mail-box-lead-generation

written by | April 29, 2022

Which ITR Should I File? Types of ITR

×

Table of Content


An income tax return indicates a kind of form that a person submits to the income tax department. It consists of details about a person's income and all the taxes they are supposed to pay during the year. Information filed in an ITR pertains to a financial year that starts from 1st April to 31st March of the next year.

The income that one earns has a wide scope and can come from different sources. Some of the main sources can be-

  • Income accrued from Capital gains or house property. 
  • Income from profit and gains of business.
  • Income from different sources like dividends, interest, and royalty.

Did you know?

The nature and amount of income and type of taxpayer dictates which form will apply to them.

Also Read: Presumptive Taxation for Business and Profession

Types of ITR Forms

There are seven different forms notified by the department to date, including ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7. It is the taxpayer's responsibility to file his ITR on or before the deadline. 

Forms of the ITR vary according to the taxpayer's source of income, the amount earned, and the type of taxpayer, such as an individual, a HUF, a company, etc.

ITR-1 Form

The form is also called the Sahaj form. The individuals who are taxpayers should file ITR-1.

It only applies to such individuals and not to anyone else.

Who should apply?

The prescribed list of these individuals should apply in this form:

  • Any individual whose income solely depends on one single house property
  • Any individual who earns from pension or salary. 
  • An individual not having income coming from a foreign source.
  • A person not earning from other business or capital gains.
  • A person earns from sources like fixed deposits or other investments.
  • An individual having an agricultural income upto ₹ 5000.
  • Individuals wishing to combine the wages of their spouses or minor children with their own.
  • Any individual earning through horse racing, winning lotteries, and windfalls.

Who is not eligible to apply?

People satisfying the below-mentioned conditions are not allowed to file the ITR-1 form:

  • Individuals that have income from agriculture of more than ₹ 5000.
  • Applicants that earn from businesses or capital gains.
  • Ones who invest in equity shares that are not publicly traded in the financial year are not appropriate for this form.
  • Anyone who might be assessed for another person's income is also not allowed to file any Income Tax returns under the form.
  • Group of individuals owning foreign assets and earning from them while being a resident.
  • In case a person has income from many house properties.
  • If an individual is a director in a company, he cannot apply for ITR 1.
  • Individuals that are Resident but Not Ordinary Resident (RNOR) and Non-Resident Indian (NRI).

ITR-2 Form

ITR-2 can only be filed by the individuals who earn by selling properties or assets. Individuals who earn from outside India can also use this type of form. HUFs are also eligible to apply for ITR2 and file an income tax.

Who can apply for income tax returns under ITR-2?

The individuals that belong to the categories mentioned under are eligible to apply:

  • One who's earning depends on sources of capital gains, including from the sale of a property or an asset.
  • Individuals who earn by means of salary or pension.
  • Owner of assets abroad and keeping a source of income from India.
  • A person who relies on two or more house properties as a source of income.
  • A person with an agricultural income of ₹ 5000 or more.
  • NRIs and RNORs.
  • People with income from lottery winning etc.
  • Director of any company.

The ones that cannot apply under this form-

All the taxpayers cannot benefit from this form for their respective income tax returns.

These people are discussed in detail below for a better understanding-

  • Ones with a total income lower than ₹ 50 lakhs.
  • If anyone's total income might include some profit from venture capitalists.
  • People from other professions are not eligible to apply under this specific form.

ITR-3 Form

Individuals who are taxpayers or operating in HUFs as partners without any business can apply for this type.

Taxpayers who wish to know the accurate information under form 3 of ITR must be properly aware of its eligibility.

Who can apply for this specific form?

Groups of individuals earning from the given sources can apply to this.

  • A person who has income by being a partner in a firm.
  • People enrolled in a profession/business are eligible.
  • Income obtained on investments due to shares that are not traded publicly.
  • Director of the company.
  • Incomes whose source might be property, pension, and salary.

Who is not suitable for the form?

Taxpayers who have already applied for either ITR 1 or ITR 2 do not fall in this category. The below individuals cannot apply for this form.

  • Those who do not accept funds from a firm's business are ineligible to apply for form 3 of ITR.
  • Any individual with a business turnover below ₹ 2 crores.
  • Taxpayers are eligible for form ITR 3 only when one's taxable income coming under some business is in the commission form, salary, remuneration bonus, and interest. Apart from this, other earning sources from the business won't be allowed.

ITR-4S Form

This ITR form is famously known as Sugam. The 4S form applies to individuals who have a business and earn from it & are also eligible for income tax returns using this type of form.

Along with income, they are permitted to club the earnings from any fortune or jackpot. Taxpayers in professions like retailers, doctors, agents, shopkeepers, designers, and others may file the returns with the help of the form itself.

Eligibility criteria:

  • Someone who has their source of income as a single house property.
  • People earn from businesses they are doing for livelihood.
  • An applicant whose source of income is within India.
  • Taxpayers who do not earn through selling assets or capital gains.
  • Individuals not owning any properties/assets outside of India.
  • This applies to all the businesses where income relies on presumptive schemes according to Section 44ADA as per the Income Tax Act.

Who cannot apply?

Few people are not suitable for the application form 4S of ITR for filing tax returns. The categories for the same are below.

  • If the total income earned by a taxpayer exceeds fifty lakhs.
  • If the petitioner has any lost income carried forward, he is not permitted to use it. 
  • Owners of foreign assets
  • Directors of any company.
  • Individuals who rely on foreign sources as a source of their incomes.
  • Investors of unlisted equity shares.
  • Someone who possesses any one of the signing authorities in an account from outside India.
  • In case any taxpayer turns out to be evaluated with respect to someone else's income wherein tax deduction takes place by any other person.
  • Individuals are generating income from more than one housing property.
  • Limited Liability Partnerships are not at all allowed to apply under this form.

Also Read: Steps to download your ITR V from the ITR website

ITR-5 Form

Business organisations and firms are eligible to use this form to file ITR. It means the form that falls under the Limited Liability Partnerships or partnership firms.

The bodies mentioned below are eligible to file for IT returns with the help of this form:

  • Association of Persons
  • Limited Liability Partnerships
  • Body of Individuals
  • Investment funds.
  • Co-operative societies.
  • Local authorities.
  • Business trusts.
  • Firms
  • Estate of the insolvent or deceased.

Who cannot use this form:

  • An individual filing ITR-1
  • HUFs
  • A company

ITR-6 Form

This form is mainly for companies who want to apply for tax returns. On the other hand, companies must use this form using electrical means to apply for income tax returns.

Following is the list of people who can apply for form 6 of ITR-

  • Incomes earned using housing property.
  • Incomes from a business.
  • Incomes from other sources.
  • All companies apart from the ones claiming exemption under Section 11.

Who isn't allowed to file income tax under ITR-6?

Some income sources and organisations are not allowed to apply for income tax returns by making use of form 6:

  • Income from capital gains.
  • Any individual or Hindu undivided families (HUFs).
  • Organisations under section 11 are suitable for having tax exemptions as the income that is accrued by these bodies can be used for charity purposes.

ITR-7 Form

Individuals or companies can make use of form 7 of ITR to publish returns as per sections 139(4C), 139(4A), 139(4E), 139(4D), or 139(4F).

Who can apply using ITR-7 :

  • Section 139(4C) - These mentioned organisations must apply for income tax returns as per this section, such as news agencies.
  • Section 139(4A) - People who earn from properties held under total legal obligations or trusts for religious purposes/charity must file IT returns by utilising this form.
  • Section 139(4D) - Usually filed by universities, colleges, etc., as per this section, but they dont required to present the return of losses or income.
  • Section 139(4B) - Political parties file returns mostly, given their total earned income exceeds the non-taxable limit.
  • Section 139(4E) - as per this section, business trusts are allowed to file returns without furnishing returns of income/loss.

People and organisations who are not included under ITR-7:

  • Those considered suitable as per form 5 shall.
  • People with profits on capital as a source of income.
  • Any individual receiving salary and included under ITR-1 form.

Conclusion

Different types of income tax return forms apply to different sections of people and organisations earning money. The forms that eligible assessees file are taken into account by the IT department in India.

It is subsequently important to know which form is appropriate in which case and file the income tax return accordingly. It is also important that one has a brief knowledge of the different types of forms available to better decide which one to opt for.
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: Is one eligible to file an ITR if they have no income?

Ans:

In any year a person has less or no income, they can skip filing tax returns; however, it is legal to file a tax return that shows zero income.

Q: Which category applies to both firms and individuals under income tax returns?

Ans:

HUFs, individuals, and firms, while filing for ITR, should go for the ITR-1 or ITR-2 form and can also use form 4S to file ITR because it applies to individuals, owners of house property, or firms.

Q: How many forms are available only for individuals under income tax returns?

Ans:

5 ITR forms are available for individuals:

  • ITR-1: the individual is not earning any income from activities like gambling
  • ITR-2: individual earns through activities that are lottery or gambling
  • ITR-3: an individual HUF engaged in any profession or any business income.
  •  ITR-4S: it is usually filed by taxpayers that have opted for a presumptive tax regime, and their turnover does not exceed ₹ 2 crores.
  • ITR-5: It is suitable for an individual and for limited liability partnerships.

Q: Which category of people are not liable for ITR?

Ans:

People with taxable income exceeding the maximum amount not chargeable to tax are eligible for income tax returns. The basic exemption limit for 2019-2020 for senior citizens is rupees ₹ 3 lakhs, ₹ 2.5 lakhs for others, and ₹ 5 lakhs for super senior citizens.

Q: Is ITR necessary to apply for loans?

Ans:

Yes, one must do the needful and apply for income tax returns when they need to apply for a loan. It becomes really important to file ITR as it reflects creditworthiness and ensures that the person is financially stable enough to pay for the future interest.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
×
mail-box-lead-generation
Get Started
Access Tally data on Your Mobile
Error: Invalid Phone Number

Are you a licensed Tally user?

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.