There are at present 7 ITR forms that can be filed by the corresponding persons or organization.

How to complete ITR filing for salaried individuals

Everyone who is a salaried employee has to file their income tax returns under the ITR-1 form. However, your total income during the 2019-20 years shouldn't exceed ₹50 lakhs. The ITR-1 is also known as Sahaj, and most of the information that goes into it will come pre-filled.

How to file ITR for salaried individuals?

You can file the ITR for salary and professional income in two ways. One is the online method, and the other is the offline method. However, both methods expect you to have access to a computer and download ITR-1 Sahaj online.

Online mode of filing ITR-1

Step 1: Visit the official portal of the Income Tax Department. www.incometaxindiaefiling.gov.in
Step 2: Login using your PAN card, password, and Captcha code.
Step 3: Select the "e-File" menu.
Step 4: Choose the "Income Tax Return" link.
Step 5: On the "Income Tax Return" link, you will find the PAN value already filled in. All you have to do is choose a) Assessment year b) ITR Form Number c) Filing type as "Original/Revised Return."
Step 6: Select the submission mode as "Prepare and Submit Online."
Step 7: Fill in the appropriate ITR fields.
Step 8: Choose a method of verification and click on the "Preview and Submit Button."
Step 9: You can then view the uploaded file.

Offline mode of filing ITR-1

To fill the ITR-1 form offline, you will need JAVA or Excel utility. Here's how to file ITR for salary and business income.

Step 1: Go to the official tax filing website www.incometaxindiaefiling.gov.in.
Step 2: Choose the ITR-1 form under the "Downloads→ IT Return Preparation Software."
Step 3: Download the ZIP file and extract the file on your computer.
Step 4: Fill in all the fields of the ITR-1 form, which are marked mandatory.
Step 5: Make sure to validate the tabs and calculate the tax.
Step 6: After this, generate and save this XML file.
Step 7: Now, log in to your account with a PAN card, password, and Captcha code.
Step 8: Choose the e-file menu.
Step 9: Choose the "Income Tax Return Link."
Step 10: Choose the a) Assessment year b) ITR Form Number c) Filing type as “Original/Revised Return” d) Submission mode as "XML."
Step 11: Choose an option by which you want to verify the ITR-1 form.
Step 12: Attach the ITR XML file.
Step 13: Submit the ITR and view the uploaded file.

What documents are required for filing ITR-1?

Filing ITR-1 requires certain government-issued documents. These are:

Pan card
Aadhaar card
Bank statement/Passbook
Form 16
Salary slips
Form 26AS
Form 16A
Exemptions under Section 80D and 80U
Capital gains statement

In addition to these, you will require an income tax login ID and password.

What is the eligibility for filing ITR-1?

The ITR-1 form, which is to be filed by salaried employees, is a simple one-page form. It is for individuals who have income up to ₹50 lakhs from any of the following sources:

Income from salary or pension
Income from one house property
Income from other sources
In the case of clubbing of income tax with spouse or minor, income should be limited to the above specifications

Can the ITR-1 for salaried employees be filed for the previous year?

Yes, you can file your ITR returns for the earlier years on or before 1 year from the end of the assessment year.

The tax brackets for salaried employees

Income Tax Slab	Income Tax Slab Rates for FY 2020-21 (Applicable for all Individuals & HUF)
Up to ₹2.5 lakhs	NIL
₹2.5 lakhs - ₹3 lakhs	5% (tax rebate u/s 87a is available)
₹3 lakhs – ₹5 lakhs	5% (tax rebate u/s 87a is available)
₹5 lakhs - ₹7.5 lakhs	10%
₹7.5 lakhs – ₹10 lakhs	15%
₹10 lakhs - ₹12.5 lakhs	20%
₹12.5 lakhs - ₹15 lakhs	25%
More than ₹15 lakhs	30%

FAQs about ITR Filing for Salaried Individuals

How is tax deducted from a salary?

Tax is deducted by the employer each year. When your salary for a year is calculated, the employers see which tax bracket you fall into and correspondingly removes a certain amount as tax from you. This is called tax deducted at source. You will have to declare this in the ITR-1 tax returns.

Is salary tax paid monthly or yearly?

While tax is paid every month, it is calculated every year. Income tax is paid by individuals, companies, and businesses. While you may notice in your salary slip that the tax has been deducted monthly, it is calculated annually.

How can I save tax?

You can save tax by investing in ELSS, FDs, and insurance policies, and PPFs. You can save up to ₹1.5 lakhs in this method. Check out other tax saving schemes under Section 80C of the Income Tax Act.

What are some of the tax exemptions for salaried persons?

If you want to avail of tax exemptions, you can try to invest in tax-deductible vehicles such as ELSS, PPF, FDs, etc., or else you can take a home loan or loan for higher studies. Also, donations, deductions on savings accounts, medical expenditures, and insurance premiums act as common exemptions. So invest in these schemes and avail of these benefits of tax exemption for salaried people.

How to complete ITR filing for companies

ITR for business involves filing different ITR forms, as the case may be. Here are the categories for ITR filing for business.

File ITR-4 for those firms other than LLPs, which have total income up to ₹50 lakhs and that income is calculated under Sections 44AD, 44ADA, 44AE.
File ITR-5 for LLPs and partnerships that are not filing ITR 7.
File ITR-6 for those companies that are not claiming exemption under Section 11.
File ITR-7 for those companies that are mandated to file returns from Sections 139(4A), 139(4B), 139(4C), 139(4D) only.

However, to file ITR for businessmen, use ITR-3 or ITR-4 as the case may be.

Additionally, the ITR form for self-employed is ITR-3 or ITR-4.

How to file ITR for business and profession

All companies, irrespective of whether they have undertaken business activities in that financial year or not, need to file their IT returns. Regardless of profit or loss, companies need to file income tax. Partnership firms need to file a NIL income tax return before the due date of the filing returns.

In India, all companies, irrespective of profit or loss, are expected to file ITR returns. Companies that are dormant and have undertaken no business decisions in a year are still expected to file returns.

However, ITR for self-employed does not need to be filed if there has been no undertaking for that financial year.

As above, there are two ways to file income tax for businesses, companies, and the self-employed. One is the online method, and the other is the offline method. Both methods need the use of a computer.

However, companies or business persons not filing ITR-4 Sugam can take the help of a tax agent to file their returns. However, if you are keen on doing it on your own, proceed as follows.

Online ITR for business income

You can only file the ITR-4 online, and here are the steps to do the same. Filing the form online means you have to key in the values in the portal online directly and submit it.

Step 1: Visit the official website for the filing of ITR-4, which is the income tax e-filing portal www.incometaxindiaefiling.gov.in.
Step 2: Log in to your account by entering PAN, password, and the Captcha code.
Step 3: On the "e-file" menu, choose the "Income Tax Return" link.
Step 4: The site will automatically fill in the PAN, so all you have to do is fill in a) Assessment year, b) ITR Form Number c) Filing type as "Original/Revised Return" d) Submission mode as "Prepare and Submit Online."
Step 5: Proceed to “Continue.”
Step 6: Read all the instructions and proceed to fill up the ITR-4 form by clicking on the "Save Draft" button from time to time to save the details as a draft.
Step 7: Once completed, choose the verification option according to your convenience.
Step 8: Choose the "Preview and Submit” button.
Step 9: Verify the data that you have entered.
Step 10: Submit the ITR.

Once the returns have been verified, you can view your ITR file through your account.

Use the above steps to file the ITR form for individual and self-employed persons.

Offline ITR for proprietorship

To complete the offline ITR, you will need to download the file from the website and, using Excel or Java utility tools, fill-up the form. Here are the steps:

Step 1: Visit the income tax filing website www.incometaxindiaefiling.gov.in.
Step 2: Go to the “Downloads” section and choose "IT Return Preparation Software."
Step 3: From this section, download the ZIP file of the utility and open the utility from the folder.
Step 4: Next, you can fill in the mandatory fields for the ITR form you selected to fill.
Step 5: Validate every tab and then calculate the tax.
Step 6: Produce and save the XML file.
Step 7: Now, you have to log in to your account by filling in the PAN number, password, and Captcha code. Then select login.
Step 8: Choose the "e-file" menu.
Step 9: Select the "Income Tax Return" link.
Step 10: On the income tax return page, choose a) Assessment year, b) ITR Form Number c) Filing type as 'Original/Revised Return' d) Choose submission mode as “Upload XML.”
Step 11: Choose a verification method among the six available options.
Step 12: Select "Continue."
Step 13: Attach the ITR XML file and submit the file.
Step 14: You can later view the uploaded file.

What are the documents required for filing ITR for business?

For businessmen, self-employed, and companies, these are the following documents required to file an ITR.

PAN card
Aadhaar card
Loan documents to claim a rebate
A balance sheet of the financial year
Records of audit if applicable
Certificates that show the tax deducted at the source (TDS)
Challan copy of income tax payments such as advance tax and self-assessment tax

What is the eligibility for filing for self-employment or business?

Self-employed persons or business people have to fill up the ITR-4 or ITR-3 forms. The income for ITR-4 has to be calculated by the presumptive tax method or the conventional way.
ITR-6 has to be filed by all companies unless excluded because they are claiming exemptions as charitable and religious trust.
ITR-7 is for those organizations that are charitable and religious trust, NGO, colleges, universities or trade unions, political parties or scientific research institutes, news agencies, or trade unions.
ITR-5 can be filed by a company that is not an LLP or filing ITR-7.

Can ITR be filed for the previous year?

Yes, you can file belated ITRs, anytime up to one year from the end of the relevant assessment year. You can submit tax returns up to three years late.

What are the tax brackets for companies and self-employed persons?

1) Tax rates for businessmen or self-employed persons

The tax is for individuals (businessmen or self-employed) who are less than 60 years of age.

Tax Bracket	Percentage of Tax
Any income up to ₹2.5 lakhs	NIL
For income between ₹2.5 lakhs and ₹5 lakhs	5% of the amount exceeding ₹2.5 lakhs
For income between ₹5 lakhs and ₹10 lakhs	20% of the amount exceeding ₹5 lakhs
For income above ₹10 lakhs	30% of the amount exceeding ₹10 lakhs

2) Tax rates for domestic companies in the year 2020-21

Categories	Tax Rate	Surcharge
Section 115BA (Companies having turnover up to ₹400 crores in FY 2017-18)	25%	7% (in the case that the company has a total income above ₹1 crore and up to ₹10 crores) 12% (in case the total income is above ₹10 crores)
Section 115BAA	22%	10%
Section 115BAB	15%	10%
Any other case	30%	7% (for a case where the total income of the company is above ₹1 crore and less than ₹10 crores) 12% (for a case where the company's total income is above ₹10 crores)

3) Tax rates for foreign companies in the year 2020-21

Type of Incomes	Tax Rate
Royalty or fees received from the Indian Government or any Indian person under an agreement made before 1st April 1976 which the Central Government has approved	50%
Any other income	40%

FAQs about ITR Filing for Companies

✓ How to calculate self-employment tax?

Persons who are self-employed need to pay their income tax based on their earnings. Deduct the expense from the revenues, and you can calculate the tax based on the balance. You will need to fill out the ITR-3 or ITR-4 form.

✓ At what income do I have to pay tax if I am self-employed?

Any person who is earning an income of more than ₹2.5 lakhs, whether self-employed or salaried, has to pay tax. Salaried persons have to file returns with the ITR-1 form, and self-employed people can choose between ITR-3 or ITR-4.

✓ Which form do I file for a tax return for a small business?

Small businesses need to file ITR-4 if they have opted for a presumptive tax scheme. However, if the company's turnover exceeds ₹2 crores, the taxpayer will have to file ITR-3.

How to complete ITR filing for senior citizens

Finance Act 2021 has announced in a new Section 194P that senior citizens from the ages of 75 and above are exempted from filing income tax returns. This rule has become applicable from 1st April 2021.

Senior citizens above 75 years are exempted from paying tax subject to the following conditions:

The person should be a resident in India during the previous year.
The source of income should be from pension and accrued interest, both from the same bank.
A declaration needs to be given that the only source of income is from pension and accrued interest. The declaration will also have details of VI-A deductions and rebates allowed under 87A of the income tax law.
These are to be submitted in banks specified by the Central Government. These banks will be responsible for TDS deductions of senior citizens above 75 years. They will also make any deductions under VI-A and 87A.

However, citizens between the years of 60 and 75 need to file their income tax returns based on the ITR-1 or ITR-2 or ITR-4 forms.

How should senior citizens file income tax?

Senior citizens should file their income tax under the ITR-4 or ITR-1, or ITR-2 tax return forms. They can do this online. There is an offline method available to fill the form, but this is open only to super senior citizens above the age of 80.

The online method of filing income tax for senior citizen

Senior citizens need to fill the corresponding forms via the online portal provided by the government. Here are the steps to do the same.

Step 1: First, you need to visit the government portal https://www.incometaxindiaefiling.gov.in/home.
Step 2: Log in using your PAN card, password, and Captcha code.
Step 3: Go to the "e-file" tab and select the "Income Tax Return."
Step 4: On the income tax return page, you need to fill up the following a) Assessment year b) ITR Form Number c) Submission mode as "Prepare and Submit Online" d) Filing type as "Original/Revised Return."
Step 5: You will be redirected to the ITR form, where you can fill in all the details.
Step 6: Once you have filled in the form you can then choose a verification option.
Step 7: After selecting how you want the form to be verified, submit and view it online.

Offline method of filing income tax for senior citizen

Senior citizens above the age of 80 or super senior citizens can file their income tax returns by submitting all the necessary documents to the Income Tax Department of a city or locality. This offline option is open only for these persons.

What are the documents required for filing ITR by senior citizens?

The documents that are necessary for senior citizens to file their ITR forms are as follows:

PAN card
Aadhaar card
Bank passbook
Capital gains statement
Documents relating to a property

What is the eligibility for filing for senior citizens?

Senior citizens can file ITR-1 or ITR-2. Here is the eligibility for both.

ITR-1
- Salary or pension income
- Income from a house or own property
- Income from any other source
ITR-2
- Salary or pension income
- Income from owned property or house
- Capital gains
- Income from other sources
- Rebate scheme
- The combined income of a spouse

Can ITR for senior citizens be filed for the previous year?

Yes, it is possible to file the ITR for senior citizens for previous years. You can submit it up to three years overdue.

What are the tax brackets for senior citizens?

The tax bracket for senior citizens under the old and new tax regime is as given below. Citizens can choose which slab rate they want to continue with in the future.

Income Tax Slab	Slab Rates for FY 19-20 and FY 20-21 (Resident Individuals between 60 and 80 Years)	Slab Rates for FY 19-20 and FY 20-21 (Resident Individuals over 80 Years)	Slab Rates for FY 20-21 (Applicable for all Individuals )
Up to ₹2.5 lakhs	NIL	NIL	NIL
₹2.5 lakhs - ₹3 lakhs	NIL	NIL	5%
₹3 lakhs - ₹5 lakhs	5%	NIL	5%
₹5 lakhs - ₹7.5 lakhs	20%	20%	10%
₹7.5 lakhs - ₹10 lakhs	20%	20%	15%
₹10 lakhs-₹12.5 lakhs	30%	30%	20%
₹12.5 lakhs -₹15 lakhs	30%	30%	25%
More ₹15 lakhs	30%	30%	30%

In conclusion, ITR filing for self-employed persons, senior citizens, and companies has been discussed above. The process for filing your ITR form first depends on which form you choose to fill up. You can disclose your returns based on the various criteria that are provided above.

So hurry now and fill that income tax form!

FAQs about ITR Filing for Senior Citizen

✓ What is the maximum tax-free income for a senior citizen?

Senior citizens are exempt from paying tax if their income is up to ₹3 lakhs, and a super senior citizen can avail of a tax slab of up to ₹5 lakhs.

✓ Do senior citizens pay capital gains tax?

Indians who are residents will be exempt from capital gain tax from the age of 60 to 80 if they are earning up to ₹3 lakhs per annum.

✓ Which form should a retired government employee fill?

A retired government employee should fill ITR-1 if he/she has a single house and pension is the only means of income for him/her.