ITR Forms Guide, Income Tax Act, 1961

What is ITR and why one should file ITR?

Income Tax Return (ITR) is notified form by CBDT, in which the taxpayers file their information about his income earned and investment details to the income tax department. Till now the department has notified 7 various forms i.e. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7.

Every taxpayer should file his ITR within 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 the taxpayer likes individuals, HUF, company, etc.

It is mandatory to file income tax returns (ITR) in India if any of the conditions mentioned below apply to the assessee:

• If a person’s gross annual income is more than the basic exemption limit as specified below-

1. For individuals below 60 years, it is INR 2,50,000

2. For individuals above 60 years but below 80 years it is INR 3,00,000

• For individuals above 80 years, it is INR 5,00,000
• If a person has more than one source of income like house property, capital gains, etc.
• If a person wants to claim an income tax refund from the department.
• If a person has earned from or has invested in foreign assets during the FY.
• If a person wishes to apply for a visa or a loan
• If a person is a company or a firm, irrespective of profit or loss.

Types of ITR Forms & eligibility of ITR Form for the Assessment Year 2021-22

ITR 1 [Sahaj]:

This Form ITR 1 is to be used by individuals being a resident other than not ordinarily resident having a total income is up to Rs.50 lakh & income consist of the following:

• Income from Salary/ Pension,
• Income from one house property,
• Income from other sources (family pension, Interest, etc.), and
• Agricultural income up to Rs.5 thousand.

NOTE:

Further, in a case where the income of another person like spouse, minor child, etc.

It is to be clubbed with the income of the assessee, this ITR Form can be used only if the income being clubbed falls into the above income categories.

A person who is not eligible to use this Form ITR 1:

1. An individual who is/ has

2. A director in a company;

3. Held any unlisted equity shares at any time during the previous year;

• Any asset (including financial interest in any entity) located outside India;

4. Signing authority in any account located outside India; or

5. Income from any source outside India.

6. Deferred tax on ESOP received from employer being an eligible start‐up.

• Withdrawn cash and TDS have been deducted u/s 194N on such withdrawal.

7. An individual whose income consists of any of the following:‐

8. Profits and gains from business and professions;

9. Capital gains;

• Income from more than one house property;

10. Income under the head other sources which are of following nature:‐

– Winnings from lottery;

– Activity of owning and maintaining race horses;

– Income taxable at special rates under section 115BBDA or section 115BBE;

– Income to be apportioned following provisions of section 5A; or

– Agricultural income above ₹5,000.

11. Further, it is also not to be used by an individual who has any claims of loss/ deductions/ relief/ tax credit, etc. of the following nature:‐

12. Any brought forward loss or loss to be carried forward under the head ‘Income from house property;

13. loss under the head ‘Income from other sources;

• Any claim of relief under section 90 and/or section 91;

14. Any claim of deduction under section 57, other than a deduction under clause (iia) thereof (relating to family pension); or

15. Any claim of credit of tax deducted at source in the hands of any other person.

ITR 2:

This Form ITR 2 is to be used by the following assessee whose income sources does not consist of PGBP:

1. An Individual

2. HUF

ITR 3:

This Form ITR 3 is to be used by the following assessee whose income sources consist of PGBP:

1. An individual or

2. A HUF &

Further, persons who are not eligible to use ITR‐1, ITR‐2, or ITR‐4.

ITR 4 [Sugam]:

1. This Form ITR 4 is to be used by the following assessee whose total income is up to INR 50 Lacs and having income from PGBP computed under section 44AD, 44ADA, 44AE or,

2. Income from Salary/ Pension or,

• Income from one house property or,

3. Income from other sources [like Interest/ family pension]:

• Individuals who are residents other than not ordinarily resident,
• HUFs who is resident other than not ordinarily resident and
• Firms (other than LLP)

Under the following sections, income is computed on a presumptive basis.

• Section 44AD: Where Gross Turnover is up to INR 2 crore.
• Section 44ADA: Where Income from goods carriage up to ten vehicles
• Section 44AE: Where Gross receipt is up to INR 50 lakh

Note:

1. The income computed on a presumptive basis under sections 44AD or 44AE or 44ADA shall be presumed to have been computed after giving full effect to every loss, allowance, depreciation, or deduction under the Income‐tax Act. However, a person having loss after giving effect to the proviso to sub‐section 3 of Section 44AE shall file ITR5

2. Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.

Assessee who is not eligible to use this Form ITR 4:

1. This Return Form should not be used by a person who is/ has:

a. A director in a company;

b. held any unlisted equity shares at any time during the previous year;

2. any asset (including financial interest in any entity) located outside India;

3. signing authority in any account located outside India; or

4. income from any source outside India.

5. deferred tax on ESOP received from employer being an eligible start‐up.

6. This return form also cannot be used by a person who has any income of the following nature during the previous year:‐

7. Profits and gains from business and professions which is not required to be computed u/s 44AD, 44ADA or 44AE, such as income from a speculative business, agency business, commission or brokerage income, etc.;

8. Capital gains;

• • Income from more than one house property;

9. Income under the head other sources which are of following nature:‐

• • Winnings from lottery;
  • The activity of owning and maintaining race horses;
  • Income taxable at special rates under section 115BBE;
  • Income to be apportioned following provisions of section 5A; or
  • Agricultural income above ₹5,000.

10. Further, this return form also cannot be used by a person who has any claims of loss/ deductions/ relief/ tax credit, etc. of the following nature:‐

Any brought forward loss or loss to be

a. carried forward under any head of income;

b. Loss under the head ‘Income from other sources;

c. Any claim of relief under section 90, 90A, or section 91;

11. Any claim of deduction under section 57, other than a deduction under clause (iia) thereof (relating to family pension); or

12. Any claim of credit of tax deducted at source in the hands of any other person.

SUGAM form is not mandatory:

Form ITR‐4 (Sugam) is a simplified return form to be used by an assessee, at his option, if he is eligible to declare profits and gains from business and profession on a presumptive basis under section 44AD, 44ADA, or 44AE. However, in case the assessee keeps and maintains all books of accounts and other documents referred to in section 44AA, and also gets his accounts audited and obtains an audit report as per section 44AB, filling up the Form ITR‐4 (Sugam) is not mandatory. In such a case, other regular return forms viz. ITR‐3 or ITR‐5, as applicable, should be used and not this Form.

ITR 5:

For persons other than-

1. Individual,

2. HUF,

3. Company and

4. Person filing Form ITR-7

ITR 6:

For Companies other than companies claiming exemption under section 11

This Return Form can be used by a company as per section 2(17) of the Income Tax Act, This form is filed by a company other than a company that is required to file a return in Form ITR‐7.

As per section 2(17) of the Income Tax Act, the company means: ‐

1. Indian Company (Domestic Company)

2. Body corporate incorporated by or under the laws of a country outside India

3. Any institution, association, or body, whether incorporated or not & whether Indian or Non‐Indian which is declared by general or special order of the board to be a company, etc.

ITR 7:

For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) only.

Persons whose income is unconditionally exempt under various clauses of section10, and who are not mandatorily required to furnish the return of income Under the provisions of section139, may use this form for filing returns.

An indicative list of such persons is given below:‐

1. Local authority Section 10(20)

2. Regimental Fund or Non‐public Fund established by the Armed forces of the Union Section 10(23AA)

• Fund, by whatever name called, set up by the Life insurance Corporation (LIC) of India on or after 1st August 1996, or by any other insurer Section 10(23AAB)

3. Authority (whether known as the Khadi and Village Industries Board or by any other name) Section 10(23BB)

4. Body or Authority Section 10(23BBA)

5. SAARC Fund for Regional Colombo Declaration Projects set up by Section 10(23BBC)

• Insurance Regulatory and Development Authority (IRDA) Section 10(23BBE)
• Central Electricity Regulatory Commission Section 10(23BBG)

6. Prasar Bharati Section 10(23BBH)

7. Prime Minister’s National Relief Fund Section 10(23C)(i)

8. Prime Minister’s Fund (Promotion of Folk Art) Section 10(23C)(ii)

• Prime Minister’s Aid to Students Fund Section 10(23C)(iii)
• National Foundation for Communal Harmony Section 10(23C)(iiia)
• Swachh Bharat Kosh Section 10(23C)(iiiaa)

9. Clean Ganga Fund Section 10(23C)(iiiaaa)

• Provident fund to which the Provident Funds Act,1925 applies Section 10(25)(i)
• Recognized Provident Fund Section 10(25)(ii)
• Approved Superannuation Funds Section 10(25)(iii)
• Approved Gratuity Fund Section 10(25)(iv) 20 Other funds referred to in sub‐clause (v) of section10(25) Section 10(25)(v)

10. Employees’ State Insurance Fund Section 10(25A)

• Agricultural Produce Marketing Committee Section 10(26AAB)
• Corporation, body, institution or association established for promoting interests of members of Scheduled Castes or Scheduled Tribes or backward Classes Section 10(26B)
• Corporation established for promoting interests of members of a minority community Section 10(26BB)
• Corporation established for the welfare and economic upliftment of ex‐servicemen Section 10(26BBB)
• New Pension System (NPS) Trust Section 10(44)

NOTE:

HUF: Hindu Undivided Family

PGBP: Profits or Gains of Business or Profession

Sources: www.incometax.gov.in