Introduction: Deciphering the right Income Tax Return (ITR) form to use can often be a perplexing task for many taxpayers in India, especially when it comes to Individuals, Hindu Undivided Families (HUFs), and Firms. The following table provides a detailed and simplified analysis of the applicability of various ITR forms, including ITR-1, ITR-2, ITR-3, and ITR-4, on the basis of certain factors.
Table: Applicability Of ITR Forms for Individual, HUF & Firms on The Basis of Certain Factors
| Particulars | ITR-1 | ITR-2 | ITR-3 | ITR-4 |
|---|---|---|---|---|
| Type of Person | Individual only | Individual & HUF | Individual & HUF | Individual, HUF & Firm |
| Exception for Individual | Not for an Individual
-who is a Director in a company, – has invested in unlisted equity shares, – has deferred Income tax on ESOP, – has TDS u/s 194N – or has agricultural income more than Rs. 5000 |
N/A | N/A | Not for an Individual
– who is a Director in a company, – has invested in unlisted equity shares, – has deferred Income tax on ESOP, – or has agricultural income more than Rs. 5000 |
| Residential status | Resident Individual only (not ordinarily resident) | Resident, Non-resident & Not Ordinarily resident | Resident, Non-resident & Not Ordinarily resident | Resident only |
| Sources of Income | -Salary,
-Income from one House Property, -Other Sources, and -reporting of exempt income BUT agricultural income up to Rs. 5000 |
-Salary,
-Income from more than one House Property, -Capital Gain, -Other Sources, and -reporting of exempt income |
Salary,
Income from one House Property, -Capital Gain, -Business Income (including presumptive), -Other Sources, and -reporting of exempt income |
-Salary,
-Income from one House Property, -Business Income opted for Sec 44Ad, 44ADA & 44AE, -Other Sources, and -reporting of exempt income BUT agricultural income up to Rs. 5000 |
| Total Income | Total Income up to Rs. 50 lakh | No Limit.
and Where Total income exceeds Rs. 50 lakh, (assets and liabilities schedule) need to be filled |
No Limit.
and Where Total income exceeds Rs. 50 lakh, (assets and liabilities schedule) need to be filled |
Total Income up to Rs. 50 lakh |
| Exception in the case of certain Income & tax relief | Not for an Individual where
-Income of specified person is included in the Total Income as per Sec 64 and Schedule SPI needs to be filled. -Not for those having Foreign Income for which Schedule FSI & FA need to be filled. -Not for Income from transfer of virtual digital asset taxable under the head “Capital Gain”. -Not for special income taxable at a special rate for which Schedule SI needs to be filled (for e.g winning from lottery, puzzles taxable @30%). -Not where tax relief is to be claimed in respect of Foreign Income u/s 90, 90A & 91. |
N/A | N/A |
ITR-4 not eligible where, -for an Individual where Income of specified person is included in the Total Income as per Sec 64 and Schedule SPI needs to be filled. ITR-4 not eligible for an Individual, HUF & Firm where – – Having Foreign Income for which Schedule FSI & FA need to be filled. -Not for Income from transfer of virtual digital asset taxable under the head “Capital Gain”. -Not for special income taxable at a special rate for which Schedule SI needs to be filled (for e.g winning from lottery, puzzles taxable @30%). -Not where tax relief is to be claimed in respect of Foreign Income u/s 90, 90A & 91. |
Conclusion: Choosing the correct ITR form is crucial for a seamless and error-free tax filing process. By understanding the specifics of each form, taxpayers can ensure they provide accurate and comprehensive information, thereby abiding by the Indian Income Tax norms. However, since tax rules may change annually, it is always prudent to refer to the latest guidelines or consult a tax professional when in doubt.
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