Summary: Choosing the correct Income Tax Return (ITR) form is essential for accurate tax filing. The type of income you earn—whether from salary, business, capital gains, or foreign sources—determines which ITR form to use. Residential status (resident or non-resident) also plays a role, along with income limits. ITR 1 (SAHAJ) is for residents with income up to ₹50 lakh from salary, one house property, and other sources like interest or dividends. ITR 2 applies to individuals and HUFs with income from multiple properties, capital gains, or foreign income. ITR 3 is for individuals and HUFs with income from business or profession. ITR 4 (SUGAM) is for individuals, HUFs, and firms opting for presumptive taxation under sections 44AD and 44ADA. ITR 5 is for partnership firms and LLPs, while ITR 6 is for companies except those claiming exemptions under section 11. ITR 7 is used by trusts, political parties, scientific institutions, and universities for specific types of income. Even if your income is below the exemption limit, filing is required if you meet conditions like depositing over ₹1 crore in a current account or spending on foreign travel. Understanding the right form ensures compliance and smooth processing of your tax returns.
Figuring out the right Income Tax Return (ITR) form to use is super important for making sure your tax filing is spot on. Let’s dive into the different ITR forms you might come across, what they’re used for, and the key limits you should keep in mind.
There are a few important things to consider when figuring out which ITR form to use. First off, the Type of Income you have matters—whether it’s from your salary, a business, or capital gains can make a difference. Then, you need to think about where that income is coming from, whether it’s from within the country or abroad. Your Residential Status is also a key factor, as it can be either resident or non-resident. Lastly, keep in mind that some forms come with specific income limits that you need to be aware of.
ITR 1 (SAHAJ): Only For Resident individuals and HUF with total income up to ₹50 lakh: if an individual source of income from these heads of Income:- Salary/Pension Income, One House Property and other source Income (i.e. Interest, dividend, etc.), and agricultural income up to Rs. 5000/-
ITR 2: For Individuals (Non-Resident or Resident) and HUFs: if an individual source of income from these sources of Income:- Salary/Pension Income, Multiple House Properties, Capital gains, Foreign income/assets, and other source Income (i.e. Interest, dividend, etc.)
ITR 3: Individuals and HUFs with Income From Business or Profession: if an individual source of income from Business or Profession Salary/Pension Income, Multiple House Properties, Capital gains, Foreign income/assets, and other source Income (i.e. Interest, dividend, etc.)
ITR 4 (SUGAM): Individuals, HUFs, and Firms (other than LLPs) who are Opting for Presumptive Taxation (i.e. u/s 44AD & 44ADA): If individuals, Hindu Undivided Families (HUFs), and firms derive income from Business or Profession and choose to opt for presumptive taxation under sections 44AD and 44ADA, they will be required to file ITR 4. However, if these persons also have income from capital gains or possess foreign assets, they will not be permitted to file ITR 4 and must file ITR 3.
ITR 5: This Form is Only for Partnership firms, LLPs, etc.
ITR 6: Companies (Other than those claiming exemption under section 11).
Section 11 of the Income-tax Act allows for a tax exemption on income earned from properties held by charitable trusts and institutions. To qualify for this exemption, the income must be generated from properties that are used only for religious or charitable activities. Additionally, the organizations must secure a registration certificate under either Section 12A or Section 12AA of the Income-tax Act
ITR 7: This is submitted by individuals and companies when they need to file their returns under these sections:
i. Under Section 139(4A): Income from Charitable and Religious Trusts.
ii. Under Section 139(4B): Political Parties.
iii. Under Section 139(4C): Scientific Research Institutions. section 139(4D): Universities, colleges, or other institutions.
You must file your income tax return (ITR) even if your income is below the basic exemption limit if you meet any of these conditions:
i. Your current account deposits are over ₹1 crore.
ii. You spend more than Rs. 2 lakh on foreign travel.
iii. Your electricity bills are over Rs. lakh.
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