ITR form is essentially a tax form used to file income tax with the Income Tax Department. Taxpayers file all information about their income and applicable taxes in the ITR form. For now, the income tax department has notified seven ITR forms mainly ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7.
The law requires all taxpayers to file income tax returns annually. ITR is filed against the income businesses or individuals generate during a given assessment year through all sources such as regular income, dividends, interest, capital gains, etc. Taxpayers must file their returns within the specified date, which is July, 31 for this year.
In case the tax return shows that a taxpayer has paid excess tax during a given year, the taxpayer/assesses is eligible for a tax refund based on the department’s calculations.
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The taxpayer’s sources and amount of income along with his/her income category (individual, business, etc.) decide which ITR form they are eligible to fill.
Identify the Suitable ITR Form
A significant step towards filing income tax return is to identify the tax return form that is applicable for an individual taxpayer, as below:
# ITR-1 (SAHAJ)
- Resident and ordinarily resident (ROR) individuals with total income of ₹50 lakh and below,
- Having salaried income,
- Owning a residential property,
- Agricultural income up to ₹5,000,
- Income from other sources,
- Despite their source or quantum of income, non-residents cannot file ITR-1.
Individuals who do not have income from profits and gains of business or profession (who cannot use ITR-1) can use ITR-2.
This is apt for individuals who have an income from profits and gains of profession or business.
- It is suited for individuals, and firms (other than LLPs) that are residents,
- have total income ₹50 lakh and below
- have income from business and profession computed under the presumptive taxation scheme.
Key Changes in ITR Forms in AY 2019-20 (FY 2018-19)
Let’s look at some important changes in the ITR forms to be used for AY 2019-20 (FY 2018-19).
- Form ITR-1 has changed in a way that now it is not applicable for an individual:
- Who is the director of some company;
- Has invested in unlisted equity shares;
- Claiming a deduction towards expenses that were incurred on the income earned from other sources. This excludes expenses that are incurred on family pension deduction; and
In the Form ITR-1, pensioners have also been added in the nature of employment.
- Significant changes have been made in the new form ITR-2 with regards to the residential status of taxpayers.
- Taxpayers are required to mention the status as ‘resident’, ‘non-resident’, or ‘resident but not-ordinary resident’. They must also mention how many days did they stay in India in the present and past years.
- For non-resident individuals, they need to mention the country they belong to.
- People who are directors in a firm must provide all details about their directorship such as name of company, etc.
- It is important for individuals and firms holding unlisted equity shares to disclose the details of the company whose shares are held by them.
- In Form ITR-3, individuals are required to give details about their partnership firms.
- The form helps to declare the income calculated under presumptive scheme.
- The form introduces GST Schedule and takes all details of the outward supplies as per GST returns filing.
- It is important that taxpayers provide all essential information while filing ITR forms to avoid any disputes or legal implications at a later stage.
- The new ITR 4 form states that from this Assessment Year 2019-20, an individual is required to specify his total salary.
- An individual must also mention the allowances that he is exempted from.
- The individual needs to specify profit with regards to salary that is to be deducted or added to reach a taxable amount from salary.
List of 6 Best Free Tax Software to File Your Tax Return in 2020
Ever wondered what is the best free tax software to use? There are many tax software available, but picking the best free online income tax filing software for filing your income tax returns can be a real challenge. However, we have collated a list of some of the best free tax software.
Now, let’s look at some best free tax filing software 2020 to file your income tax returns.
With free H&R Block software, you can file your tax return conveniently. H&R Block is considered as one of the best free tax software for small business.
- For firms as well as individuals, this is considered among the best free tax software for self-employed individuals. The software provides free e-file options online to help you file your taxes without any hassles.
- H&R Block helps e-file tax return for your clients and assures 100 percent accuracy. It negates the scope of errors and maximizes tax savings.
- The software offers more credits and deductions to ensure that you don’t end up paying extra for your simple tax return.
- Informed tax advice and hassle- free tax return filing experience, that’s what makes H&R Block software special.
- Simply upload a picture of your Form W-2, and this software puts all your information in the right places to give you a go ahead to start your free tax preparation.
- The software is easy to use, and one can conveniently switch from their existing tax software to H&R Block. All you need to do is simply drag and drop your return from another tax preparer or software to this efficient software.
- H&R’s free tax preparation facility ensures transparency in processes. It answers common questions and keeps clients well informed about all steps.
- Not only this, the software also gives direction on around 350 credits and deductions.
- Stay abreast with your refund details and get maximum refunds or absolutely free returns with H&R Block software.
- Also, H&R Block ranks in the top few best free tax software for itemized deductions as its Home Free Edition covers a majority of common tax deductions.
One of the best free tax software to prepare income tax returns, CompuTax software also uploads all tax related information to the department’s website.
- The software caters to several taxes. It prepares these tax returns and then files return of income tax, ROC return of companies, TDS, Service Tax, etc.
- Additionally, you can follow revised Schedule VI, statutory and tax audit reports, etc. to prepare profit and loss accounts. You can also prepare balance sheets using CompuTax.
- You can reply greatly on CompuTax as it facilitates automatic transfer of master data. This master data includes details such as name, PAN, address, Written Down Value of depreciation assets, unabsorbed depreciation, National Savings Certificate details, etc. to the following assessment year.
- The tax software also takes care of deductions, ceilings, setting off and carrying forward of losses, etc.
- CompuTax comes with the CompuBal module to ensure you import balance sheet, profit and loss statement easily.
- You can also keep record of your investment details, ITR for relevant assessment year, transfer income in computation. With the help of CompuTax, you can conveniently change the ‘set off order’ of your current assessment year losses.
- Another interesting feature is the availability of hot keys to operate buttons with keyboard. Using CompuTax, you can import permanent information from xml file.
A prominent software in the tax returns filing sector, ClearTax Software is a boon for individuals and firms wanting to prepare and file their income tax returns easily and accurately. It is considered as one of the best free tax software for independent contractors and freelancers alike.
- This efficient tax software was introduced in India at a time when the financial sector was experiencing rapid growth and advancements.
- An online tax return-filing and investment platform, ClearTax is absolutely free to use. Those wanting to file their income tax returns online can switch to this convenient tax return platform.
- Every time you file a tax return, keep all your tax return documents handy. Remember, these documents work as proof of your financial investments while applying for loans or visa.
- Taxpayers use ClearTax to avoid any delays or misses in tax return submissions. With ClearTax, you can simply carry forward your losses against house property and depreciation. Claim your tax refund at the earliest to get quick refunds.
You can file your income tax returns with ClearTax software if you have:
- Fixed Deposit, House Property, Interest, etc.
- Salary income you can file tax returns with/without Form-16.
- Changed jobs during the assessment year, you can file Multiple Form-16.
- Income from Capital Gains i.e. stocks and mutual funds.
For those who have foreign income, foreign assets, NRI, go ahead and use ClearTax to sort your tax worries.
Committed to helping start-ups and business owners, LegalRaasta is considered a reliable software for filing tax returns online.
- The LegalRaasta free income tax filing software is easy to use, time-efficient and offers secured income tax return filing service. It has gained immense popularity over the last few years and is currently being used by over two lakh users nationally.
- The software allows users to file their income tax returns online without any charges. It enjoys the status as a registered e-filing intermediary of Income Tax Department.
- A unit of LegalRaasta, TaxRaahi is a user-friendly, reliable site to facilitate your process of filing income tax returns online.
- Filing ITR online through LegalRaasta is a secure and satisfying experience as it offers accuracy and saves time. Refund tracking is another facility offered by this tax software.
The software provides corporates the flexibility of offering self-return filing package for their employees. While chartered accountants can file tax returns for their clients using this best free tax software.
Chartered Tax Pro TDS Professional Return Filing Software
The Chartered TaxPro TDS Professional Return Filing Software clearly presents assesses information on a single screen. The Chartered TaxPro software also gives details about assessee’s master data, pending documents, return status, work status, etc.
- The software also provides common utility tools, such as the tax calculator, windows calculator, auto backup and live update.
- TaxPro provides the Data Import Utility module that helps import master data from ITR Return xml file. It provides ready Data Import Utility from TaxCal, ITAX, Tax Publisher, Easy Tax and other such products. This helps import master data from other for the data to be exported to Excel format.
- With TaxPro’s inbuilt SMS facility, you can automatically send SMS about tax-related deadlines to users.
- With this software, you can directly upload returns with auto login to e-filing portal. Thus, you can directly store and retrieve e-return acknowledgement from the software.
- TaxPro allows you to directly download your income tax return acknowledgement.
- You can change setoff priorities with TaxPro to automate processes like the Set-off & Carry Forward of Losses along with an option for manual set-off.
- Calculation of Advance Tax becomes possible with TaxPro. Quarterly Advance Tax Challans can be generated along with client wise Advance.
- Tax Payment details can also be viewed using this tax software.
- With the Statement of Advance Tax Liability tool of TaxPro, work can be delegated to the responsible person. Statement also becomes available for tax planning at the point of every instalment.
RelyonSoft Saral Income Tax
Considered as one of the best free tax software, RelyonSoft Saral Income Tax is a comprehensive income tax software with automated computation. It makes income tax return preparation a reality.
- The software supports both ITR 1 to ITR 8 filing electronically as well as on paper. It also comes with wealth tax and audit reports.
- Income tax software Saral IncomeTax helps file income tax return and audit report return as per the ITD schema.
- The return prepared can be uploaded at ITD website in one click with access to all related details for the assessee such as profile details, Form 26AS, etc.
- The software helps login, view details, verify information, etc. in the ITD website.
- RelyonSoft Saral Income Tax software facilitates in-built billing module to bill the assesses for the service provided. It also provides updated service tax information.
- With the help of this software, the balance sheet can be ported directly to the audit report module. Additionally, you can port the profit and loss account details to prepare the report and file.
- Use digital signature to automatically file income tax return. Not only this, you can use TALLY to directly port details required for balance sheet and profit and loss accounts.
Above all, the ITR forms for the assessment year 2019-2020 have been revised. It is a mandate for everyone to understand the new form requirements before filing their income tax return. Be very careful while filling your forms to avoid any complications or legal implications.
Also check How to file GSTR 1 using Tally