Filing income tax returns is an essential responsibility for every taxpayer. It not only ensures compliance with the law, but also helps individuals claim refunds and benefits. However, with various Income Tax Return (ITR) forms available, it can be confusing to determine which form is appropriate for your tax return. In this article, we will demystify the different ITR forms to help you choose the right one for your e filing of income tax return needs.
ITR 1, also known as SAHAJ, is the simplest form among the ITR forms. It is applicable to individuals who have income from salaries, one house property, other sources (excluding winning from the lottery and income from racehorses), and total income up to ₹50 lakhs. This form is suitable for salaried employees, pensioners, and individuals with income from interest or rental properties.
ITR 2 is applicable to individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession. If you have income from multiple house properties, capital gains, or foreign assets, you should choose this form. It is important to note that individuals having income from a proprietary business or profession cannot file ITR 2; they must use ITR 3.
ITR 3 is specifically designed for individuals and HUFs having income from a proprietary business or profession. If you are a self-employed professional or a partner in a partnership firm, this form is for you. It requires you to provide details of your business or profession, including a balance sheet, profit and loss account, and other related information.
ITR 4, also known as SUGAM, is applicable to individuals, HUFs, and firms (other than LLPs) who have opted for the presumptive taxation scheme under Section 44AD, Section 44ADA, or Section 44AE of the Income Tax Act. This form is suitable for small businesses and professionals whose turnover or gross receipts do not exceed ₹2 crores. It simplifies the tax filing process by allowing taxpayers to declare their income based on a prescribed percentage of their turnover or receipts.
ITR 5 is meant for entities such as firms, Association of Persons (AOPs), Body of Individuals (BOIs), and Limited Liability Partnerships (LLPs). It is important to note that companies are not eligible to file ITR 5. This form requires you to provide detailed information about your entity, including partners/members’ details, profit and loss accounts, balance sheets, and other relevant information.
ITR 6 is applicable to companies other than those claiming exemption under Section 11 of the Income Tax Act. It is mandatory for companies to file their income tax returns using this form. Detailed financial statements, including the profit and loss account, balance sheet, and other relevant schedules, need to be furnished while filing ITR 6.
ITR 7 is specifically designed for entities, including trusts, political parties, charitable institutions, and research associations, that are required to file returns under Section 139(4A), Section 139(4B), Section 139(4C), or Section 139(4D) of the Income Tax Act. This form requires detailed information about the entity’s income, expenditure, assets, and liabilities.
Choosing the right itr filing form is crucial for filing an accurate and complete tax return. If you choose the wrong form, your return may be rejected by the department, and you may have to file a revised return with the correct form. To avoid any confusion and hassle, you should follow these steps to choose the right ITR form:
- Identify your sources of income and their amounts for the FY.
- Identify your category of taxpayer (individual, HUF, company etc.)
- Check the eligibility criteria and applicability of each ITR form as per your income sources and category.
- Choose the most suitable ITR form that covers all your income sources and matches your category.
- Download the relevant ITR form from the official website of the department.
- Fill in the required details and complete the e-filing of income tax return before the due date.
Understanding the different income tax return forms is essential for a smooth and accurate tax filing process. Whether you are a salaried employee, a self-employed professional, a company, or a charitable institution, there is an ITR form tailored to meet your specific requirements. By selecting the right form, you can ensure compliance with tax laws and effectively fulfill your e filing of income tax return obligations.