Paying taxes and filing Income Tax Returns (ITR) are vital responsibilities of a citizen. In 2024, the cost of filing ITR in India continues to be influenced by several factors, including the complexity of financial transactions, the involvement of loans, and the emergence of digital services. Taxpayers often wonder, "how much charge for ITR filing will I have to bear?". Understanding these costs is crucial if you are aiming to fulfil your obligations efficiently and economically.

Understanding the basics of ITR filing costs

Filing Income Tax Returns is mandatory for individuals and entities whose income exceeds the specified threshold set by the Income Tax Department of India. The cost associated with ITR filing primarily depends on the complexity of one's financial activities and the method chosen for filing.

Methods of ITR filing

1. Self-filing: Individuals who choose to file their returns independently can do so using the Income Tax Department's e-filing portal, which offers a free and user-friendly platform. However, this method requires a good understanding of tax laws and the ability to navigate the online portal effectively.
2. Hiring a tax consultant: Many individuals, especially those with complex financial situations or multiple income sources, prefer to hire a tax consultant or chartered accountant (CA) to handle their ITR filing. The fees for such services can vary based on the consultant's experience, the complexity of the tax situation, and the additional services provided.
3. Online platforms and software: Several online platforms and software applications offer assistance with ITR filing. These platforms often charge a fee, which can vary depending on the level of service and features offered. Some platforms provide step-by-step guidance, automated calculations, and error checks, making them popular among taxpayers seeking convenience and accuracy.

Cost breakdown of ITR filing

1. Self-filing costs: For individuals opting to file their returns independently using the Income Tax Department's e-filing portal, the process is free. However, taxpayers must invest time in understanding tax regulations and accurately inputting their financial details to avoid penalties or delays.
2. Hiring a tax consultant: Tax consultants or CAs charge fees based on various factors:
   • Complexity of financial transactions: Individuals with multiple income sources, investments, or significant financial transactions may incur higher fees due to the increased complexity of their tax returns.
   • Additional services: Consultants may charge extra for services such as tax planning advice, audit support, or representation before tax authorities if required.
   • Geographical location and reputation: Fees can also vary based on the consultant's location and reputation. Consultants in metropolitan areas or those with specialized expertise may charge higher fees compared to their counterparts in smaller towns or less experienced professionals.

Online platforms and software

1. Basic services: Some online platforms offer basic ITR filing services at nominal or no cost for straightforward tax situations.
2. Premium services: Advanced features such as automated data import from financial institutions, year-round tax advice, or audit support may be available at higher subscription fees or one-time charges.

Maximising tax benefits

An integral part of ITR filing is understanding the impact of various financial products on your taxable income. For example, if you have availed a home loan, the principal repaid can provide tax benefits under section 80C, and the interest paid can lead to tax savings under section 24(b).

Other financial products like shares and mutual funds, insurance policies, Provident Fund (PF), Fixed Deposits (FD), and National Pension Scheme (NPS) investments can also influence your taxable income, and consequently, your ITR filing process.

In conclusion, while there's no exact figure we can pin down for ITR filing costs in the future, it's safe to presuppose a possible escalation due to inflation and service cost increases. However, remember that effective investment in savings or tax-exempted options, can minimise your taxable income and help manage the overall costs better, including the charges for ITR filing in 2024.