ITR Forms & Applicability (ITR-1 to ITR-7)
The Income Tax Department of India prescribes different Income Tax Return (ITR) forms for various categories of taxpayers, based on their income sources, total income, and residential status. Choosing the correct ITR form is crucial for accurate tax filing and compliance.
General Applicability of ITR Forms
Before diving into each specific form, it's important to understand that the choice of ITR form depends primarily on your:
- Residential Status: (Non-Resident, or Resident Not Ordinarily Resident - RNOR).
- Sources of Income: (Salary, House Property, Business/Profession, Capital Gains, Other Sources, Agricultural Income).
- Total Income Amount: Specific monetary thresholds determine eligibility for simpler forms.
- Specific Situations: Such as being a company director, holding unlisted equity shares, or having foreign assets.
Always ensure you choose the correct form. Filing an incorrect ITR form may lead to your return being treated as defective, requiring rectification, and potentially incurring penalties.
ITR-1 (Sahaj)
ITR-1, also known as Sahaj, is the simplest form and is applicable for resident individuals with a total income up to ₹50 Lakh. It covers income from specific sources:
- Income from Salaries/Pension.
- Income from One House Property (excluding cases where loss is brought forward from previous years).
- Income from Other Sources (excluding winning from lottery or horse race).
- Agricultural Income up to ₹5,000.
Who cannot file ITR-1:
- Individuals with total income exceeding ₹50 Lakh.
- Non-Residents and Resident Not Ordinarily Residents (RNOR).
- Individuals who are a Director in a company or have held unlisted equity shares.
- Individuals with income from more than one house property.
- Individuals with income from business or profession.
- Individuals with Capital Gains income (except specific cases under Section 112A up to ₹1.25 lakhs with no brought forward/carry forward losses).
- Individuals having foreign assets or foreign income.
- Individuals in whose case tax has been deducted under Section 194N.
ITR-2
ITR-2 is applicable for Individuals and Hindu Undivided Families (HUFs) who are not eligible to file ITR-1 and do not have income from "Profits and Gains from Business or Profession."
Who can file ITR-2:
- Individuals and HUFs with total income exceeding ₹50 Lakh.
- Individuals and HUFs having income from Capital Gains.
- Individuals and HUFs having income from more than one house property.
- Individuals who are a Director in a company.
- Individuals who have held unlisted equity shares at any time during the financial year.
- Individuals having foreign assets or foreign income.
- Non-Residents and Resident Not Ordinarily Residents (RNOR).
- Individuals having agricultural income exceeding ₹5,000.
- Individuals with income from other sources like winning from lottery, horse races, etc.
Who cannot file ITR-2:
- Individuals or HUFs having income from "Profits and Gains from Business or Profession."
ITR-3
ITR-3 is for Individuals and Hindu Undivided Families (HUFs) who have income from "Profits and Gains from Business or Profession."
Who can file ITR-3:
- Individuals and HUFs earning income from a proprietary business or profession.
- Individuals and HUFs who are partners in a firm and receive remuneration/interest.
- The return may include income from salary, house property, capital gains, and other sources, in addition to business/profession income.
- Individuals who have investments in unlisted equity shares.
- Individuals who are directors in a company.
Who cannot file ITR-3:
- Individuals or HUFs not having income from business or profession.
- Any person eligible to file ITR-1, ITR-2, or ITR-4.
ITR-4 (Sugam)
ITR-4, also known as Sugam, is a simplified form for Resident Individuals, HUFs, and Firms (other than LLP) having a total income up to ₹50 Lakh and whose income is computed under the presumptive taxation schemes under Section 44AD, 44ADA, or 44AE of the Income Tax Act.
Who can file ITR-4:
- Resident Individuals, HUFs, and Firms (other than LLP) whose total income is up to ₹50 Lakh.
- Those who have opted for the presumptive income scheme for business (Section 44AD) or profession (Section 44ADA).
- Those who have opted for the presumptive income scheme for income from plying, hiring, or leasing goods carriages (Section 44AE).
- Includes income from salary/pension, one house property, other sources (excluding lottery/horse race winnings), and Agricultural Income up to ₹5,000.
Who cannot file ITR-4:
- Individuals with total income exceeding ₹50 Lakh.
- Non-Residents or Resident Not Ordinarily Residents (RNOR).
- Individuals who are a Director in a company or have held unlisted equity shares.
- Individuals with income from more than one house property.
- Individuals with capital gains.
- Individuals with Agricultural Income exceeding ₹5,000.
- Individuals with income from winning lottery, horse races, etc.
- Individuals earning income in the form of commission or brokerage, or from an agency business.
ITR-5
ITR-5 is for entities other than Individual, HUF, Company, and persons filing ITR-7.
Who can file ITR-5:
- Firms (Partnership Firms).
- Limited Liability Partnerships (LLPs).
- Association of Persons (AOPs).
- Body of Individuals (BOIs).
- Artificial Juridical Persons (AJPs).
- Co-operative Societies.
- Local Authorities.
- Estates of deceased persons.
- Estates of insolvent persons.
- Business Trusts.
- Investment Funds.
Who cannot file ITR-5:
- Individuals, HUFs, Companies, and those required to file ITR-7.
ITR-6
ITR-6 is specifically for Companies, except those claiming exemption under Section 11 (income from property held for charitable or religious purposes).
Who can file ITR-6:
- All companies registered under the Companies Act, 2013, or previous Company Acts.
- This includes private limited companies, public limited companies, and other corporate entities that generate taxable income.
Who cannot file ITR-6:
- Companies claiming exemption under Section 11 of the Income Tax Act (e.g., religious or charitable trusts). These companies need to file ITR-7.
ITR-7
ITR-7 is for persons, including companies, who are required to furnish a return under specific sections of the Income Tax Act, 1961.
Who can file ITR-7:
- Persons required to file return under Section 139(4A): Those receiving income from property held under trust or other legal obligation wholly for charitable or religious purposes.
- Persons required to file return under Section 139(4B): Political parties.
- Persons required to file return under Section 139(4C): Scientific research institutions, news agencies, associations or institutions referred to in Section 10(23A), universities, colleges or other institutions referred to in Section 10(23C).
- Persons required to file return under Section 139(4D): Universities, colleges, or other institutions referred to in Section 35(1)(ii)/(iii) (scientific research associations or institutions), whose income or loss is not required to be included in the total income of the assessee.
- Individuals or entities claiming exemptions under these specific sections.
Who cannot file ITR-7:
- Any taxpayer not falling into the categories mentioned above.
It is important to select the correct ITR form to avoid any discrepancies or penalties. If you are unsure, it is advisable to consult a tax professional.