Income Tax Return: How to choose correct ITR form for tax filing
There are 7 ITR forms the Income Tax Department has notified, and often, taxpayers get confused which ITR form is applicable to them.
Taxpayers are required to select an ITR form (Income Tax Return form) based on their income types and residential status. An ITR form is a document that facilitates reporting income and filing taxes to the Income Tax Department.
For ITR filing FY 2023-24, the Central Board of Direct Taxes (CBDT) in April this year released seven forms: ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7. Taxpayers are directed to file tax returns through the ITR form applicable to them on or before the due date. The applicability of various ITR forms is decided by income sources of individuals, taxable earnings, and the category of the taxpayer, such as individuals, HUF, companies, etc.
Why should you file an ITR?
Taxpayers are required to file an ITR to claim refunds against the taxes paid from the government. They are also required to file an ITR if they have earned income from or invested in foreign assets during the financial year. The income tax provisions also say that one has to file a tax return if he or she plans to apply for a visa or a loan. In the case of companies, the firm needs to file a tax return regardless of profit or loss. Taxpayers must note that if they have a loss from business or profession, they cannot carry these losses forward to subsequent years if they fail to file a tax return before the due date in that particular year.
Which ITR form should you file?
As discussed earlier, there are 7 ITR forms the Income Tax Department has notified, and often, taxpayers get confused which ITR form is applicable to them. In this article, we will discuss ITR forms 1-4, which are very common, and taxpayers’ eligibility to file the respective ITR form applicable to them.
ITR-1 (Sahaj)
Eligibility Criteria
ITR-1 can be filed by a Resident and ordinarily resident whose total Income from any of the following sources is upto ₹ 50 lakh:
- Income from Salary / Pension
- Income from One House Property
- Income from Other sources
ITR-1 cannot be used by a person who:
- has any asset (including financial interest in any entity) located outside India
- has income from any source outside India
- who has any brought forward loss or loss to be carried forward under any head of income
- has Income from Business and Profession and Capital Gains
Eligibility Criteria
ITR-2 can be filed by individuals or HUFs who:
- Not having Income under the head Profits and Gains of Business or Profession
- Who is not eligible for filing ITR -1
ITR-1 cannot be used by a person who:
- who has income in the nature of Interest, Salary, bonus commission or remuneration, by whatever name called, due to, or received by him from a partnership firm.
Eligibility Criteria
ITR-3 can be filed by individuals or HUFs who:
- Having Income under the head Profits and Gains of Business or Profession
- having income in the nature of Interest, Salary, bonus commission or remuneration, by whatever name called, due to, or received by him from partnership firm
cannot be used by a person who does not have Income under the head Profits and Gains of Business or Profession
ITR-4
Eligibility Criteria
ITR-4 is applicable for Resident and ordinarily resident having total Income from Profession upto ₹ 50 lakhs (Rs. 75 lakhs in specified cases) lakh or Income from Business upto ₹ Rs. 2 crores (Rs. 3 crores in specified cases) as follows:
- Income from business where such income is computed on presumptive basis u/s 44AD / 44AE of the IT Act·
- Income from Profession where such income is computed on presumptive basis under u/s 44ADA of the IT Act
- Income from Salary / Pension
- Income from One House Property
- Income is from other sources
Non-Eligibility Criteria
ITR-4 cannot be used by a person who:
- has any asset (including financial interest in any entity) located outside India
- has income from any source outside India
- who has any brought forward loss or loss to be carried forward under any head of income
- has Income from Other Sources in the nature of winnings from lottery
- any claim of credit of tax deducted at source in the hands of any other person
ITR-4
(Sugam) is not mandatory but required to be filed in case the taxpayer opts for Presumptive Taxation.
ITR-5
ITR 5 Form is applicable to firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals), Artificial Juridical Person (AJP), co-operative society, Estate of deceased, Estate of insolvent, Business trust and investment fund, subject to some conditions.
ITR-6
ITR 6 is applicable to firms not claiming the exemption u/s 11 (Income from property held for charitable or religious purposes). The 31st of October is the due date for filing the ITR 6 for AY 2023-24.
ITR-7
ITR-7 Form is used by persons including companies who are required to furnish returns under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D).