Guide to e-filing Income Tax Returns – Which ITR Form Should I File?

By the time you are reading this post, you may have received your Form 16 (issued by your employer with details of salary paid) or Form 16A (issued by the payers in respect of certain payments like FD interest, contractual payments, rent etc. and containing the details of income paid/credited and tax deducted thereon).

Since now you have your income particulars in hand, you should now use these particulars and file your Income Tax Return (ITR) with the Income Tax Department.  Income Tax Returns are the prescribed formats to file the summary of the taxable incomes and taxes paid by people/organisations. Income Tax Dept. has issued 7 different forms, ITR-1 to ITR-7 that are applicable to taxpayers as per their legal status and income particulars. Care is taken to simplify the return forms and not complicate them for smaller taxpayers at least. This article attempts to decode the applicability of different ITR forms so that you can also know the ITR form applicable to you and accordingly file your income tax returns correctly.

ITR-1

ITR-1 is applicable to you if you are an individual having

• Income from Salaries,
• one house property and
• income from other sources (Interest from fixed deposits etc.).

Covering most of the individual taxpayers, the form is the simplest of all and aims to capture minimal returns and accordingly, make ITR filing an easier process. This year, it also seeks to capture the details in respect of salary such as allowances not exempt, profit in lieu of salary and value of prerequisites among others. Till last year, only the net taxable salary was required to be reported in ITR.

However, this form can be filed only if your total income Is up to Rs. 50 lakh. Further, this form is applicable only for individuals who are ordinarily resident in India. In case you are a Non-Resident Indian, read on further to find which form you need to file.

ITR-2

ITR-2 can be called the big brother of ITR-1 and is applicable to individuals and HUFs having all types of incomes except income from profits and gains of business or profession. This form, therefore, covers the following two additional income sources other than ITR-1 :

• Income from more than 1 house property
• Income from Capital Gains

Further, in case non-residents or HUFs do not have any business or professional income to report, they need to file ITR-2 only. Option to file ITR-1 is not available with such taxpayers.

ITR-3/4?

In case of individuals and HUFs having income from business or profession, ITR-3 or 4 can be filed. The distinction between ITR-3 and ITR-4 lies between the calculation method of the income from such business or profession. In case you are filing presumptive income as allowed under Section 44AD (for businesses – minimum 6%  of digital turnover and 8% of the balance turnover) or Section 44ADA (for professionals – minimum 50% of gross receipts), you can file the income particulars in ITR-4. However, in case the income particulars are being filed on the basis of books of accounts, you can file ITR-3. Further, these forms encapsulate income from business or profession in addition to all the incomes which can be reported under ITR-2.

ITR-5?

ITR-5 can be filed by all the taxpayers except individuals/ HUFs (liable to file ITR-1 to 4), Companies (liable to file ITR-6) and other taxpayers who are liable to file ITR-7.

ITR-6?

ITR-6 is applicable to all the companies other than companies claiming exemption under Section 11 and therefore liable to file ITR-7.

ITR-7?

ITR-7 is applicable to all taxpayers including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F). Such taxpayers may be charitable trusts, political parties, hospitals, educational institutions etc. 

We hope this information about which ITR form to use when filing your Income Tax return was useful to you. Make sure you file your returns before the due date, as there is a late filing penalty applicable from this year.

Do also read:

Step-By-Step Guide to File Income Tax Return Online

Top 5 Websites for Filing Income Tax Returns (ITR) Online in India

4 Additional Disclosures in Your Income Tax Returns Form This Year