Guide on Choosing which Income Tax Return to be filed
Every individual who has an annual income exceeding the basic exemption limit is required to file an ITR (income tax return). Now, there are various types of ITR forms classified on the basis of the nature of income.
We have curated this guide on choosing which income tax return to be filed. Let’s begin to find out!
What are ITR forms?
Income Tax Return (ITR) forms are standardized documents prescribed by the Income Tax Department of India for taxpayers to declare their income, expenses, deductions, and tax payments for a specific financial year.
With that being said above, ITR forms are of different types, which taxpayers must file before the specified timeline to avoid penalties.
Types of ITR forms?
Below is the list of different types of ITR forms.
ITR-1 (Sahaj)
Who can file ITR 1?
Indian residents with relatively simple income sources, including
Salary or pension
Other sources like interest, dividends (excluding income earned from winning lottery or race horses and income taxable under section 115BBDA or section 115E)
Agricultural income up to ₹5,000
Income from one house property (excluding those scenarios in which house property loss has been brought forward from previous years)
It is worth remembering that the total income of the entity should not exceed ₹50 lakhs.
Who cannot file ITR 1?
Total income exceeding ₹50 lakhs and Agricultural income exceeding ₹ 5,000.
NRIs (Non-Resident Indians)
Individuals with income from more than one house property
Not Ordinarily Resident
The ones claiming relief u/s 90/90A/91 for taxes paid in foreign country
Holding directorship in a company
Business or professional income
Capital gains income
Payment or tax deduction has been deferred on ESOP
ITR-2 (Beyond Business)
Who can file ITR 2?
Individuals and Hindu Undivided Families (HUFs) with diverse income sources, including:
Salary/Pension
Income from more than one house property
Income from Capital Gain, Foreign assets/income
Total income exceeding ₹ 50 Lakhs
Agriculture Income of more than ₹ 5000
Resident(ROR/RNOR)or non-resident.
Who cannot file ITR 2?
Individuals or HUFs with income from profits and gains of business or profession, either as a Proprietorship or as a Partner.
Firm, Company, LLP, or any other Entity.
ITR-3 (Professionals and Proprietorships)
Who can file ITR 3?
Individuals and Hindu Undivided Families (HUFs) earning income from sources like:
Salary
Pension
Business or profession
House property
Short or long-term capital gains
Other sources
Non-resident individuals are eligible to file ITR 3
Individuals who make income from assets situated outside India.
Those entities earning income under the head “profits or gains from profession or business” and not eligible to file ITR-1, ITR-2, or ITR-4.
Who cannot file ITR 3?
Companies
Co-operative Society
Trusts
Local Authority
LLPs
Association of Persons (AOP) Body of Individuals (BOI)
Artificial Juridical Person
ITR-4 or Sugam (Presumptive Taxation Enrollees)
Who can file ITR 4?
Resident individuals and HUFs.
Those who have opted for the presumptive taxation scheme.
All resident partnership firms, except LLPs, that have income from business or profession.
Taxpayers with business turnover up to ₹2 crore. [Rs.3 crore from A.Yr.2024-25 with some additional conditions] If it exceeds ₹2 crore, the individual is required to file ITR-3 with an audit report.
The total income must not exceed ₹50 lakh.
Income from one house property (loss carry forward is not allowed in this form), salary or pension, and other sources.
Who cannot file ITR 4?
Individuals earning income from the following sources:
Income from more than one house property
Income from owning or maintaining racehorses
Capital gains
Income from lottery winnings
Agricultural income of more than ₹5,000
Income taxable under Sections 115BBDA or 115BBE
Individuals claiming relief under sections 90/90A/91 for taxes paid in foreign countries.
Taxpayers with a loss of income from other sources.
Any claim of credit for TDS in the hands of another person.
Taxpayers with financial interests or signing authority in accounts outside India.
ITR-5 (Partnerships, LLPs, and More)
Who can file ITR 5?
Firms
Association of Persons (AOP)
Limited Liability Partnerships (LLPs)
Body of Individuals (BOI)
Artificial Juridical Persons (AJP)
Cooperative Societies
Local Authorities.
Who cannot file ITR 5?
Individuals
HUFs
Companies
Entities falling under Sections 139(4A), 139(4B), 139(4C), 139(4D), 139(4E), or 139(4F)
ITR-6 (Companies)
Who can file ITR 6?
Companies under the Companies Act 2013 or the earlier Companies Act 1956.
Companies not claiming any exemptions under Section 11(Property income held for charitable or religious purposes)
Who cannot file ITR 6?
Section 11 companies and those who are eligible to file Form ITR-7.
ITR-7 (Special Entities)
Who can file ITR 7?
ITR-7 is designated for certain entities, including companies, required to file returns under specific sections of the Income Tax Act. Here’s a breakdown of those sections.
Section 139(4A): Trusts or legal obligations holding property where income is used solely for charitable or religious purposes.
Section 139(4B): Political parties required to file returns for their total income.
Section 139(4C): Entities such as:
Scientific research associations.
Educational and medical institutions.
Associations and institutions covered under sections 10(23A) and 10(23B).
News agencies.
Other prescribed entities.
Section 139(4D): Colleges, universities, and other institutions that are not required to furnish returns of income or loss under any other provision.
Section 139(4E): Business trusts
Section 139(4F): Investment funds referred to in section 115UB.
Who cannot file ITR 7?
Any other entity from those specified above.
Reasons Why Should You File ITR?
Here are some of the reasons why you should file an income tax return.
ITR filing is mandatory for individuals and entities whose income exceeds the basic exemption limit. Check your Income Tax Slab now.
It is required by banks and financial institutions when you apply for loans, credit cards, or other financial products.
To claim deductions and exemptions.
Filing ITR allows you to carry forward losses to subsequent years, which can be set off against future income.
Above all the reasons, as an Indian citizen, it’s your responsibility to file ITR timely and pay taxes (if applicable) to the government.
Common Mistakes or Pitfalls to Avoid While Filing Income Tax Returns
Selecting the wrong form: Choosing an incorrect form can lead to rejection of your return and penalties.
Ignoring additional income: Failing to report all income sources, such as interest from savings accounts or dividends, can result in penalties.
Neglecting Foreign Income/Assets: Non-disclosure of foreign assets or income can attract severe penalties.
Missing deadlines: Ensure timely filing to avoid late fees and interest charges.
How can KarrTax help you with Income Tax Return filing?
We at KarrTax offer expert advice on choosing the correct ITR (income tax return) form based on your income sources and tax obligations. Our tax experts ensure your ITR is filed on or before the due date to avoid penalties and also assist in claiming any tax refunds you might be eligible for.
Leave all your income tax return filing worries to us by clicking here.
Frequently Asked Questions (FAQs)
1. What documents are required for income tax return filing?
The below documents are required for income tax return filing:
PAN card
Bank account details
Aadhar card
Salary Slips
Form 16/16A/16B/16C
Bank statements
Investment proofs (if any)
Proof of deductions
Home loan statements
2. Is it necessary to link PAN to Aadhaar for income tax return filing online?
Yes, your PAN must be linked to your Aadhaar for successful income tax return filing online.
3. Can I file ITR for AY 2024-25 now?
Yes, absolutely, salaried individuals can file ITR for AY 2024-25 before 31st July 2024. No matter if your tax liability is zero, failing to meet this deadline will result in a penalty from Rs 1,000 to Rs 5,000.
Still confused on which ITR Form should you choose? Connect with our Tax Expert for FREE.
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