Step-by-Step Guide to Filing Income Tax Returns in India (2025)

Introduction

It’s that time of the year again when taxpayers rush to file their Income Tax Returns (ITRs) before the deadline. Filing your ITR on time is essential to avoid penalties and legal consequences. The income tax return serves as proof of income and tax payments and helps individuals and businesses maintain financial credibility.

What is an Income Tax Return (ITR)?

An Income Tax Return (ITR) is a document filed with the Income Tax Department that declares your total income, deductions, and tax payments for a specific financial year. Under the Income Tax Act, 1961, filing an ITR is a mandatory requirement for individuals and businesses whose income exceeds the tax exemption limit.

Even if your income is below the exemption limit, filing an ITR can be beneficial for loan applications, visa processing, and future financial planning.

Who is Required to File an ITR?

Filing an ITR is mandatory for the following categories of taxpayers:

1. Individuals

1. Individuals (both men and women) with a taxable income exceeding ₹2,50,000 per year.

2. Senior citizens (above 60 years) with taxable income exceeding ₹3,00,000 per year.

3. Super senior citizens (above 80 years) with taxable income exceeding ₹5,00,000 per year.

2. Businesses and Companies

1. All registered businesses, including companies, partnerships, and proprietorships, must file an ITR.

2. Corporate tax is levied at 25% if the gross turnover is up to ₹50 crores in the previous year and 30% if it exceeds ₹50,000 crores.

3. Other Cases Where ITR Filing is Required

1. If TDS (Tax Deducted at Source) has been deducted from your income, you must file an ITR to claim a refund.

2. If you have income from foreign assets or foreign bank accounts.

3. If you are applying for a loan, visa, or credit card, banks and financial institutions often require ITR documents for verification.

4. If you wish to carry forward losses to the next financial year for tax adjustment.

Important Income Tax Deadlines for FY 2024-25

Failure to file your ITR before the deadline may attract penalties and late fees.

Tax-Saving Investments for 2025

To reduce your tax liability, you can invest in various tax-saving instruments under Sections 80C, 80D, and 80CCD of the Income Tax Act. Some popular tax-saving options include:

1. Section 80C (Maximum Deduction: ₹1.5 Lakh)

1. Public Provident Fund (PPF)

2. Equity-Linked Savings Schemes (ELSS)

3. National Pension Scheme (NPS)

4. Life Insurance Premiums

5. 5-Year Fixed Deposits in Banks or Post Offices

2. Section 80D (Health Insurance Deductions)

1. Medical insurance premiums for self, spouse, and children - Up to ₹25,000

2. For senior citizens - Up to ₹50,000

3. Section 80CCD (National Pension Scheme - NPS)

• Additional deduction of ₹50,000, beyond the ₹1.5 lakh limit under Section 80C.

By investing in these instruments before March 31, 2025, you can maximize your tax savings.

How to File Your Income Tax Return Online

Filing an ITR online (e-filing) is quick and easy. Follow these step-by-step instructions to file your income tax return for FY 2024-25:

Step 1: Register on the Income Tax Department Website

1. Visit www.incometax.gov.in.

2. Click on ‘Register’ and enter your Permanent Account Number (PAN) (This acts as your User ID).

3. Fill in your details, create a password, and verify your email and mobile number.

Step 2: Choose the Right ITR Form

The appropriate ITR form depends on your income sources:

1. ITR-1 (SAHAJ) – For salaried individuals with a single house property and no business income.

2. ITR-2 – For individuals with capital gains or multiple sources of income.

3. ITR-3 – For business professionals and proprietors.

4. ITR-4 (SUGAM) – For businesses under the presumptive taxation scheme.

Step 3: Gather Essential Documents

Before filing, keep the following documents ready:

1. PAN Card

2. Aadhaar Card

3. Form 16 (Issued by your employer)

4. Bank Account Details

5. Investment Proofs

6. Form 26AS (Tax Credit Statement)

7. TDS Certificates

Step 4: File Your ITR Online

1. Log in to the Income Tax e-Filing Portal.

2. Click on ‘File Income Tax Return’.

3. Select the relevant Assessment Year (AY 2025-26).

4. Choose Online or Offline Filing.

5. Enter your income details, deductions, and tax paid.

6. Verify tax calculations and upload necessary documents.

Step 5: Verify Your Tax Return

Once your ITR is submitted, you must verify it. You can do this in the following ways:

1. E-Verification using Aadhaar OTP

2. Net Banking E-Verification

3. Sending a Signed ITR-V to CPC Bangalore by post

After verification, the Income Tax Department will process your return and issue a refund if applicable.

What Happens If You Miss the ITR Deadline?

If you miss the ITR filing deadline, you can still file a belated return before December 31, 2025, but you may have to pay a penalty of up to ₹10,000. Additionally, if you fail to file altogether, the Income Tax Department may issue a notice for income escaping assessment.

Benefits of Filing an ITR

1. Easy Loan Approval – Banks require ITR proof for home, car, and personal loans.

2. Visa Processing – Many foreign embassies ask for ITR records for visa approvals.

3. Claim Tax Refunds – Get a refund on excess TDS deductions.

4. Avoid Legal Consequences – Non-filing may attract penalties and prosecution.

5. Carry Forward Losses – Capital losses can be adjusted against future income.

Conclusion

Filing your Income Tax Return (ITR) for 2025 is not just a legal obligation but also a financially prudent move. By understanding the process, choosing the right tax-saving investments, and filing your ITR on time, you can ensure smooth financial transactions and compliance with tax laws.

For any assistance, consult a tax expert to avoid errors and maximize your tax benefits.