TR filing is mandatory for individuals who have an annual income exceeding the basic exemption limit. There are various types of Income Tax return forms that taxpayers have to fill to complete e filing Income Tax Return process. These ITR forms are classified on the basis of the nature of income. However, the ITR form required in each case is different, and it can be confusing to select the right one.
Before filing an ITR, any taxpayer can assess their tax liability and make payments. For instance, in the event of a failure carryforward and setoff of brought-over losses, you can file an ITR. Check form 26AS for information on TDS and other taxes, such as FD interest, while filing your ITR. You’ll just use your Form 16 to fill out the particulars of your income and tax-saving deduction statements.
What are ITR forms?
ITR is a prescribed form through which you communicate the details of your income earned, deductions claimed, and taxes paid in a financial year to the Income Tax Department. It also allows you to carry forward the losses and claim a refund from the Income Tax Department.
Different ITR forms are prescribed for different categories of taxpayers (individual, HUF, company, LLP, Partnership firms, etc). The department has notified seven various form types prescribed for different categories of taxpayers (individual, HUF, company, LLP, Partnership firms, etc). The department has notified 7 various forms, i.e., ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-7, till date. The selection will depend upon the Taxpayer’s status, Nature of income, Residential Status in India, etc.
Types of ITR
ITR 1
Who Can File ITR 1?
This form is for a resident individual whose total income includes-
- Income earned from salary or Pension.
- Income from other sources, excluding income from winning a lottery or income from owning and maintaining race horses, income taxable under section 115BBDA or section 115E.
- However, income from One House Property, in this form, the loss brought forward from previous years or carried forward of losses are not eligible.
- Income from agriculture activities up to Rs 5000.
- The total income of the individual should not exceed 50 Lakhs.
Who Cannot File ITR 1(Sahaj)?
- Non-Resident
- Not Ordinarily Resident
- A person having a business or profession
- Anyone having a total income exceeding Rs 50 lakhs
- If you own more than one house property
- Income arising from Winnings from Lottery or Race Horses, Gambling, or speculation income
- An assessee having Capital Gains income
- Individuals having a financial interest in assets located outside India, which includes any signing authority for accounts held outside India.
- Person having foreign income or claiming relief u/s 90/90A/91 for taxes paid in foreign country
- Loss under income from other sources
- One who desires to carry forward or bring forward loss under income from house property.
- An individual who is holding the position of a Director in a company
- An Individual who has held any unlisted equity shares at any time during the previous year
- Agricultural income exceeding Rs. 5,000/-
- Any claim of credit of TDS in the hands of any other person
- Any tax has been deducted under Section 194N
- In cases where payment or deduction of tax has been deferred on ESOP
ITR 2
Who Can File ITR 2?
This form is for individuals or a HUF (Hindu Undivided Family) whose income includes:
- Income from salary or Pension
- Income from House Property(one or more)
- Income from other sources, including income from winning a lottery, income from owning and maintaining horse races, or income taxable at special rates.
- Persons who had investments in unlisted equity shares at any time during the entire financial year.
- An individual who is a director in a company.
- An individual who is a Resident(ROR/RNOR)or non-resident.
- Income earned from capital gains
- Income from foreign assets/ other foreign income.
- Agricultural income of more than Rs 5,000/-
- Incomes where clubbing provisions are applicable
- Individuals having a financial interest in assets located outside India, which includes any signing authority for accounts held outside India.
- One who desires to carry forward or bring forward loss under income from house property.
- Any tax has been deducted under Section 194N
- In cases where payment or deduction of tax has been deferred on ESOP
(Total income can exceed 50 lakhs in this ITR Form)
Who Cannot File ITR 2?
- Individuals or HUFs whose accruing income is from business or profession
- Partner of a partnership firm having income from a partnership.
ITR 3
Who Can File ITR 3?
This form is to be used by either an individual or a Hindu Undivided Family who are carrying on a profession or a business. The following persons are eligible to fill this form:
- The residential status can be either Non-resident or Resident(ROR/RNOR)
- If a person is the director of the company.
- Persons who had investments in unlisted equity shares at any time during the entire financial year.
- Income from other sources
- Income of a person who is a partner in a firm.
- Income from salary or Pension
- Income from House Property(one or more)
- Total income can exceed 50 lakhs in this case.
- Income earned from capital gains or foreign assets/foreign income.
- who has income under the head profits or gains of business or profession and who is not eligible to file Form ITR-1 (Sahaj), ITR-2, or ITR-4 (Sugam).
- In short, individuals or HUFs who are not eligible to file ITR-1, ITR-2, and ITR-4 should file ITR-3
Who Cannot File ITR 3?
- Companies
- Trusts
- Co-operative Society
- Local Authority
- Artificial Juridical Person
- Firm including LLP
- AOP, BOI
ITR 4
Who Can File ITR 4?
- This form is applicable to both the resident individuals and HUFs.
- Other than LLPs, all partnership firms which are residents and have an income which is either professional or from business.
- Those persons who have opted for a presumptive income scheme according to Section 44AD, Section 44AE, and Section 44ADA of the Income Tax Act.
- If the person’s business turnover exceeds Rs. 2 crores, then he is required to file ITR-3 with Audit report, and not ITR 4.
- The total income for ITR 4 should not exceed Rs. 50 lakhs.
- Income from One House Property(loss brought forward from previous years or carry forward of losses are not eligible in this ITR Form ).
- Income from Salary or Pension.
- Income from other sources. (excluding income from winning a lottery or income from owning and maintaining racehorses, income taxable under section 115BBDA or 115BE).
Who Cannot File ITR 4(SUGAM)?
- Anyone who maintains books of accounts and is willing to set off expenses with income earned and not want to file as per the 44AD / 44ADA and 44AE provisions i.e., presumptive taxation basis.
- Income earned through capital gains.
- If you own more than one house property, whether let out or self-occupied
- A person having Agricultural income in excess of Rs 5,000.
- A person who is a Director in a company
- A person has held any unlisted equity shares at any time during the previous year.
- Persons having financial interest in assets located outside India, which includes any signing authority for accounts held outside India
- Income arising from Winnings from Lottery or owning and maintaining Horse Races, Gambling, or speculation income.
- person claiming relief u/s 90/90A/91 for taxes paid in a foreign country.
- Loss under income from other sources
- One who desires to carry forward or bring forward loss under income from house property
- Any claim of credit of TDS in the hands of any other person
- In cases where payment or deduction of tax has been deferred on ESOP
ITR-5
Who Can File ITR 5?
The following should choose the ITR-5 form :
- Investment funds
- Business trusts
- Estate of insolvent, Estate of deceased
- Artificial Juridical Person (AJP)
- Body of Individuals (BOIs)
- LLPs
- Associations of Persons (AOPs) and Firms.
Who Cannot File ITR 5?
- Individuals
- HUF
- Company
- A person requires to file Form ITR-7, i.e., Trusts, etc, claiming the exemption of Section 11.
ITR-6
Who Can File ITR 6?
This form can be used by companies which are not claiming any exemptions under Section 11(Income from property held for charitable or religious purposes) and by a person which is required to file the return in Form ITR-7.
Who Cannot File ITR 6?
- Section 11 companies are companies formed with a charitable or religious purpose.
- Person on which Form ITR-7 is applicable
ITR-7
Who Can File ITR 7?
Persons, including companies that are required to file returns under Section 139(4A), Section 139(4B), Section 139(4C), Section 139(4D), Section 139(4E), or Section 139(4F) should choose ITR-7 form. The details against each section are briefed for you below:
- Section 139(4A): The return to be filed in respect of Income from a property, of which the true owner is a trust or such property is held under any other legal obligation. In this case, the income generated should be used only for charitable or religious purposes.
- Section 139(4B): The return to be filed in respect of total Income derived by a Political party
- Section 139(4C): The below-mentioned entities should file returns under this section:
- i.) Scientific Research Association.
- ii.) Educational institutions, hospitals, and other medical institutions.
- iii.)Associations and institutions covered under section 10(23A) and Section 10(23B).
- iv.) News agencies.
- v.) Others as may be prescribed.
- Section 139(4D): The returns by colleges, universities, or any other institutions that are not required to furnish a return of income or loss under any other provision under this section.
Who Cannot File ITR 7?
Any other person from those specified above cannot report using ITR 7 Form. From A.Y.2022-23 onwards ITR 7 will not be applicable to the persons whose income is unconditionally exempt.
Why Should You File ITR?
- Legal Proof:
Income Tax Return serves as a legally significant document registered with the government.
Accepted as a valid identity proof as well as Income proof. - Deduction Claims:
Filing Income Tax Returns enables taxpayers to claim deductions and exemptions provided by the government to reduce tax liabilities.
These deductions are applicable to investments and can help in minimizing tax obligations. Additionally, refunds for Tax Deducted at Source (TDS) can be claimed. - Loan Application:
It is essential for loan applications, as banks require various documents including Aadhar card, PAN card, and income proof like Income Tax Returns for the past three years. - International Travel Facilitation:
It is vital for international travel plans as many countries require Income Tax Returns as part of visa application documentation.
Filing returns showcases a responsible financial history, enhancing visa approval chances. - Avoidance of Penalties:
Failure to file Income Tax Returns when liable to pay taxes can result in penalties as per the Income Tax Act 1961. - Loss Carryforward Provision:
Enables individuals to offset losses against future income, providing tax relief in subsequent years.
FAQs
How do I get a tax refund and a TDS refund under Section 87A of the Internal Revenue Code?
If your net revenue after deductions and allowances is less than Rs 5 lakh, you will get a refund on the tax you owe. The highest amount of money you can get back is Rs 12,500. In this scenario, you might be eligible for a refund of the TDS you spent on your earnings.
May I file an ITR if I have a loss from a job, a home, or the selling of stock?
Yes, you can file an ITR if you have a loss from a company, a stock sale, or interest charged on a home loan. An ITR filing allows you to exclude the deficit and move it on to subsequent years. Keep in mind that you must register your ITR on or before the deadline.