Which ITR Form Should You File? – Types of ITR Forms

 

Direct taxes are the taxes collected on the annual income of an individual or business from various sources and play a very important role in the economic growth of the country. It is the source of revenue for the Government to fund various welfare and infrastructure projects. Filing the Income Tax Return using the appropriate Income Tax Return form is a mode to ensure that all eligible entities pay their dues to the Government within a specified period in a financial year. 

How to file ITR online? is a concern for users and the ITR form contains all the information about the income of the entity for a financial year that covers the period from the 1st of April of a financial year till the 31st of March of the following financial year.  Every responsible citizen should file income tax returns and pay the tax as applicable to the income slabs without fail year after year. 

There are seven types of forms that you can use for ITR filing. The relevant form, as per the Central Board of Direct Taxes in India guidelines, has to be used while filing the tax returns. Learn about what are ITR forms, their types and their usage in this detailed guide about ITR forms. 

What are ITR Forms?

The ITR form is a document used by taxpayers to report their income, deductions, exemptions claimed, and the tax paid for a particular financial year. While filing the Income Tax Return Form, the tax liability for a particular financial year is calculated and paid to the Income Tax Department. The taxpayer submits the relevant ITR form along with the proof of investments to the designated Income Tax Office.

The IT department has notified 7 ITR form types, i.e., ITR 1 to ITR 7. The relevancy of the ITR form depends on the income source, the income earned, and the category of the taxpayer, i.e., individual, HUF, etc. You will have to identify the category you belong to and choose the appropriate type of Income Tax Return form before filing the ITR.

Reasons To File ITR

The filing of income tax returns is mandatory if the following conditions apply:

• Gross income specification as given below:

• If you have income from sources other than salary or business income, i.e., capital gains, house property, interest on deposits, etc.
• To claim a refund from the Income Tax Department.
• If you have invested in assets abroad or have income from foreign assets during the Financial Year.
• If you intend to take a loan or apply for a Visa.
• If the taxpayer is a Company or Firm, the ITR has to be filed irrespective of profit or loss.
• When a business is at a loss, or there is a loss under capital gains, the loss cannot be carried forward unless the income tax returns are filed for that financial year.

Types of ITR Form

The type of Income Tax Return Form to use depends on the source of income, income earned and the category of the taxpayer. The form, per the guidelines of the Central Board of Direct Taxes, should be used while filing income tax returns. The infographic below will give you a clear picture of the ITR form type and who should use them.

ITR 1 Form or SAHAJ

ITR-1 Formor Sahaj applies to individuals who have income from the following sources:

• Salary/Pension.
• House Property except in cases where loss is brought forward from the previous year.
• Income from other sources (except winning a lottery or through racehorses).
• Agricultural income up to Rs. 5000/-.

Who Cannot File the ITR 1 Form?

The following individuals cannot use this Income Tax Return form

• Whose income is more than Rs. 50.00 lakhs.
• Whose agricultural income is above Rs. 5000/-.
• Those who have taxable capital gains.
• Those who are Directors of a Company.
• Those with income from business or profession.
• Those who have income from more than one house property. 
• Those who have invested in unlisted equity shares during the financial year.
• Those who own assets abroad or have a financial interest in any foreign entity and signing authority in any account maintained abroad.
• NRIs and Resident Not Ordinarily Resident (RNOR).
• Those liable for the income of another person for which tax has already been paid.
• If tax has been deducted under Section 194N.
• If payment of tax or deduction has been postponed for ESOP (Employee Stock Ownership Plan).
• Where loss has been carried forward, or loss under any other income head has been carried forward.

ITR 2 Form 

This ITR form type applies to the following individuals and HUFs if:

• They have income from Salary/Pension, House Property, and other sources, including income from winning a lottery or racehorses.
• They are individual directors in a Company.
• They have invested in unlisted equity shares at any time during the financial year.
• NRIs and Resident Not Ordinarily Resident (RNOR).
• They have income from capital gains or income from abroad.
• They have an agricultural income of more than Rs. 5000.
• They are liable for the income of others for which tax has already been paid.
• They have income from abroad.
• They own assets abroad and those with signing authority for accounts maintained abroad.
• The tax has been deducted under Section 194N.
• The payment or deduction of tax on ESOP is postponed.
• Have carried forward losses or loss under any other income head has to be carried forward.

If the income from other persons like spouse and child, which fall under any of the above categories, have to be clubbed with the income of the assessee, this ITR form can be used, and the income can be above Rs. 50.00 lakhs.

Who Cannot File ITR Form 2?

ITR 2 Form is among the ITR form types that cannot be used by individuals whose income is from business or profession. 

ITR Form 3

This type of Income Tax Form should be used by individuals and HUFs with proprietary firms or professionals. ITR 3 form is among the ITR form types that taxpayers with income from business or profession and if:

• They are individual Directors of a Company.
• They have invested in unlisted equity shares at any time during the financial year.
• The income can also be from Salary/Pension, House Property, and other sources.
• Income as a partner in a Partnership Firm.

Who Cannot File ITR Form 3?

The assesses who are filing returns using the following forms need not file Income Tax Return Form 3

• ITR 1
• ITR 2
• ITR 4

ITR Form 4 (Sugam)

The prevailing ITR 4 form applies to resident individuals, HUFs, and Partnership Firms other than LLPs. The income should be from the following sources:

• Business income that is covered under Section 44AD or 44AE and income from profession covered under Section 44ADA according to the presumptive income scheme.
• Income from salary or pension within Rs. 50.00 lakhs.
• Income from one house property within Rs. 50.00 lakhs, excluding losses carried forward and the loss that needs to be carried over.
• Income from other sources not exceeding Rs. 50.00 lakhs, excluding income from lottery or racehorses.

An assessee earning income from any of the above sources as a freelancer can also opt for a presumptive income scheme provided the income does not exceed Rs. 50.00 lakhs.

A presumptive income under Section 44D, 44E and 44DA is when the income is presumed to be at a minimum rate depending on the percentage of gross receipts/turnover or ownership of a commercial vehicle. If the gross turnover is above Rs. 2.00 crores, the income tax returns have to be filed using the Income Tax Return Form 3.

Who Cannot File ITR Form 4?

You cannot file Income Tax Return Form  4 if:

• Your income exceeds Rs. 50.00 lakhs.
• If income is from multiple properties. (more than one).
• If you are a signing authority for any account maintained overseas
• If you own any asset abroad or have income from abroad.
• If you are a Director of a Company.
• If you have purchased unlisted equity shares at any time during the financial year.
• If you are an NRI or RNOR.
• If you are liable for the income of another person for which the tax has been paid already.
• If the payment and deductions on ESOP have been postponed.
• If there are carried-over losses and losses under any income head to be carried over.

ITR Form 5

ITR Form 5 is for the following:

• Firms
• LLPs (Limited Liability Partnership)
• AOPs (Association of Persons)
• BOIs (Body of Individuals)
• Artificial Juridical Person (AJP)
• Estate of Deceased
• Estate of Insolvent.
• Business Trust And Investment Fund

Who Cannot File ITR Form 5?

The following cannot file ITR 5 Form:

• Individual assesses
• Hindu Undivided Families (HUFs)
• Companies
• Taxpayers who have to file returns using the Income Tax Return Form 7 under Sections 139(A), 139(B), 139(C), 139(D), 139(E), and 139(F)

ITR Form 6

All Companies registered under the Companies Act 2013 or the earlier Companies Act 1956 should use the ITR 6. If the Income Tax Return Form 6 is used, the filing of returns should be done electronically. 

Who Cannot File ITR Form 6?

Companies claiming exemption under Section 11, i.e., with income from property held for charitable or religious purposes, cannot file the ITR 6 form. 

ITR Form 7

Income Tax Return Form 7 is for persons, including Companies that file returns under Sections 139(A), 139(B), 139(C), 139(D), 139(E), and 139(F).

• Persons with income derived from property held under trust for charitable or religious purposes should file the income tax return under Section 139(4A).
• Political parties have to file returns under Section 139(4B) if the total income without giving effect to provisions under Section 139(4A) exceeds the maximum exempted from income tax.
• The following have to file returns under Section 139(4C):

- News Agency

- Scientific Research Organisation

- Institutions that come under Section 10(23B)

- Fund, Institution, Educational Institution, University, and hospital or other medical institutions

• Every university or college or any other institution that does not have to file a return of income or loss under any other provision of this Section should file returns under 139(4D).
• Any business or trust which does not have to file a return of income or loss under any other provision of this Section should file returns under 139(4E).
• Any investment fund referred to in Section 115UB which does not have to file a return of income or loss under any other provision of this Section should file returns under 139(4F).

Who Should Not File ITR Form 7?

Those not seeking exemptions under Sections 139(4A), 139(4B), 139(4C) or 139(4D) need not use the Income Tax Return Form 7.

What are the key changes notified in the new ITR forms for FY 2022-23 (AY 2023-24)?

Though there is no significant change in the types of ITR form, some updations have been made as given below:

A new schedule for reporting income from Virtual Digital Assets (VDA) such as cryptocurrencies has been included under Capital Gains in types of ITR form except ITR 1. 

The taxpayers who have opted out of the new regime in the last assessment year have to report along with the year they opted out in the ITR from types ITR 3 and ITR 4.

The taxpayers have to report the taxable income on which relief under Section 89A was claimed in any of the previous years under the disclosure for ‘Income from retirement benefit accounts’ which is newly added. 

In the ITR form types ITR 3, ITR 5, and ITR 6, the turnover and income from intraday trading must be reported in the new section under the ‘Trading Account’ section.

Foreign Institutional Investors have to mention their SEBI registration number as a new disclosure measure. 

There is a small update in the balance sheet reporting. Reporting of income received through advances from individuals specified in Section 40A(2) b of the IT Act and others should be under the ‘Advances’ Section in Source of Funds.

Steps to Download the ITR Form Utility Online

How can I download the ITR Form utility online is a concern every new taxpayer has before commencing the ITR filing process. Here is how you do it:

1. Access the official website of the IT Department of India.

2. Click on the ‘Downloads’ option which is to the right of the screen.

3. Select the assessment year.

4. Click on ‘Common Offline Utility (ITR1 to ITR4) for ITR forms 1 to 4.

5. Click on ‘Utility Excel based’ to download the Excel file of the types of ITR required 

Which ITR Form to File When Filing Income Tax Return?

The details of the Income Tax Return Form to be used as per eligibility to file the tax returns are given below:

Where can Individuals Download the Various Forms?

Individuals can download the various types of ITR forms from the official websites of indiagov.in,

Conclusion

Filing income tax returns is mandatory to claim a refund from the Income Tax Department. It is equally important to have an idea about which ITR to file and who is eligible to use the relevant Income Tax Return form as per the guidelines of the Central Board of Direct Taxes. Choosing the wrong form will make the ITR defective and may also lead to being treated as an invalid return. So, if you are overwhelmed with the type of Income Tax Return Form to use among the range available, you can seek the advice of a professional to file your income tax returns accurately. 

FAQs on ITR forms

What is the ITR form for?

Income Tax Return form is a document used to report the annual income from salary or business for a financial year, i.e., from the 1st of April of a year till the 31st of March of the following year to the Income Tax Department and pay the applicable tax as per the income slab rates.

Which is the correct ITR form?

The Income Tax Return form depends on the source of income, income earned, and the category of the taxpayer.

What is the ITR form for individuals?

The ITR forms for individuals are ITR 1 or Sahaj, ITR 2, ITR 3, and ITR 4.

What is the ITR for salary income?

The Income Tax Return form for salary income is ITR 1 if the annual salary is within Rs. 50.00 lakhs and ITR 2 if the income is above Rs. 50.00 lakhs

What is the difference between ITR 3 and ITR 4?

ITR 3 is for individuals, HUFs, and Partners in a firm, whereas ITR 4 is for individuals, HUFs, and Firms.

Which ITR form is applicable for nil return?

The forms applicable for nil returns for individuals and HUFs are ITR2, ITR3, and ITR4.

Which ITR form is to be used for commission income?

The Income Tax Return Form 3 is the form to be used if the commission is the primary source of income.

Which ITR form should NRI use?

NRIs should file the income returns using ITR 2 except for business income and ITR 3 for business income.

Which ITR form to fill for self-employed?

Self-employed individuals should use Income Tax Return Form 3 for non-presumptive income and ITR 4 if the income is up to Rs. 50.00 lakhs and they intend to show presumptive income.

In which month do ITR forms become available?

The ITR forms are available throughout the year.

ARN - INT/ED/02/24/8533