Last Updated on Jan 27, 2022 by Ayushi Mishra
An income tax return (ITR) form is technically a form that a taxpayer has to file with the Tax department and authorities for filing returns. ITR forms are a way to keep track of how much you earn, your expenditures, and other details related to tax. This way, you can easily determine how much tax you are liable to pay, pay the taxes, and then file for a return if you have paid the excess.
In this article, we are going to talk about ITR forms, their types, and which one you need to use to pay your taxes.
This article includes:
Table of Contents
What is an ITR form?
An ITR form is a form that taxpayers have to use to keep track, pay their taxes, and file for return if necessary. Depending on your total income, the source of your income, and taxpayer category, there are 7 types of ITR forms to choose from – ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, and ITR 7.
We will talk about each of them and their criteria in detail in this article.
ITR 1
Also known as the ‘Sahaj’ form, ITR 1 needs to be filed by an individual that fulfils the following criteria:
- Earns through salary or pension.
- Earns money through only one housing property.
- Only has domestic income.
- Does not have any property outside of the country.
- Agricultural income is less than Rs. 5000.
- Has fixed deposit incomes.
- No capital gains.
- No windfall income through activities like horse racing or lotteries.
ITR 2
Both individuals and members of the Hindu Undivided Family (HUF) can use this form to file for returns if the following criteria apply to them:
- Earns more than Rs. 50 lakh.
- Agricultural income is more than Rs. 5000.
- Individual who is the director of a company.
- Directors of companies and individuals invested in an unlisted company (equity shares).
- Earns through pension, salary, lottery, horse racing, foreign assets or incomes, capital gains, or house property.
ITR 3
HUF and individuals that fulfill the following criteria can apply for tax returns through ITR 3:
- Earning income from proprietorship business or profession.
- If you are the only director in a company.
- You have an income from being a partner in a firm.
- You earn money through house property, pension, salary, or other sources.
ITR 4
To file for tax returns through ITR 4 (also known as ‘Sugam’ form), individuals, Partnership firms, and HUFs have to earn from businesses or professions. Also, people who have opted for Section 44AE, Section 44ADA, and Section 44AD (income is derived on a presumptive basis as a percentage of gross profits of a business) have to file their taxes through this form. However, if your turnover is more than Rs. 2 cr., you will have to file your taxes through the ITR 3 form.
ITR 5
The following need to file for taxes through ITR 5 form:
- Firms
- Co-operative societies
- Body of Individuals
- Association of Persons
- Local authorities
- Investment Fund
- Artificial Judicial Persons
- Estate of Insolvent
- Estate of Deceased
- Business Trust
- Limited Liability Partnerships (LLPs).
ITR 6
This form is a unique one as this one has to be filed electronically by all companies, irrespective of their structure registered under Companies Act. But this excludes companies that have claimed an exemption through section 11, which means their income comes through a religious or charitable property. Note that it is mandatory for companies filing ITR 6 to do so by digitally signing the form, i.e, with DSC (digital signature).
ITR 7
Companies or individuals who fulfill the following criteria must file for tax returns through ITR 7:
- Section 139(4A) – Individuals who earn through a property used for charitable or religious purposes as a trust.
- Section 139(4B) – Political parties who have income that goes over non-taxable limits.
- Section 139(4C) – News agencies, scientific research associations, medical or educational institutions, institutions, or associations under sections 10(23A) or 10(23B). Associations under section 10(23A) include companies that are approved by the central government and use its income solely for the reasons it was established. Associations under section 10(23B) include registered khadi and village industries.
- Section 139(4D) – Institutions like colleges and universities where the income and losses do not need to be reported under this section should file for taxes through ITR 7.
- Section 139(4E) – Business trusts that do not need to provide a report of their revenues and losses need to file for taxes through this form.
- Section 139(4F) – Investment funds filing of returns of income.
How can you file an ITR?
Now that you know all about ITR forms and which one to choose depending on your income type, amount, and taxpayer category, filing a tax return becomes easy. You just need to follow these steps.
- Download form 26 AS. This form has all the tax details that have been deducted from your income in this financial year. Think of it as a passbook for your taxes. Form 26AS may be accessed from the IT department website, Traces website, or even through an internet banking account.
- Check form number 26AS and make note of any mistakes you see.
- Calculate your total income and the tax liability after applying tax rates.
You can download and fill the ITR form from the Income Tax Department’s official website.
Conclusion
ITR is something that every financially independent person needs to know about. Not only does this help you pay all your due taxes. But if there are any anomalies, you can file for a return, and you will get your money back. Given the varied nature of such forms and the exceptions under each of them, it would be prudent for you to have a working knowledge of which ITR form to take.
