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Types of Income Tax Return (ITR) Forms

Income Tax Return (ITR) forms come in various types, tailored for different taxpayer categories such as individuals, businesses, and those with specific income sources, ensuring accurate reporting and compliance with tax regulations.

  • 37,933 Views | Updated on: Mar 08, 2024

Filing Income Tax Returns (ITR) is an annual ritual for individuals and entities, and understanding the appropriate form to use is crucial. The Income Tax Department offers different ITR forms, each tailored to specific financial situations.

A taxpayer can file his taxes using one of nearly nine different ITR form types in total. However, as per the Central Board of Direct Taxes in India, only the following forms should be used by people for submitting returns:

What is ITR Filling?

The income tax return is a form that allows you to file your taxes with the Income Tax Department. In most cases, the tax return is a worksheet with predefined parameters, which helps calculate your income tax liability based on your income.

The legal framework requires every individual and business to file income tax for each financial year. The types of returns must be filed for any income earned as a salary, interest, dividends, capital gains, or other sources. More importantly, income tax returns must be filed before the specified date to avoid late ITR file charges and penalties, and there are different benefits to filing ITR.

If the income tax return (ITR) shows that you have paid more than the liability, you may claim a refund for excess tax. However, such refunds are subject to the calculations made by the Income Tax Department.

Types of ITR form

Let us examine the different types of ITR forms to learn more about their specifics. Taxpayers can file their taxes using a variety of ITR form types. The category that the taxpayer belongs to depends on the kind of income and its source (individual, company, and Hindu Undivided Families). The income tax return (ITR) form that must be submitted will vary depending on the individual.

ITR 1

ITR 1 form is used if your income is earned through a salary or pension. Additionally, if you have income from house property or other sources, excluding lottery winnings or income earned through horseracing, you need to file this ITR form.

When your annual income exceeds ₹50 lakhs or of your foreign assets, you cannot file using this form. Moreover, the form may not be used for taxable capital gains, income from multiple properties, agricultural income exceeding ₹5,000, or income from a profession or business.

ITR 2

If your annual income from house property, salary or pension, or other sources exceeds ₹50 lakhs, you must file your ITR using ITR 2 form. If you club the income of your spouse or children with your annual income, you must file income tax using Form 2. However, this form will not be used if your income includes a profession or business earnings.

ITR 2A

People who have accrued income from the sale of assets or property typically use the ITR-2 Form kind of ITR form. Additionally, this form is helpful for those who receive income from sources outside of India. This form can often be used by individuals or Hindu Undivided Families (HUF) to file their IT returns.

ITR 3

An individual who earns an income from carrying on a profession or business is eligible to file income tax using ITR Form 3. The form may also be used if your earnings include income from pension, salary, or other sources.

ITR 4

When you opt for the presumptive income scheme under sections 44AD, 44ADA, and 44AE, you must use ITR Form 4 to file your income tax ITR. However, if your total annual turnover is more than ₹2 crore, you must file your income tax using Form 3.

ITR 4A

Any person or Hindu Undivided Family (HUF) may utilize the ITR-4S form, also known as the Sugam form, to file their income tax returns. This form is helpful in unique situations and applies to businesses whose income is determined using a presumptive method.

ITR 5

Form 5 is used to file income tax by limited liability partnerships (LLPs), a body of individuals (BOIs), and an association of persons (AOPs).

ITR 6

Form 6 must be filed electronically by companies not exempt under section 11. This section offers guidelines for income from property held for religious or charitable uses.

ITR 7

This is the ITR type for a company or individual that must furnish income tax ITR under sections 139 (4A), 139 (4B), 139 (4C), and 139 (4D) and must file returns using Form 7. In addition, you may easily file your ITR form online, also known as e-filing, which makes the entire procedure simple, quick, and hassle-free.

Why Should You File an ITR?

If any of the following circumstances apply to you, filing income tax returns (ITR) in India is required. If your annual gross income exceeds the basic exemption amount listed below:

Particulars

Amount

Individuals below 60 years old

₹2.5 Lakh

Individuals above 60 but below 80 years old

₹3 Lakh

Individuals above 80 years old

₹5 Lakh

Deposited more than ₹1 Crore in a ‘Current’ Bank Account

Mandatory filing is required if the cumulative deposits in one or more current accounts with a bank amount to ₹1 crore or above. Note that this requirement does not extend to deposits made in post office current accounts.

Deposited more than ₹50 Lakh in a ‘Savings’ Bank Account

Filing is compulsory if the total deposits in one or more savings bank accounts reach ₹50 lakh or more.

Spent more than ₹2 Lakh on Foreign Travel

Mandatory filing is applicable if your total expenditure on foreign travel, whether for yourself or another individual, exceeds ₹2 lakh.

Electricity Expenditure is more than ₹1 Lakh

Filing is obligatory if the expenditure on electricity consumption crosses ₹1 lakh during the previous year.

TDS or TCS is more than ₹25,000

If the total tax deducted at source (TDS) or tax collected at source (TCS) surpasses ₹25,000 in the previous year, filing becomes mandatory. For senior citizens (above 60 years), this limit is ₹50,000.

Business Turnover is more than ₹60 lakh

Businesspersons with total sales, turnover, or gross receipts exceeding ₹60 lakh during the previous year are required to file their tax return.

Professional Income is more than ₹10 lakh

Mandatory filing is applicable for individuals engaged in a profession if their gross receipts amount to more than ₹10 lakh during the previous year.

How You Can File Returns Online?

Filing tax returns is an essential financial responsibility, and in the digital age, the process has become more accessible than ever. Online tax filing offers convenience, speed, and accuracy, empowering individuals to manage their financial obligations efficiently.

Know the Basic Rules

Before you file your returns online, you must understand the basic rules and changes that may have been made for the current year. You must also know the tax rates to calculate your tax liability accurately.

Modifications to the ITR Form Types

The Income Tax Department has modified the various forms of return in the current year. Before you file your returns online, understanding these changes will ensure you can complete the procedure without any trouble.

Decide the Appropriate ITR Form

There are multiple forms, and you must know which one you must file. You must read the various rules and regulations to know the form you must use to file your income tax return.

Verify Form 26AS

You should verify the details of the tax credit statement (Form 26AS) are accurate. This form provides details on the tax deducted at source (TDS) by your employers and others.

Missed-out Deductions

The Income Tax Act provides several tax benefits and deductions. It would be best if you took advantage of the income tax deductions to minimize your tax liability.

Once you file the returns online with digital copies of the required documents, you must verify the same. Failing to do so renders the filing incomplete, and you may have to pay the penalty for late filing.

Wrapping Up

Selecting the correct ITR form is essential to ensure accurate and timely filing of tax returns. Understanding the basics of each form empowers taxpayers to navigate tax filing efficiently. Whether you are an individual with a simple income structure or a business entity with diverse revenue streams, choosing the right ITR form ensures compliance with tax regulations and facilitates a smooth filing process. As tax laws evolve, staying informed about the specific requirements of each ITR form is key to maintaining financial transparency and meeting your tax obligations effectively.

Key takeaways

  • Tax Return (ITR) forms cater to diverse taxpayer categories, including individuals, Hindu Undivided Families (HUFs), businesses, and more.
  • Filing an ITR allows individuals to claim tax refunds for excess taxes paid during the financial year. Refunds can arise from deductions, exemptions, or tax credits, providing a way to recover overpaid taxes.
  • ITR-1, or Sahaj, is a simplified form primarily for salaried individuals with income from salary, one house property, and other sources.
  • ITR-4 offers a presumptive taxation scheme for small businesses and professionals, simplifying tax calculations.
  • Certain forms, such as ITR-3, ITR-5, ITR-6, and ITR-7, are applicable when audit reports are required under specific tax provisions.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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