Which ITR Should I File?

What is ITR?

Income Tax Return is a process through which the taxpayers can easily submit the details of their annual income earned in a financial year. Besides, with the help of the ITR form, one is able to calculate and submit the total tax on his/her annual earnings that is due towards the Income Tax Department of India. In order to extract complete information in an easy manner, the ITR form has been divided into seven various forms i.e. ITR1, ITR2, ITR3, ITR4, ITR5, ITR6 and ITR7. 

Now if you are confused about which ITR form should you file, then this is the article you need to keep reading. 

Which ITR to file?

The type of ITR form that you need to file depends upon your source of income. By taking into account the category of the source of income and the amount of income earned it is determined which of the seven ITR forms you need to file. The categories vary from individual to HUF to Company and many more. 

Let us discuss each type of ITR form in detail to get the proper idea.  

ITR-1ITR-2ITR-3ITR-4ITR-5ITR-6ITR-7

ITR-1 OR SAHAJ

This Return Form is for a resident individual whose total income for the assessment year 2018-19 includes:

• Income from Salary/ Pension; or
• Income from One House Property (excluding cases where loss is brought forward from previous years); or
• Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)
• Agricultural income up to Rs.5000.

Who cannot use ITR 1 Form?

Any taxpayer would be considered “Not Eligible” to file ITR1 form if :

• Total income is in excess of Rs 50 lakh
• Agricultural income is in excess of Rs 5000
• If you have taxable capital gains
• If you have income from business or profession
• Having income from more than one house property
• If you are a Director in a company
• If you have had investments in unlisted equity shares at any time during the financial year
• Owning assets (including financial interest in any entity outside India) if you are a resident, including signing authority in any account located outside India
• If you are a resident not ordinarily resident (RNOR) and non-resident
• Having foreign assets or foreign income
• If you are assessable in respect of income of another person in respect of which tax is deducted in the hands of the other person.

ITR-2

ITR 2 is concerned with the details of any individual or a Hindu United Family (HUF) and whose total income for the annual year includes, as source: 

• Income from Salary/Pension; or
• Income from House Property; or
• Income from Other Sources (including winnings from lottery and income from horse races).

(Total income from the above should be more than Rs 50 Lakhs)

Who can use ITR 2?

• If you are an Individual Director in a company
• If you have had investments in unlisted equity shares at any time during the financial year
• Being a resident not ordinarily resident (RNOR) and non-resident
• Income from Capital Gains; or
• Foreign Assets/Foreign income
• Agricultural income more than Rs 5,000

Also, in a situation where other people’s income, say spouse’s or child’s earnings, is to be joined with the income of the assessee, then this form of return can be used where the income falls in any of the above mentioned categories.

Who cannot use this Return Form

This Return Form should not be used by an individual whose total income for the AY 2018-19 includes Income from Business or Profession.

For declaring these types of Income, you may have to use ITR-3 or ITR-4 .

ITR-3

The Current ITR3 Form is to be used by an individual or a Hindu Undivided Family who have income from proprietary business or are carrying on profession. The persons having income from following sources are eligible to file ITR 3 :

• Carrying on a business or profession
• If you are an Individual Director in a company
• If you have had investments in unlisted equity shares at any time during the financial year
• Return may include income from House property, Salary/Pension and Income from other sources
• Income of a person as a partner in the firm

ITR-4 or Sugam

Individuals, HUFs, Partnership firms (other than LLPs) who are residents and have any form of business or profession as a source of income are designated to use ITR 4. Besides, if someone has opted for the presumptive income scheme as per Section 44AD, Section 44ADA and section 44AE of the Income Tax Act. Although, the taxpayers whose income exceeds Rs. 2crore will have to file ITR3. 

Who cannot use ITR 4 Form?

• If your total income exceeds Rs 50 lakh
• Having income from more than one house property
• If you have any brought forward loss or loss to be carried forward under any head of income
• Owning any foreign asset
• If you have signing authority in any account located outside India
•  Having income from any source outside India
• If you are a Director in a company
• If you have had investments in unlisted equity shares at any time during the financial year
• Being a resident not ordinarily resident (RNOR) and non-resident
• Having foreign assets or foreign income
• If you are assessable in respect of income of another person in respect of which tax is deducted in the hands of the other person.

ITR-5

ITR 5 is for firms, LLPs (Limited Liability Partnership), AOPs (Association of Persons), BOIs (Body of Individuals), Artificial Juridical Person (AJP), Estate of deceased, Estate of insolvent, Business trust and investment fund.

ITR-6

For Companies other than companies claiming exemption under section 11 (Income from property held for charitable or religious purposes), this return has to be filed electronically only.

ITR-7

For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) or section 139(4E) or section 139(4F).

• Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
• Return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount, not chargeable to income-tax.
• Return under section 139(4C) is required to be filed by every –
  • Scientific research association;
  • News agency ;
  • Association or institution referred to in section 10(23A);
  • Institution referred to in section 10(23B);
  • Fund or institution or university or other educational institution or any hospital or other medical institution.
• Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish return of income or loss under any other provision of this section.
• Return under section 139(4E) must be filed by every business trust which is not required to furnish return of income or loss under any other provisions of this section.
• Return under section 139(4F) must be filed by any investment fund referred to in section 115UB. It is not required to furnish return of income or loss under any other provisions of this section.