Which ITR should I file?|Types of ITR Forms|Slab Rate|New vs. Old Tax Regime

Updated on : Aug. 29, 2022 - 1 p.m. 17 min read.

Are you a taxpayer in India, struggling to understand the intricacies of Income Tax Returns (ITR) filing? Well, you're not alone! With numerous ITR forms and complex tax laws, it can be overwhelming for beginners to navigate through the process. However, understanding ITR forms is crucial to ensure compliance and avoid any penalties. That's why we've put together this comprehensive guide to help you understand everything you need to know about ITR forms. From the different types of ITR forms and their applicability to the process of filing and common mistakes to avoid, we've got you covered. So, whether you're a salaried employee or a freelancer, this guide will equip you with the knowledge you need to file your ITR with ease. Let's dive in!

Income Tax Return (ITR) is a form in which taxpayers file information about their income earned and taxes applicable to the income tax department.
In India, it is mandatory for individuals to file ITR in case they fall under the below-mentioned categories:
In case the gross income of the individual is more than the details mentioned in the table below:

In case individuals wish to receive a refund from the Income Tax Department.
In case individuals wish to apply for a loan or a visa.
In case individuals have more than one source of income (capital gains, house property, etc.)
In case individuals have earned an income from foreign assets during the financial year.

Different types of ITR Forms:

In total, there are almost 7 types of ITR forms available for a taxpayer to file his taxes. However, only the following forms are to be taken into consideration by individuals when filing returns as per the Central Board of Direct Taxes in India.

ITR FORMS:

ITR-1
ITR-2
ITR-3
ITR-4

The following income tax return forms are applicable only for companies and firms.

ITR-5
ITR-6
ITR-7

ITR FORM -1 SAHAJ:

The ITR-1 form is also called the Sahaj form, ‘Sahaj’ meaning ‘Simple’. The form is filed exclusively by a single taxpayer. An individual becomes eligible for filing ITR-1 under the following conditions:

Income from Salary/Pension
Income from One House Property (excluding cases where loss is brought forward from previous years)
Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)
Agricultural income up to Rs.5000.

Who cannot use ITR 1 Form?

Total income exceeding Rs.50 lakh
Agricultural income exceeding Rs 5000
If you have taxable capital gains
If you have income from a business or profession
Having income from more than one house or property
If you are a Director in a company
If you have had investments in unlisted equity shares at any time during the financial year
Owning assets (including financial interest in any entity) outside India) if you are a resident, including signing authority in any account located outside India.
If you are a resident not ordinarily resident (RNOR) and non-resident
Having foreign assets or foreign income.
If you are assessable for the income of another person for which tax is deducted in the hands of the other person.

ITR FORM -2:

ITR 2 is filed by an individual or a Hindu Undivided Family (HUF) whose total income for the AY 2021-22 includes:

Income from Salary/Pension
Income from House Property
Income from Other Sources (including Winnings from Lottery and Income from Race Horses).
(Total income from the above should be more than Rs 50 Lakhs)
If you are an Individual Director in a company
If you have had investments in unlisted equity shares at any time during the financial year
Being a resident not ordinarily resident (RNOR) and non-resident
Income from Capital Gains
Foreign Assets/Foreign Income
Agricultural income is more than Rs 5,000.

Further, in a case where the income of another person like one’s spouse, child, etc. is to be clubbed with the income of the assessee, this Return Form can be used where such income falls in any of the above categories.

Who cannot use this Return Form?

This Return Form should not be used by an individual whose total income for the AY 2021-22 includes Income from Business or Profession. For declaring these types of Income, you may have to use ITR-3 or ITR-4. Go through our comprehensive guide on ITR-2 to know how to fill out the ITR-2 form.

ITR FORM -3:

The Current ITR-3 Form is to be used by an individual or a Hindu Undivided Family who has income from a proprietary business or is carrying on a profession. Persons having income from the following sources are eligible to

Carrying on a business or profession
If you are an Individual Director in a company
If you have had investments in unlisted equity shares at any time during the financial year
The return may include income from House property, Salary/Pension, and Income from other sources.

ITR FORM -4 SUGAM:

The current ITR 4 applies to individuals, HUFs, and partnership firms (other than LLPs), that are residents and whose total income includes:

In case, HUFs, partnership firms, and individuals who are Indian residents generate an income from a profession or business they must opt for it. However, limited liability partnerships (LLPs) cannot opt for this form. Individuals who have also chosen the presumptive income scheme according to Section 44AD, Section 44ADA, and Section 44AE of the Income Tax Act 1961, should also opt for this form.

Who is unable to choose this option?

The below-mentioned individuals and HUFs are not allowed to opt for ITR-4:

In case the total income that has been generated is more than Rs.50 lakh.
In case any losses have been brought forward from previous years.
In case the individual has a signing authority at a place that is not located in India.
In case any investments are present in equity shares that are unlisted at any time during the financial year.
In case, individuals have foreign assets or have generated a foreign income.
In case the income has been generated from more than one house property.
In case the individual is a Director of a company.
In case the individual is a non-resident or an RNOR.

ITR FORM -5:

Investment funds, business trusts, Estates of insolvent, Estates of deceased, Artificial Juridical Persons (AJP), Body of Individuals (BOIs), Associations of Persons (AOPs), LLPs, and firms must opt for the ITR 5 form.

Who cannot file the ITR-5 form?

Individual assesses
Hindu Undivided Family (HUF)
Company
Taxpayers who must file tax returns in Form ITR-7, under Sections 139(4A), 139(4B), 139(4C), 139(4D), 139(4E) or 139(4F).

You can easily file your ITR-5 online in a hassle-free manner. Make sure that the return is filed before the last day to avoid any penalties.

ITR FORM -6:

Except for those companies or organizations that claim tax exemption as per Section 11, the ITR-6 form is used by all companies. Organizations that can claim tax exemptions as per Section 11 are those in which the income received is accumulated from the property used for the purpose of religion or charity. This particular income tax return form is only available to be filed online.

Who is not eligible to file the ITR-6 form?

Taxpayers who are not liable to file for ITR-6 Form are mentioned below.

Individuals, Hindu Undivided Family (HUF), Firm, Association of Persons (AOP), Body of Individuals (BOI), Local Authority, and Artificial Judiciary Person
Companies that claim an exemption under section 11 (Income from property held for charitable or religious purposes)

ITR FORM -7:

For persons including companies required to furnish returns under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) or section 139(4E) or section 139(4F).

Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.

A return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount, not chargeable to income tax.
A return under section 139(4C) is required to be filed by every–
- Scientific research association;
- News agency;
- Association or institution referred to in section 10(23A);
- Institution referred to in section 10(23B);
- Fund or institution or university or other educational institution or any hospital or other medical institution.
A return under section 139(4D) is required to be filed by every university, college, or other institution, which is not required to furnish a return of income or loss under any other provision of this section.
A return under section 139(4E) must be filed by any business trust which is not required to furnish a return of income or loss under any other provisions of this section.
A return under section 139(4F) must be filed by any investment fund referred to in section 115UB. It is not required to furnish a return of income or loss under any other provisions of this section.

By Amit Pawar

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