When it comes to filing your income tax returns (ITR), it is important to fill all the right forms. The choice of the ITR form you use depends on the nature of your income, its source, and the nature of the assessee (individual, partnership, business, AOP, etc). Choosing the right form is very important because submitting the wrong one can lead to the Income Tax Department rejecting your returns claim. In this case, you will have to go through the entire process all over again.
The Income Tax website contains the details of the various forms and the conditions for using them. You can either download the physical form and fill it or you can fill it up in an Excel and then upload the utility as an XML file. Alternatively, you can also file the returns in the appropriate ITR form online through the Income Tax Department’s website itself. The demarcations and the conditions for using each form are quite clear and the decision is fairly simple.
What do we understand by Income Tax Return?
Filing your Income Tax Returns (ITR) is different from actually paying your tax. Even if you have paid all your tax in the form of TDS or Advance Tax, you still need to file your returns claim. Your taxation ordeal for a year is completed only when you file the ITR and the same is acknowledged by the Income Tax Department.
Your tax return form contains information about your income and tax liability thereon. The Income Tax Act, 1961, makes it obligatory for all citizens who fulfill certain conditions to file their tax returns with the I-T Department at the end of every financial year. Remember the concept of Financial Year (FY) and Assessment Year (AY) here. For example, income earned between April 2017 and March 2018 will be for the FY2017-18, which corresponds with AY2018-19, and has to be statutorily filed by July 31, 2018, unless the government postpones the date.
Tax filing is not mandatory for every citizen. There are different types of ITR forms and each is applicable to a certain section of assessees. These forms need to be filed on a specified due date. Furthermore, the I-T Department only processes those returns where forms have been properly filled and submitted within the due date. Effective FY2017-18, all returns filed after July 31 (unless postponed) will attract a penalty of up to Rs.5,000 and the same will have to be paid online before filing your returns.
How to decide which ITR form to file?
The Finance Ministry has introduced a simplified ITR-1 (Sahaj) form applicable only for individuals with income up to Rs.50 lakh. However, taxpayers with dividend income above Rs.10 lakh or unexplained credit cannot opt for ITR-1.
On the other hand, the ITR-2A form, which was introduced in 2016, has now been withdrawn and the old ITR-3 form has been merged with ITR-2. All individual taxpayers, except those eligible to use ITR-1 (Sahaj) or those earning business income, will be required to file ITR-2 only.
Furthermore, the old ITR-4 has now been replaced by ITR-3; as such, individual taxpayers with business or professional income are now required to use ITR-3. Till AY2016-17, taxpayers opting for presumptive taxation were required to file ITR-4S but now they are required to file ITR-4 (Sugam) for presumptive income. Remember, ‘Sugam’ is purely meant for the filing of tax returns based on presumption income only.
1. Filing of Form ITR-1 (Sahaj) – Who can file and who cannot file?
Who is eligible to file income tax returns using ITR-1 (Sahaj)?
Who is not eligible to use ITR-1 (Sahaj)?
2. Filing of Form ITR-2 – Who can file and who cannot file?
Who can file returns using ITR-2?
ITR-2 can be used by all individuals and Hindu Undivided Family (HUF) not involved in any proprietary business or profession. This is normally the default ITR form for individuals and HUFs where the Sahaj conditions are not applicable. All individual assessees are covered between Form 1 and Form 2 of the ITR.
Who is not eligible to use ITR-2?
As stated earlier, the applicability of ITR-2 is limited to only individuals and HUFs. However, ITR-2 cannot be used by an individual and HUF with income that is chargeable to tax under the head “proprietary business or profession”.
3. Filing of Form ITR-3 – Who can file and who cannot file?
Who is eligible to file income tax returns using ITR-3?
Who is not eligible to use Form ITR-3?
4. Filing of Form ITR-4 (Sugam) – Who can file and who cannot file?
Who is eligible to file income tax returns using ITR-4 (Sugam)?
Returns through ITR-4 form can be filed by an individual or HUF or a firm (other than a limited liability partnership {LLP}) if the total income of the assessee includes:
Who is not eligible to use Form ITR-4 (SUGAM)?
Return in ITR-4 cannot be filed by a person who:
5. Filing of Form ITR-5 – Who can file and who cannot file?
Who is eligible to use ITR-5?
If you are an association of persons (AOP), body of individuals (BOI), limited liability partnership (LLP) firm, or an artificial judicial person as per Sections 2(31)(vii) and 160(1)(iii) /(iv), local authority, cooperative society, and/or registered society, you must file ITR-5 with your income tax return. ITR-5 is also applicable to those who need to file u/s 139(4A), (4B), (4C), (4D) or (4F).
Who is not eligible to use ITR-5?
If you are an individual, company, HUF, or have to file ITR-7, then ITR-5 is not for you.
Filing of Form ITR-6 – Who can file and who cannot file?
Who is required to file ITR-6?
All limited companies registered under the Companies Act, 1956, and Companies Act, 2013, has to file ITR-6 as part with their income tax return.
Who is not required to file ITR-6?
If the said company has claimed exemption U/S 11 (income from property for religious/charitable purpose), then the company does not have to file ITR-6.
6. Filing of Form ITR-7 – Who can file and who cannot file?
Who is eligible or required to file ITR-7?
Who is not eligible or required to file ITR-7?
Companies that do not file under the above-mentioned sections do not need to file ITR-7.
Applicability of ITR for Individual and HUF:
TR forms for Individual and HUF | ||||
---|---|---|---|---|
Nature of income | ITR 1 (Sahaj) | ITR 2 | ITR 3 | ITR 4 |
Income from salary/pension | Y | Y | Y | Y |
Income from one house property (excluding losses) | Y | Y | Y | Y |
Income or losses from more than one house property | - | Y | Y | - |
Agricultural income exceeding Rs.5,000 | - | Y | Y | - |
Total income exceeding Rs.50 lakh | - | Y | Y | Y |
Dividend income exceeding Rs.10 lakh taxable u/s 115BBDA | - | Y | Y | - |
Unexplained credit or unexplained investment taxable at 60% u/s 68, 69, 69A, etc. | - | Y | Y | - |
Income from other sources (other than winnings from lottery and horse races or losses under this head) | Y | Y | Y | Y |
Income from other sources (including winnings from lottery and horse races) | - | Y | Y | - |
Capital gains/losses | - | Y | Y | - |
Share of profit of partner from a partnership firm | - | Y | Y | - |
Income from presumptive business u/s 44AD/44ADA/44AE | - | - | - | Y |
Income from business or profession (other than presumptive business) | - | - | Y | - |
Income from foreign sources or foreign assets or having signing authority in any account outside India | - | Y | Y | - |
Claiming foreign tax relief u/s 90, 90A or 91 | - | Y | Y | - |
Acknowledgment
The tax process does not end until the Income Tax Department acknowledges the same. This can be done in one of the four ways:
Few important things to know about filing your ITR forms
Filing the tax return forms, despite not having to claim anything, is a practice each and every taxpayer should duly and diligently follow.