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Which ITR form should you file? ITR forms for FY 2023-2024
Individuals in India are taxed according to the income tax slab they fall under. Such taxpayers and eligible individuals should file an income tax return once every year.
Income Tax Return, or ITR, is an official form filed with the Income Tax Department. It contains information about a person's annual income, taxes paid, and the deductions made. ITR helps determine a person's tax liability and request a refund for overpaid taxes. It is filed once every financial year, which starts from the 1st of April of the current year and ends on the 31st of March of the following year.
To make return filling easier, the taxing authority has identified seven types of ITR forms. They are: ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, and ITR 7.
Individuals should file using the suitable form depending on their income, residential status, and type of business they run.
Filing returns can be a challenging process if you don't know the applicability of each form. If you end up using the wrong form, you'll have to file a revised return and pay a penalty on the unpaid tax amount. In this article, we have broken down the eligibility criteria and structure of each ITR form to make the filing process easier for you.
Types of ITR forms
What is ITR 1 or Sahaj?
ITR 1, also called Sahaj (meaning "simple" in Hindi), is a concise two-page form for resident individuals with a gross income less than ₹50 lakh. Salaried individuals who satisfy the following conditions can file returns using ITR 1.
Who is eligible to file ITR 1?
Resident individuals earning a gross income of up to ₹50 lakh from the below sources are eligible:
- Salary or family pension
- One house property
- Agricultural income of up to ₹5,000
- Interest from savings account(s)
- Interest from deposits in the bank, post office, and/or cooperative society
- Interest from income tax refunds
- Interest on enhanced compensation
- Income of a spouse (those who are not covered under the Portuguese Civil Code
Who is not eligible to file ITR 1?
The following individuals are not eligible to file returns using the ITR 1 form:
- Non-resident Indians
- Resident but Not Ordinary Resident (RNOR). You'll be considered an RNOR if you fall under any one of the following categories:
- You have been an NRI during 9 out of 10 financial years preceding the year.
- You have been in India for a period of 729 days or less during the past seven financial years.
- Those with a gross income more than ₹50 lakh
- Individuals whose agricultural income exceeds ₹5,000
- Those who have income from more than one house property
- Individuals who are a director of a company or have income from a business or profession
- Residents with income from lotteries, horse races, and other such activities
- Those who have capital gains or hold unlisted equity shares
Structure of ITR 1
Form ITR 1 is divided into five parts and two schedules. They are:
- General information
- Gross total income
- Deductions and taxable total income
- Computation of tax payable
- Other information - details of all bank accounts
- Schedule IT - details of advance tax and self assessment tax payments
- Schedule TDS - details of tax deducted/collected at the source
Note: Taxpayers have the provision to opt for a new tax regime while filing ITR. If you wish to go with the new tax regime, choose Yes under Section 115BAC of Part A.
What is ITR 2?
ITR 2 is for individuals and Hindu Undivided Families (HUF) who do not have income from a business or profession.
Who is eligible to file ITR 2?
Individuals and HUFs who are NOT eligible to file ITR 1 and have income less than ₹50 lakh from the following sources are eligible:
- Salary or family pension
- House property (can be from more than one property)
- Loss on the sale of property or investment
- Capital gains
- Agricultural income of more than ₹5,000
- Foreign assets
- Winnings from legal gambling, horse races, lotteries, or other such activities
Further, if you are a non-resident, RNOR, or a director of a company, you have to file tax returns using ITR 2. Individuals who have invested in unlisted equity shares can also use the ITR 2 form.
Who is not eligible to file ITR 2?
- Individuals and HUFs whose gross income includes profits and gains from a business or profession.
- Those who have income in the nature of interest, salary, compensation, or remuneration received from a partnership firm.
Persons eligible for ITR 1 should not use ITR 2 while filing returns.
Structure of ITR 2
Form ITR 2 is split into two parts: Part A and Part B.
Part A consists of general information and is further divided into 21 schedules. Each schedule deals with various aspects of income such as salary, pension, house property, capital gains, brought forward/carry forward losses, details of donations, and others.
Part B of the form consists of total income and the computation of tax liability on such income.
What is ITR 3?
ITR 3 is used by individuals and HUFs who have income in the form of profits and gains from a business or profession.
Who is eligible to file ITR 3?
Persons and HUFs with income from a proprietary business or from carrying a profession are eligible. If you are a director of a company, you should file this form. Your returns can include every income source listed in ITR 2 plus income from a business/profession.
Who is not eligible to file ITR 3?
- Persons other than individuals/HUFs
- Individuals/HUFs who do not have income under the head of profits and gains from a business or profession
Structure of ITR 3
The ITR 3 form is divided as follows:
- Part A consists of general information about the person and the nature of the business they run.
- Schedules: The 38 schedules cover computation of income, deductions, losses, and depreciation on assets.
- Part B entails the computation of total income and the person's tax liability.
Click here to download ITR 3 form for AY 2024-2025.
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What is ITR 4 or Sugam?
ITR 4, also called Sugam, is filed by individuals, HUFs, and certain partnership firms who opt for taxation under the presumptive scheme. By choosing this scheme, you can calculate tax on an estimated income without maintaining books of accounts.
Who is eligible to file ITR 4?
Resident individuals, HUFs, and partnership firms (other than Limited Liability Partnerships) whose gross income is less than ₹50 lakh from the following sources:
- Business income computed under Section 44AD or 44AE
- Professional income computed under Section 44ADA
- Salary/family pension
- One house property
- Interest from savings account(s), bank deposits, income tax refunds, and any other interests
- Agricultural income (less than ₹5,000)
Who is not eligible to file ITR 4?
Non-residents and RNORs cannot file returns using ITR 4. Resident individuals, HUFs, and partnership firms falling under any of the below categories are also not eligible:
- Gross income exceeds ₹50 lakh
- Agricultural income is more than ₹5,000
- Income from more than one house property
- Income from winnings from lotteries, horse races, legal gambling
- A director of a company
- Those invested in unlisted equity shares in the financial year
- Individuals with brought-forward loss or losses to be carried forward to the following year
- Deferred tax on Employee Stock Option Plan (ESOP) received from an employer
- Those owning assets outside of India or having foreign income
- People with signing authority in any account outside India
Structure of ITR 4
This simplified form is four pages long and is divided into four parts and several schedules.
- Part A is for general information and employment details of the person filing the return.
- Part B consists of the computation of gross total income from sources such as salary/pension, house property, and others.
- Part C deals with deductions. You can provide your Section 80 investment details here and claim tax benefits.
- Part D details tax computation and the status of tax payments.
- Schedules include financial particulars of the business/profession, computation of presumptive income, details of advance tax payments, and tax collected at the source.
What is ITR 5?
The ITR 5 form is meant for entities such as firms, limited liability partnerships (LLPs), and others listed below to file returns.
Who is eligible to file ITR 5?
- Firms, LLPs
- Association of Persons (AOP) - a group of people or LLPs/firms who come together to achieve a common goal
- Body of Individuals (BOI) - a group of individuals who come together to earn an income
- Artificial juridical person - a public corporation with their own juristic principles
- Estate of a deceased person - an entity created after the death of an individual to lawfully transfer assets to their dependents
- Estate of an insolvent - the assets of a debtor involved in an insolvency proceeding
- Business trusts and investment funds
- Cooperative societies and local authorities
Who cannot file returns using ITR 5?
Persons who derive income from property held for charitable or religious purposes or from running a political party or institution cannot file returns using this form. They have to file returns using ITR 7 under Section 139(4A) or 139(4B) or 139(4D).
Structure of ITR 5
The form is split into seven parts and 31 schedules. The seven parts of the form are:
- Part A: general and audit information.
- Part A-BS: balance sheet, source, and application of funds.
- Part A-Manufacturing Account: expenses of running a factory, inventory stock details, and the wages paid to your employees.
- Part A-Trading Account: credits and debits of your accounts.
- Part A-P&L: profit and loss statement of your entity.
- Part A-OI: other information which includes the method of accounting, the amount of contributions made, and others.
- Part A-QD: quantitative details of the raw materials and by-products.
In the schedules section, you will be furnishing income details from various sources, computation of deductions made, and your tax liability for the year.
What is ITR 6?
Companies that do NOT have any income from property held for religious or charitable purposes and do not come under the purview of Section 11 must furnish returns using ITR 6.
Section 11 of the Income Tax (IT) Act allows certain tax exemptions for companies that operate as a charitable or religious trust. Such companies should only use ITR 7.
Structure of ITR 6
The well-detailed ITR 6 is divided into 14 parts and 42 schedules. It follows a similar structure as ITR 5. The 14 parts of the form seeks:
- General and audit information of the persons.
- Balance sheets as of the 31st of March of that year or on the date of the business combination.
- Details of inventory, wages paid, and factory expenses.
- Credits and debits to the trading account.
- Profit and loss statement of the business.
- Quantitative details of raw materials, stock, and by-products.
- Gross total income and tax liability.
The schedules section includes details of depreciations on assets, deductions or contributions made by the assessee, capital gains, details of foreign assets, and others.
What is ITR 7?
Persons including companies who derive an income by running a trust, political party, institution, or college can use ITR 7 to file returns. They are required to file income tax returns under Section 139(4A) or 139(4B) or 139(4D) of the IT Act.
Who is eligible to file ITR 7?
- Persons including companies whether or not registered under the Companies Act who derive income from religious or charitable properties.
- Chief executive officer of a political party, provided the income derived by the party exceeds the basic exemption limit.
- Entities like research associations, universities, institutes, news agencies, hospitals, and others as mentioned in Section 139(4C).
- As per Section 139(4D), all business trusts not required to file returns under any other provisions should file using ITR 7.
- Every investment fund not required to furnish returns under any other provisions are eligible for ITR 7 under Section 139(4F).
Who cannot file returns using ITR 7?
Assessees who are NOT required to file returns under Section 139(4A), (4B), (4D) are not eligible for ITR 7.
Structure of ITR 7
The form is broken up into two parts and 23 schedules. Part A of the form consists of general and audit information. In Part B, you'll be providing a complete statement of income for the financial year, details of tax liability, and tax payment.
The schedules section of the form will include information related to:
- Investment of funds of the trust
- Political party and electoral trust's income
- Voluntary contributions
- Expenditure statements
- Income from house property, capital gains, and from other sources
ITR filing procedure
Once ascertaining the correct ITR form, you should furnish returns before the deadline. ITR can be filed online or offline. ITR 1 and ITR 4 can be filed online through the IT department's e-filling portal. All other returns can be furnished offline using the ITR Offline Utility.
Learn all about the return filling procedure online and offline in our step-by-step guide, How to file ITR.
Appendix
Portuguese Civil Code
A law applicable only in the state of Goa and the union territories of Daman and Diu and Dadra and Nager Haveli. It was first implemented in Goa in 1869 and later extended to the union territories. The code is also called the Goa Family Law as it dictates regulations related to property inheritance and marriage.
