Everything About ITR Forms: Which Form to File and Why Filing Is Advisable Regardless of Income
As we all know, ITR filing has commenced! However, it’s prudent to wait until the first week of June 2024 for all details to be updated on the income tax portal. In the meantime, let’s delve into ITR forms.
Ensure you gather the following documents: PAN, Form 16, bank statements, investment proofs, income from other sources, any medical bills, details of deductions such as electric vehicle expenses, Aadhaar card, and bank account information.
Selecting the correct ITR form is crucial to avoid future problems and effectively plan taxes. Otherwise, the Income Tax Department may levy hefty demands, including interest and penalties.
Some individuals offer low-cost ITR filing services, but based on my experience, this can be detrimental as they may compromise your personal information for profit.
For my TaxGuru readers, I’ve prepared concise slides to assist in choosing the right ITR form and making wise investments. You can download them from the link at end of the Article and same are also reproduced below for ready reference of our readers.
Income Tax Returns for individuals FY 2023-24 AY 2024-25
Due Date 31/07/2024
INCOME TAX RETURN (ITR) and TAX Planning
- Income Tax Return (ITR) is a form in which the taxpayers file information about their income earned and tax applicable, to the income tax department.
- The department has notified 7 various forms i.e. ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-7 to date. Every taxpayer should file his ITR on or before the specified due date. The applicability of ITR forms varies depending on the sources of income of the taxpayer, the amount of the income earned and the category of the taxpayer like individuals, HUF, company, etc.
Why should you file ITR?
It is mandatory to file income tax returns (ITR) in India if any of the conditions mentioned below are applicable to you:
1. If your gross annual income is more than the basic exemption limit as specified below-
| Particulars | Amount |
| For individuals below 60 years | Rs 2.5 lakh |
| For individuals above 60 years but below 80 years | Rs 3.0 lakh |
| For individuals above 80 years | Rs 5.0 lakh |
2. If you want to claim an income tax refund from the department.
3. If you have earned from or have invested in foreign assets during the FY.
4. If you wish to apply for a visa or a loan
5. If the taxpayer is a company or a firm, irrespective of profit or loss.
6. If you have loss from business/profession or under capital gains head, you will not be allowed to carry them forward to the next years unless you file the return before the due date.
Also, you are mandatorily required to file ITR even if your income is below the basic exemption limit but you meet one of these conditions:
- Deposited more than Rs. 1 crore in ‘current’ bank account: You have to mandatorily file a tax return if you have deposited a total of Rs. 1 crore or more in one or more current accounts with a bank. However, no such requirement has been specified for deposits made in with post office current accounts; or
- Deposited more than Rs. 50 lakh in ‘savings’ bank account: You have to mandatorily file a tax return if you have deposited a total amount of Rs. 50 lakh or more in one or more of your savings bank account.
- Spent more than Rs. 2 lakh on foreign travel: You have to mandatorily file a tax return if you have incurred a total expenditure of more than Rs. 2 lakh on foreign travel whether for yourself or any other person; or
- Electricity expenditure is more than Rs. 1 lakh: You have to mandatorily file a tax return if you have incurred more than Rs.1 lakh towards electricity consumption during the previous year; or
- TDS or TCS is more than Rs. 25,000: If the tax deducted at source (TDS)/ tax collected at source (TCS) exceeds Rs. 25,000 in the previous year. In the case of a senior citizen (above 60 years), this limit is Rs. 50,000.
- Business turnover is more than Rs. 60 lakh: In case you are a businessman and your total sales, turnover, or gross receipt is more than Rs. 60 lakh during the previous year, then you have to mandatorily file a tax return
- Professional income is more than Rs. 10 lakh: You have to mandatorily file a tax return if you are engaged in a profession and your gross receipts are more than Rs. 10 lakh during the previous year.
Which Form to be filed?
ITR-1 OR SAHAJ
This Return Form is for a resident individual whose total income for the AY 2023-24 includes:
- Income from Salary/ Pension; or
- Income from One House Property (excluding cases where loss is brought forward from previous years); or
- Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)
- Agricultural income up to Rs 5000
Who cannot use ITR-1 Form?
- Total income exceeding Rs 50 lakh
- Agricultural income exceeding Rs 5000
- If you have taxable capital gains
- If you have income from business or profession
- Having income from more than one house property
- If you are a Director in a company
- If you have had investments in unlisted equity shares at any time during the financial year
- Having any foreign income
- If you are assessable in respect of income of another person in respect of which tax is deducted in the hands of the other person.
- If tax has been deducted under Section 194N
- If in case payment or deduction of tax has been deferred on ESOP
- If you have any brought forward loss or loss needs to be carried forward under any income head.
- Owning assets (including financial interest in any entity) outside India, including signing authority in any account located outside India
- If you are a resident not ordinarily resident (RNOR) and non-resident.
ITR-2
ITR-2 is for the use of an individual or a Hindu Undivided Family (HUF) whose total income for the AY 2023-24 includes:
- Income from Salary/Pension
- Income from House Property
- Income from Other Sources (including Winnings from Lottery and Income from Race Horses)
- If you are an Individual Director in a company
- If you have had investments in unlisted equity shares at any time during the financial year
- Being a resident not ordinarily resident (RNOR) and non-resident
- Income from Capital Gains
- Having any foreign income
- Agricultural income more than Rs 5,000
- Owning assets (including financial interest in any entity) outside India, including signing authority in any account located outside India
- If tax has been deducted under Section 194N
- If in case payment or deduction of tax has been deferred on ESOP
- If you have any brought forward loss or loss needs to be carried forward under any income head
Further, in a case where the income of another person like one’s spouse, child etc. is to be clubbed with the income of the assesse , this Return Form can be used where such income falls in any of the above categories.
The total income can be more than Rs 50 Lakhs.
ITR-3
The current ITR-3 Form is to be used by an individual or a Hindu Undivided Family who have income from a proprietary business or is carrying on a profession. The persons having income from the following sources are eligible to file ITR-3:
- Carrying on a business or profession
- If you are an Individual Director in a company
- If you have had investments in unlisted equity shares at any time during the financial year
- The return may include income from House property, Salary/Pension and Income from other sources
- Income of a person as a partner in the firm
In short, individuals or HUFs who are not eligible to file ITR-1, ITR-2, and ITR-4, should file ITR-3.
ITR 4 or Sugam
- The current ITR-4 applies to individuals and HUFs, Partnership firms (other than LLPs), which are residents and whose total income includes:
- Business income according to the presumptive income scheme under section 44AD or 44AE
- Professional income according to presumptive income scheme under section 44ADA
- Income from salary or pension up to Rs 50 lakh
- Income from one house property, not more than Rs 50 lakh (excluding the amount of brought forward loss or loss to be carried forward)
- Income from other sources having income not more than Rs 50 Lakh (excluding income from lottery and race-horses )
Who cannot use ITR-4 Form?
- If your total income exceeds Rs 50 lakh
- Having income from more than one house property
- Owning any foreign asset
- If you have signing authority in any account located outside India
- Having income from any source outside India
- If you are a Director in a company
- If you have had investments in unlisted equity shares at any time during the financial year
- Being a resident not ordinarily resident (RNOR) and non-resident
- Having foreign income
- If you are assessable in respect of the income of another person in respect of which tax is deducted in the hands of the other person.
- If in case payment or deduction of tax has been deferred on ESOP
- If you have any brought forward loss or loss needs to be carried forward under any income head.
ITR-5 and 6
- ITR-5– ITR-5 is for 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.
- ITR-6- For Companies other than companies claiming exemption under section 11 (Income from property held for charitable or religious purposes), this return has to be filed electronically only.
ITR-7
For persons including companies required to furnish returns under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) or section 139(4E) or section 139(4F).
- Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
- Return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount, not chargeable to income-tax.
- Return under section 139(4C) is required to be filed by every –
- Scientific research association;
- News agency ;
- Association or institution referred to in section 10(23A);
- Institution referred to in section 10(23B);
- Fund or institution or university or other educational institution or any hospital or other medical institution.
- Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish a return of income or loss under any other provision of this section.
- Return under section 139(4E) must be filed by every business trust which is not required to furnish a return of income or loss under any other provisions of this section.
- Return under section 139(4F) must be filed by any investment fund referred to in section 115UB. It is not required to furnish a return of income or loss under any other provisions of this section.
Conclusion: Income Tax Return (ITR) filing is not just a legal obligation but a vital aspect of financial management. It ensures compliance with tax regulations, facilitates refunds, and enables efficient tax planning. Understanding the intricacies of ITR forms, eligibility criteria, and tax planning strategies empowers taxpayers to optimize their financial affairs and navigate the taxation landscape effectively. By adhering to ITR filing requirements and adopting prudent tax planning measures, individuals and entities can enhance their financial well-being and ensure regulatory compliance.
Author Bio
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