ITR or Income Tax Return refers to a form that an individual or entity is required to submit to the Income Tax Department of India. This form carries information related to an individual’s annual income and the total tax liability to be paid at the end of the year.
All the information within the form must pertain to a specific financial year, that is, beginning from 1st April and concluding on 31st March of the next year. The Income Tax Department of India has laid down seven types of ITR forms- ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7.
The relevance and applicability of these forms would depend upon the nature and income of the taxpayer. To help you find which ITR form would be suitable for you, here is a complete overview of ITR forms that are relevant for individuals and ITR forms that are applicable for companies:
ITR Forms for Individuals/HUFs
1. ITR-1 or Sahaj
The ITR-1 or Sahaj must only be used by Indian resident individuals who fall under the following categories:
- The income is earned from a salary or pension.
- The income is earned from other sources, such as lottery, horse races, etc.
- The income is generated from sole house property (with certain exclusions).
- The aggregate income must be up to a maximum limit of INR 50 lakh.
- If there is agricultural income, it must be less than INR 5,000.
Who cannot choose this form?
- If taxable capital gains were earned by the individual during the financial year.
- If investments were made in unlisted equity shares during the financial year.
- If you are an NRI or RNOR (Resident Not Ordinary Resident).
- If you are a director of a company.
- If you have foreign income or assets located abroad.
2. ITR-2
The ITR-2 form must only be used by individuals and Hindu Undivided Families. This form would be applicable for individuals that come under the following categories:
- The income of the individual must exceed INR 50 lakh.
- The income must come out from either salary or pension.
- The income is generated from house property.
- The income is generated from other sources, such as lottery or horse races.
- The assessee is the director of a company.
- The income is generated from capital gains.
- The assessee made investments in unlisted equity shares during the financial year.
- The income is foreign in nature or the assessee has foreign assets.
Who cannot choose this form?
Individuals who earn their income from either business or profession.
3. ITR-3
The ITR-3 form must only be used by individuals and Hindu Undivided Families who earn their income from proprietorship business or profession. Only the individuals mentioned below can choose the ITR-3 form:
- Individuals who are earning their income from a business or profession.
- Individuals who, at any point of time during the financial year, invested in unlisted equity shares.
- Individuals who are a partner in a firm.
- Individuals who are a director of a company.
- Individuals whose income is earned from a salary or pension, other sources, or house property.
- Individuals whose business has a turnover of more than INR 2 crores.
4. ITR-4 or Sugam
The ITR-4 form or Sugam must be filed by Hindu Undivided Families, individuals, and partnership firms that are Indian residents and generate an income from a business or profession.
Moreover, individuals that opted for the presumptive income scheme according to Section 44AD, Section 44ADA, and Section 44AE of the Income Tax Act 1961 must also opt for the ITR-4 form.
Who cannot choose this form?
Individuals cannot opt for this form, if:
- The total income earned exceeds INR 50 lakh.
- Any losses from previous years have been brought forward.
- The individual has a signing authority at a place located outside India.
- Individuals have foreign income or foreign assets.
- House property income comes from multiple house properties.
- The individual is a director of a company.
- The individual is an RNOR or non-resident.
ITR Forms for Companies
1. ITR-5
The ITR-5 form must be filed by the following entities:
- Firms
- Body of Individuals
- Co-operative societies
- Limited Liability Partnerships (LLPs)
- Association of Persons
- Artificial Judicial Persons
- Local authorities
- Estate of Deceased
- Estate of Insolvent
- Investment Fund
- Business Trust
2. ITR-6
The ITR-6 form can be filed by companies that are not claiming exemption under section 11, that is, income from a charitable or religious property. It is important to note that the ITR-6 form can only be filed electronically by companies.
3. ITR-7
The ITR-7 form must only be filed by those individuals that have presented returns under Section 139 (4A), Section 139 (4B), Section 139 (4C), or Section 139 (4D).
The following individuals and entities must file their returns under each section:
- Section 139 (4A)- Must be filed by individuals who hold a property for religious or charitable purposes.
- Section 139 (4B)- Must be filed by political properties if the total income generated exceeds the maximum amount.
- Section 139 (4C)- Must be filed by the following entities: institutions that fall under Section 10 (23B), news agencies, scientific research association, medical institutions, universities, funds, and hospitals.
- Section 139 (4D)- Must be filed by colleges, universities, and other institutions that are not obligated to present any income or loss.