Understanding Income Tax Returns (ITR) in India: Types and Filing Requirements

What is an Income Tax Return (ITR)?

An Income Tax Return (ITR) is a form that taxpayers submit to the Income Tax Department of India to report their income, expenses, tax deductions, and investments for a financial year. The purpose of filing ITR is to declare taxable income and compute the tax liability or refund due to overpaid taxes.

Types of ITR Forms

The Income Tax Department has prescribed different forms for different types of taxpayers, depending on the source and amount of income. Here’s a detailed overview of the various ITR forms and who needs to file them:

1. ITR-1 (Sahaj)

Who Should File:

• Individuals who are residents and have income from:
• Salary or pension
• One house property (excluding cases where loss is brought forward from previous years)
• Other sources (excluding winnings from lottery and income from race horses)
• Total income up to ₹50 lakh

Who Should Not File:

• Non-residents
• Individuals with income exceeding ₹50 lakh
• Those who have income from more than one house property
• Individuals with capital gains, agricultural income exceeding ₹5,000, or income from business/profession

2. ITR-2

Who Should File:

• Individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession
• Income sources can include:
• Salary or pension
• More than one house property
• Capital gains
• Other sources (including winnings from lottery and race horses)
• Foreign assets or income
• Agricultural income exceeding ₹5,000

Who Should Not File:

• Individuals and HUFs with income from business or profession

3. ITR-3

Who Should File:

• Individuals and HUFs who have income from business or profession
• Income sources can include:
• Proprietorship businesses
• Salary or pension
• House property
• Capital gains
• Other sources (including winnings from lottery and race horses)
• Foreign assets or income

4. ITR-4 (Sugam)

Who Should File:

• Individuals, HUFs, and Firms (other than LLPs) who are residents and have opted for the presumptive income scheme under Sections 44AD, 44ADA, and 44AE
• Income sources can include:
• Business income under the presumptive scheme
• Salary or pension
• One house property
• Other sources

Who Should Not File:

• Non-residents
• Individuals, HUFs, and firms with income exceeding ₹50 lakh
• Those with more than one house property
• Individuals with capital gains, agricultural income exceeding ₹5,000, or income from business/profession under regular provisions

5. ITR-5

Who Should File:

• Partnership firms, LLPs, Association of Persons (AOPs), Body of Individuals (BOIs), and other entities except individual taxpayers, HUFs, companies, and entities filing ITR-7
• Income sources can include any business or profession, property, capital gains, and other sources

6. ITR-6

Who Should File:

• Companies other than those claiming exemption under Section 11 (income from property held for charitable or religious purposes)

7. ITR-7

Who Should File:

• Entities including trusts, political parties, institutions, and other specified bodies who are required to file returns under:
• Section 139(4A): Trusts or institutions claiming exemption under Section 11
• Section 139(4B): Political parties
• Section 139(4C): Institutions specified under Section 10(23C)
• Section 139(4D): Colleges and universities not required to file income/loss return under any other provision

Filing Deadlines

• Individuals and HUFs (ITR-1, 2, 3, 4): Typically July 31st of the assessment year
• Businesses requiring audit (ITR-3, 5, 6): Typically September 30th of the assessment year
• Entities filing ITR-7: Typically September 30th of the assessment year

Steps to File ITR

1. Determine the Applicable ITR Form: Based on your income sources and type of entity, determine the correct ITR form.
2. Gather Required Documents: Collect all necessary documents such as Form 16, Form 26AS, TDS certificates, bank statements, and investment proofs.
3. Register on the Income Tax e-Filing Portal: Create an account or log in to the Income Tax e-Filing Portal.
4. Fill Out the ITR Form: Enter your income details, deductions, and tax payments accurately in the appropriate ITR form.
5. Verify and Submit: Review the form for accuracy, submit it online, and verify using Aadhaar OTP, EVC (Electronic Verification Code), or by sending a signed ITR-V to CPC, Bangalore.

Conclusion

Understanding the types of ITR forms and knowing which one to file based on your income and entity type is crucial for compliance with Indian tax laws. By selecting the appropriate ITR form and following the correct filing process, taxpayers can ensure timely and accurate submission of their income tax returns. For more detailed information and to file your ITR, visit the Income Tax e-Filing Portal.