ITR Forms applicable for individuals for AY 2021-2022

Recently, the Central Board of Direct Taxes (CBDT) in April 2021 notified new ITR forms for the financial year 2021-2022. Later in May 2021, they extended the timeline for submitting direct tax compliances for the current financial year.   In India, every individual has to file for income tax returns i.e. ITR in every financial year. Salaried Individuals, HUFs, business firms, and companies all have to file returns. The Income Tax Act, 1961 formulates rules and regulations which are to be followed while filing for ITR.  This article gives an in-depth analysis of ITR forms applicable for Individuals for AY 2021-2022 and steps to file ITR in India.

ITR Forms and Changes in ITR for AY 2021

• The CBDT has notified 7 new ITR forms ITS-1 to ITR-7 for AY 2021-2022. This has been done to facilitate the taxpayers during the ongoing covid pandemic. Additionally, no significant changes have been made in the ITR forms.
• From AY 2021-22 individuals and HUFs will have an option to choose between the existing and the new concessional tax regime for filing the ITR.
• The 7 new ITR forms applicable for individuals as the case may be are Sahaj (ITR-1), Form ITR-2, Form ITR-3, Form ITR-4 (Sugam), Form ITR-5, Form ITR-6, and Form ITR-7 depending upon the income and the category of the individual, and the residential status. It is also important to download Form 26AS and verify all the financial transactions and TDS.
• Now the dividends are also made taxable from AY 2021-2022. Also, if an individual is a salaried person, he has to submit Form 16 and Form 16A. The government in Union Budget 2021 exempted senior citizens earning pension and interest income aged 75 years and above from filing ITR.

How is an ITR filed?

Step 1: Visit the official page of Income Tax and download the offline utility software.

Step 2: Once downloaded, the taxpayer has to fill in the relevant details and the details of the income tax challan.

Step 3: The taxpayer has to validate the information given in the form and convert the file into XML format.

Step 4: The taxpayer has to log in to the e-filing portal and upload the XML file along with the necessary details.

Step 5: Once the XML file is submitted, choose documents for verification of ITR and submit the ITR.

Why should you file ITR?

It is mandatory to file ITR in the following cases-

• If the gross income of an individual below 60 years is 2.5 lakh
• If the gross income of an individual between 60 and 80 years is 3 lakh.
• If the individual aged above 80 years has a gross income of 5 lakh.
• If the taxpayer has multiple source of income.
• Lastly, if they have earned income from any foreign assets during the current financial year.

Filing ITR helps individuals to receive a refund from the Income Tax Department. They can apply for loan or visa also.

Which ITR to file?

Every individual has to file a different form of ITR depending upon their income and category. If the taxpayer chooses a wrong ITR form, they have to file ITR again.

ITR forms applicable for Individuals

• ITR-1 Sahaj

This form is only for the resident individuals having a total maximum income of 50 Lakh. Individuals having a salary, pension, a single house property, other sources, family pension, and agriculture income of Rs. 5000.

It is one of the simplest ITR forms divided into many components like general information, gross total income, deductions and taxable total income, computation of payable tax along with other information.

Individuals not allowed to opt for this form-

a) If total income of the individual is more than Rs. 50,000

b) If having taxable capital gains.

c) If income is generated from more than one house property.

d) If there are no investments in unlisted equity shares.

e) NRI and RNOR

f) If having more than Rs. 5000 agricultural incomes.

g) If the income is generated from any profession or business or from property located outside India.

h) Director of company.

i) If the individual has any foreign asset or income.

• ITR-2

Individuals and HUF who are not having any income from profit and gains of business or profession, director of a company or someone who owns the unlisted equity shares of the company, and Individuals having more than one house property have to file ITR-2.

This form must be submitted by individuals and HUFs having-

a) Income of more than Rs.50 lakh.

b) Salary or pension generated income

c) Income from house property

d) Income from winning a lottery or horse race

e) Income generated if the individual is the director of the company.

f) Agricultural income which is more than Rs. 5,000

g) Income generated from capital gains or if generated from any foreign income or asset.

h) Investments done in unlisted equity shares.

If an individual is not eligible for ITR-1 and individual or HUF is having no income from business or profession, then ITR-2 is applicable for AY 2021-22.

• ITR-3

ITR-3 should be filed by individuals and HUFs who are having income from any profit and gains of a business or profession and if they are running a business or are a practicing profession.

Following individuals can opt for ITR-3 form-

a) Having income from profession or business.

b) If investments are done in unlisted equity shares.

c) If the individual is a partner or director in a company or firm

d) If the income is from salary or pension, house property, or any other source.

e) If the Individual has a turnover of more than Rs. 2 crores.

• ITR-4 Sugam

HUF and firms other than LLP having a total income of up to 50 Lakh should file ITR-4. If the computation of income is done under sections 44AD, 44ADA & 44AE of the Income Tax Act, then one should file ITR under this form. However, if the business income exceeds Rs. 2 crores then the taxpayer has to file ITR-3.

Following individuals are not allowed to opt for ITR-4-

• If the total income of the taxpayer is more than Rs. 50 Lakh.
• If the individual has brought forward any losses from the previous years.
• If the individual having signing authority outside India.
• If investments are done in unlisted equity shares.
• if the individuals have foreign assets or income.
• If the individual has more than one house property income.
• And lastly, if the individual is director of the company or an NRI or RNOR.

ITR-4 is not mandatory. This form can be used by the taxpayer if he is eligible under /s 44AD, 44ADA, or 44AE to declare profits and gains from business or profession on a presumptive basis.

• ITR-5

Firms, Association of Persons, LLPs, Body of Individuals, Artificial Judicial Person, Estate of Deceased and insolvent, Investment Fund, Business Trust, and Trust other than trust eligible to file ITR-7.

• ITR-6

Companies not choosing exemption under section 11 have to file ITR-6.

• ITR-7

Person including companies which required to furnish return under section 139(4A), 139(4B), 139(4C) & 139 (4D), Section 139(4E), or Section 139(4F) have to file ITR-7.

How to download the ITR forms?

Individuals can download the ITR forms applicable to individuals on the official website of the Income Tax Department. The forms are available in PDF format and the instructions to fill the form are also available on the same website.

Depending on the income, every taxpayer can either opt for ITR-1, ITR-2, ITR-3, ITR-4, and ITR-7. The Income Tax Returns can be filed on the official website of the Income Tax Department and the process to file the returns is also simple.

Key Points before Filing ITR form for Individual

• The individual has to choose the ITR form depending on the residential status and the income earned.
• The Finance Act, 2020 introduced an optional tax regime, this gives the taxpayer an option to choose old and new tax regimes while filing the ITR form.
• The government has introduced prefilled information in ITR forms, which will ease ITR filing.
• If there is a change in employment, the taxpayer has to submit a consolidated form 16 and 12 BA for ITR.
• Individuals having an agricultural income, income not chargeable as per double taxation avoidance agreement, and income of the minor child.
• The taxpayer should do verification of prepaid taxes with Form 26AS.
• If individuals are not mandated to file for ITR because of their taxable income, then also in some cases they have to submit the ITR like if they enter high-value transactions for example if they are doing payment of more than Rs. l Lakh electricity bill, a deposit of more than Rs. 1 Crore in one or more current bank accounts, and lastly if the individual spends Rs. 2 Lakhs in aggregate on an overseas trip.

Conclusion

During the ongoing coronavirus pandemic the CBDT notifying the ITR forms applicable for individuals for AY 2021-22 with only small modifications is a welcome step. This helps the taxpayers to minimize the lengthy complex taxation system The new ITR forms have a designated space for describing the investments of the taxpayer. And the new forms cater to small as well as medium taxpayers. Individuals HUFs, firms, and companies also have their specific ITR form now. Therefore, it can be said that the CBDT has made filing ITR more people friendly.