An ITR (Income Tax Return) is a document taxpayers use to report their earned income and related taxes to the income tax department.
The Income Tax Act of 1961 makes all ITR forms available and explains the processes to be followed. Taxpayers disclose all income and assets held to the Income Tax Department of India using various ITRs. It may establish the individual taxpayer’s actual tax liability, assist a taxpayer in applying for refunds if the individual’s actual tax liability is less than the tax paid by the individual, and assist a taxpayer in scheduling tax payments. In submitting ITRs, all sources of income are evaluated, including salaries, capital gains, dividends, interest, income from overseas assets, and other sources.
There are seven types of ITR (ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7) applicable to different sorts of taxpayers according to their category and income. The application of ITR forms varies based on the taxpayer’s sources of income, the amount of income generated in a year, and the taxpayer’s category, such as individuals, HUFs, corporations, and so on.
ITR 1 or SAHAJ
ITR 1 is often referred to as the Sahaj form. This applies to residents whose primary source of income is a salary or a pension. This form is ineligible for taxpayers whose yearly income exceeds Rs.50.00 lacs or who get income from overseas assets.
ITR-1 filing eligibility
- Any person whose primary source of income is a salary or pension.
- Any income derived from a single-family residence (Except when a loss from the previous financial year is carried forward).
- Income derived from agricultural activities doesn’t exceed Rs.5,000/-.
- Income derived from other sources of income (excluding winning a lottery and race house).
- The income from the sources mentioned above does not exceed Rs.50.00 lacs.
Ineligibility for ITR-1 filing
- Total income over Rs.50.00 lacs.
- Agricultural income above Rs.5,000/-.
- If you own taxable capital gains.
- If you earn an income through your business and/or profession.
- One who receives income from more than one residential property.
- If you serve as a director in the company.
- If you invested in unlisted equity shares at any period between the financial year.
- Possession of assets (including financial interests in any organization) located outside of India, as well as signing power over any account located outside of India.
- If you are a non-resident and an RNOR – resident not ordinarily resident.
- Receiving any overseas income.
- If you are assessed concerning the income of another person on which tax is deducted from the other person’s hands.
- If you have deducted tax as per Section 194N.
- If in the case payment or deduction of tax has been postponed on ESOP (Employee Stock Ownership Plan).
- If you have any carried forward losses or losses that must be carried ahead under any income head.
The following documents are required to file the ITR-1 form:
- PAN card
- Form 16: This is issued by all your employers for the financial year.
- 26AS Form: Double-check that the TDS on Form 16 matches the TDS on Part A of your Form 26AS.
- Receipts: If you could not provide documentation of some exemptions or deductions (such as HRA allowances or Section 80C or 80D deductions) to your employer on time, keep these receipts on hand so that you can claim them directly on your Income Tax Return.
- Certificate of Bank investment: Interest Certificate from Bank Saving/FDR/etc.
ITR 2
This applies to residents whose income source is more significant than Rs.50.00 lacs through a salary, pension, house, or other sources. The ITR-2 form can be used by those who get income from sources outside India to file their taxes.
ITR-2 filing eligibility
- Any person whose income comes from a Salary or pension.
- Any person who owns ESOPs or unlisted equity shares. Anybody whose income comes from the selling of an asset or property.
- Any person whose generation of income includes income from outside of India.
- Income received from the sources above exceeds Rs.50.00 lacs.
Ineligibility for ITR-2 filing
- If any person’s entire income consists of earnings from a business and/or other professions.
- If the person’s annual income is less than Rs.50.00 lacs.
ITR 3
ITR-3 is mainly for those who make a livelihood via their profession and/or business. Salary, a pension, and other forms of income are also included. Salaried individuals also file an ITR-3 for intraday stock exchange and/or futures and options trading income.
ITR-3 filing eligibility
- Somebody who makes a livelihood through a profession and/or business.
- Any compensation earned by a director of a company.
- Salary, pensions, or other kinds of income are all acceptable sources.
- Earnings received by any partner in a company.
- Any person who purchased unlisted equity shares.
Ineligibility for ITR-3 filing
- Those people or HUFs need a source of earnings from their profession and/or business.
- Those whose annual revenue is less than Rs.2.00 crores.
- Any additional sources of revenue except the business’s pay (salary, bonus, commission, pay, and interest).
ITR 4 or Sugam
ITR 4 is often referred to as the Sugam. Income generated by Indian residents HUFs, Partnership Companies (other than LLPs), and individuals from business and/or profession who are Indian residents must be reported filed Income Tax Return using ITR-4. Sections 44AD, 44ADA, and 44AE of the Income Tax Act may also be completed by individuals who have chosen a presumptive income scheme.
ITR-4 filing eligibility
- Indian residents HUFs, Partnership Companies (other than LLPs), and individuals from business and/or profession.
- Agriculture income is more than Rs.5,000/-.
- Someone who has selected a presumptive income plan under Sections 44AD and 44AE of the Income Tax Act.
- Someone who, under Section 44ADA of the Income Tax Act, has adopted a presumptive income scheme.
Ineligibility for ITR-4 filing
- If the entire income is more significant than Rs.50.00 lacs.
- If income from more than one residential property is obtained.
- If someone is in ownership of any overseas assets.
- If any person receives income from a country other than India.
ITR 5
Business Trusts, Investment Funds, Estates of the Deceased, Estate of Insolvent, Artificial Judicial Persons, Associations of Persons (AOPs), Body of Individuals (BOIs), Limited Liability Partnerships (LLPs), and firms have to file ITR-5.
ITR-5 filing eligibility
- Business Trusts
- Investment Funds
- Estate of Deceased
- Estate of Insolvent
- Artificial Judicial Person
- Association of Persons (AOPs)
- Body of Individuals (BOIs)
- Limited Liability Partnerships (LLPs)
- Local Government
Ineligibility for ITR-5 filing
- Everyone who qualifies to submit an ITR-1
- Hindu Undivided Families (HUFs)
- Any Business
- Individuals earn from capital gain.
ITR 6
ITR-6 is submitted by companies that are not claiming exemptions as per section 11. Companies who choose it can only fill this out electronically.
ITR-6 filing eligibility
- Companies that are not claiming exemptions as per section 11.
- Any income generated through real estate activity.
- Income through profit from a business.
- Income from any other source.
Ineligibility for ITR-6 filing
- Income generated through capital gain.
- Individual income or income generated by HUFs.
ITR 7
ITR 7 can be chosen by companies filing income tax returns under various sections of the Income Tax Act of India.
ITR-7 filing eligibility
- Section 139(4A): Individuals owning property for charitable or religious purposes.
- Section 139(4B): Political parties and affiliates.
- Section 139(4C): News Agencies, Institutions covered under section 10 (23A), Associations or Institutions belonging to Section 10 (23B), and the Association of Scientific Research
- Section 139(4D): Colleges, Universities, and other institutions
Ineligibility for ITR 7 filing
- Any salaried individual or HUFs.
- Those who are eligible to file income tax returns under ITR-5.
