Types Of ITR Forms - Which ITR Should I File?

In India, every taxpayer, whether an individual or a business, is required to provide the details of his taxable income and tax liability in a fiscal year to the Income-tax department. These details are communicated in the form of ITR forms. There are different types of ITR forms designed for different categories of taxpayers and incomes under the Income-tax Act. Before discussing types of ITR, let us first understand what an ITR form is.

What are ITR Forms?

An ITR form is an Income-tax return form that is used by a taxpayer, to report his income and calculate tax liability for a financial year. In India, a financial year is considered from April 1 to March 31 of the next year. The form required to be filled by a taxpayer depends on the nature and sources of his income as well as his tax status. There are different forms for different classes of taxpayers, such as individuals, businesses and HUFs, i.e. Hindu Undivided Families. While filing ITR, a taxpayer needs to provide details like income, deductions, tax payments and tax exemptions applicable.

In this blog, you will gain knowledge about different types of ITR forms as prescribed under Income-tax Act.

What are the Types of ITR Forms¹?

As per Income-tax laws, taxpayers can furnish their income-tax returns using 7 different types of ITR forms depending on their category and income type. In order to help select the correct form for filing your tax return, given below is a list of all 7 types of ITR forms with details of their applicability and non-applicability.

ITR 1 –

This form is also known as SAHAJ and is the most basic ITR form applicable to a resident individual with an income of upto ₹ 50 lakhs.

Applicability - This form is applicable to any resident individual having a total income from any of the following sources,

• salary or pension,
• one house property (but excluding any case where a loss has been brought forward or is to be carried forward),
• any other sources except for lottery winnings and income from horse racing.
• Agricultural income up to Rs 5000

Remember that if the income of a spouse or a minor child or any other person is added to the income of the taxpayer to calculate total income, all income sources should fall into one of the above categories.

Non-applicability - ITR 1 cannot be used to file returns if an individual or a taxpayer falls in any of the following categories, among others.

• He is a Resident Not Ordinarily Resident (RNOR), and Non-Resident Indian (NRI)
• He is a director of a company
• His total income is more than ₹ 50 lakhs
• He has income from multiple house properties
• He has held equity shares that were unlisted during the previous financial year
• He has signing authority in an account outside India.
• Tax deducted on withdrawal of cash under Section 194N.
• The tax has been deferred on ESOP allotted by an eligible start-up.
• If he is assessable in respect of income of another person in respect of which tax is deducted in the hands of the other person

ITR 2 –

This form is applicable to individuals and HUFs, i.e. Hindu Undivided Families, who have income sources other than profit or gain from a profession or business.

Applicability - The ITR 2 is applicable for individuals not eligible for ITR 1 and whose income is

• from a source such as property, capital gains and other sources such as foreign income, lottery winnings, horse racing etc.
• More than ₹ 50 lakhs.

Non-applicability - The form is not applicable if

• the total income for a financial year includes income from a business or profession.

ITR 3 –

This form is applicable to individuals and HUFs who have income under the heads ‘profits or gains of a business or profession in the nature of interest, salary, bonus, commission or remuneration received from a partnership firm. The return may include income from House property, Salary/Pension and Income from other sources.

Applicability - If the assessee is not eligible to file ITR 1, ITR 2 and ITR 4.

Non-applicability - The ITR 3 is not applicable to

• any person other than an individual or HUF.
• Any individual or HUF not having income from business or profession.

ITR 4 –

This form is also known as SUGAM and is applicable to individuals, HUFs and partnership firms. Applicability - The form is applicable if the individual/HUFs/partnership firms have

• Opted for the presumptive taxation scheme of section 44AD/44ADA/ 44AE of the Income Tax Act.
• Income not more than ₹ 50 lakhs in the financial year.
• Income from salary/pension, one house property.
• Income from other sources, excluding lottery winnings or horse racing.

Non-applicability - The form is not applicable if any of the above eligibility condition is not met. There are 16 more conditions listed by the Income Tax Department. Listed below are few of these:

• The assessee or the taxpayer is a director of a company
• The assessee has any assets (including financial interest in any entity) located outside India
• The assesse has signing authority in any account located outside India
• The assessee holds any unlisted equity
• The assessee has deferred income tax on ESOP, etc.
• The assesse has brought forward loss or loss to be carried forward under any head of income

ITR 5 –

Applicability - This form is applicable to any firm, AOP, LLP, artificial juridical person, BOI, local authority Private Discretionary trust, cooperative society, a society registered under the Society Registration Act, 1860, the estate of a diseased person or insolvent, business trust and investment fund.

Non-applicability - ITR 5 is not applicable if a taxpayer files a return of income under sections 139(4A), 139 (4B), 139 (4C), or 139(4D), which includes trusts, institutions, political parties, colleges, persons filing form ITR7 etc.

ITR 6 –

Applicability -This form is applicable to any company other than the one claiming exemption u/s 11 of Income Tax Act,1961. Non-applicability -This form is not applicable to companies claiming exemption u/s 11, which includes charitable or religious trusts.

ITR 7 –

Applicability - This form is applicable to companies that are required to provide a return under sections 139(4A), 139(4C), 139(4B) or 139(4D). Such companies include trusts, institutions, political parties, colleges etc.

Non-applicability - This form is not applicable to a person eligible for ITR 5 or anyone who is not required to file a return under sections 139(4A), 139(4C), 139(4B) or 139(4D).

Why should one file ITR²?

An individual is compulsorily required to file ITR if any of the following conditions are applicable.

• If an assessee’s annual income is more than the lowest income tax slab as per his age. For an assessee below 60 years, the exemption limit is ₹ 2.5 lakhs. For an assessee between 60 and 80 years, it is ₹ 3 lakhs, and for an assessee above 80 years, it is ₹ 5 lakhs.
• If the assessee wants to claim an income tax refund.
• If the assessee has earned from investments in foreign assets during the financial year.
• If the assessee wants to carry forward losses to the next financial year

However, there are certain conditions when an assessee is compulsorily required to file ITR even if his income is below the basic exemption limit. Some of the conditions where the taxpayer has to file ITR are as follows,

• He has deposited an amount of more than ₹ 1 crore in one or more current bank accounts.
• He has spent an amount of more than ₹ 2 lakhs on foreign travel for himself or any other individual.
• He has an electricity bill of more than ₹ 1 lakh.

FAQs³

1. Do I need to attach any supporting documents with the ITR forms?

ITR forms are attachment-less forms, and therefore no document is to be attached along with ITR forms. However, a taxpayer should retain these documents and produce the same if demanded by tax authorities for assessment or inquiry.

2. Which ITR form should be used by an agent?

An insurance agent is eligible to use ITR 3 as he receives a commission from the insurance company.

3. How can I file a return of income?

Return of income can be filed manually as well as electronically. You can file the return in hard copy at the local office of the income tax department. To file the return electronically, visit the official income tax website https://www.incometax.gov.in.

4. What is the difference between e-filing and e-payment?

E-payment is the electronic payment of tax using net banking or debit/credit card, while e-filing is the process of furnishing the return of income electronically.

5. What are the important points to remember while filing ITR?

Always file your return before the due date. Identify the correct return form applicable in your case. Carefully provide all the information in the ITR form. Use an income tax calculator to confirm the calculation of total income, deductions, interest, tax liability, refunds etc.

6. What are the ITR forms used by firms and companies?

Firms or companies use ITR 5, ITR 6 and ITR 7 to file tax returns.

7. How many types of ITR forms are available for individuals?

There are 4 types named ITR 1, ITR 2, ITR 3, ITR 4 available for individuals⁴.

8. What is the password to open ITR-V?

The password should be a combination of PAN Card number and date of birth⁵.

9. How many times can the revised return be filed

Return can be revised any number of times before 3 months of completion of assessment year or before the completion of assessment of the return, whichever is earlier⁶.

Conclusion

Identifying the correct ITR form as per your income and tax status is crucial because if you fail to do so, it may result in penalties or delays in processing your tax return. If you are not sure which ITR form is applicable to you, consult a tax professional for guidance on different types of ITRs.

Sources

1. https://incometaxindia.gov.in/tutorials/5-filing%20of%20return%20of%20income.pdf (page no 5 to 8)

2. https://www.incometax.gov.in/iec/foportal/help/individual-business-profession#returnsandforms

3. https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs%20on%20filing%20the%20return%20of%20income

4. https://cleartax.in/s/which-itr-to-file

5. https://www.taxwink.com/blog/open-password-protected-income-tax-return-pdf-file

6. https://learn.quicko.com/sec-139-5-revised-return-income-tax

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