Income Tax* Return(ITR) Form is a form in which the taxpayers of India present their income and the related tax liability to the Income Tax Department. It needs to be furnished every financial year. In India, we have different categories of taxpayers; individuals, HUFs, and business entities. Therefore, the Income Tax Department has introduced different types of ITR forms to distinguish the taxpayers and their respective tax liabilities. ITR filing is a mandatory process. So, let us get started to understand all about ITR forms and their types right away!
 

Types of ITR Forms
 

There are seven ITR forms: ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6, and ITR 7. The types of ITR forms are differentiated based on the combination of sources of income such as income from salary, house property, business or profession, other sources, capital gains, etc., the amount earned, and the category of taxpayer such as individual, HUF, company, etc.

Here is a detail about the different ITR forms.
 

• ITR 1 or SAHAJ – ITR 1 is applicable for the resident (other than not ordinarily resident) individuals whose total income is based on the following:
  
  
  • Income from pension or salary
  • Income from one house property
  • Income from other sources
  • Agriculture income which is not more than ₹5000
    
    
  ITR 1 is not applicable in the following scenarios:
   
  • The total income exceeds ₹50 Lakh
  • Agriculture income is more than ₹5000
  • The taxpayer is non-resident and resident but not ordinarily resident (RNOR)
  • The taxpayer owns foreign assets or gets foreign income.
  • The taxpayer has taxable capital gains.
  • The taxpayer has income is from business or profession.
  • The taxpayer is the director of a Company.
  • If the taxpayer is assessable based on the income of another person for which taxes are not deducted for the other person
  • Tax deductions and payments deferred on ESOP.
  • The taxpayer brought forward any loss, or has losses to be carried forward under any of the different heads of income.


• ITR 2 - ITR 2 is applicable for Hindu Undivided Family (HUFs) or an individual based on the following scenario:
  
  
  • The income from pension or salary is more than ₹50 Lakh.
  • The income is from more than one house property and exceeds ₹50 Lakh.
  • The income is from other sources such as winning a horse race, lottery, etc.,
  • The income is from a foreign destination.
  • The income is from foreign assets.
  • The income from other sources exceeds ₹50 Lakh
  • The income from capital gains
  • The investments made in unlisted shares
  • The taxpayer is a non-resident and resident but not ordinarily resident (RNOR).
  • The taxpayer is a director in a company.
  • The income from agriculture exceeds ₹5000
    
    
  ITR 2 does not apply to an income earned from a profession or business.
  
  
• ITR 3 - The ITR 3 form is applicable to an individual or Hindu Undivided Family based on the following conditions:
  
  
  • The income is from a business or profession.
  • The taxpayer is a partner in a firm.
  • The taxpayer is an Individual Director in a company.
  • The taxpayer has invested in unlisted shares.
  • The income is from salary or pension, house property, and other sources.
    
    
  Individuals who cannot file the ITR - 1, ITR - 2, and ITR -4 should be filing ITR - 3. 
  
  
• ITR 4 or Sugam - ITR 4 is for the resident individuals and HUFs, Partnership firms other than LLPs whose total income does not exceed ₹50 Lakh and is based on the following conditions:
  
  
  • It is business income based on the presumptive income scheme stated under Section 44AD or 44AE
  • It is professional income based on the presumptive income stated under Section 44ADA.
  • The income is from salary or pension.
  • The income is from house property.
  • The income is from other sources.
  
  Individual freelancers having income as mentioned above and do not exceed ₹50 Lakh can opt for the presumptive scheme under Sections 44AD, 44AE, and 44ADA and choose to file ITR 4.
  
  ITR 4 is not applicable in certain specific scenarios, such as
   
  • Total income exceeds ₹50 Lakh.
  • The income is received from more than one house property.
  • The income is earned outside the Indian borders.
  • The taxpayer has invested in unlisted shares
  • The taxpayer is non-resident and RONR
  • If the taxpayer is assessable based on the income of another person for which taxes are not deducted for the other person
  • Tax deductions and payments deferred on ESOP.
  • The taxpayer brought forward any loss, or has losses to be carried forward under any of the different heads of income.

 

• ITR 5 - ITR 5 applies to the following establishments:
  
  
  • Firms
  • Limited Liability Partnerships
  • Association of Bodies
  • Body Of Individuals
  • Business Trust
  • Artificial Juridical Person
  • Estate Of Deceased
  • Estate Of Insolvent
  • Investment Fund
     
• ITR 6 - ITR 6 applies to all companies including companies that receive an income from a property held for charitable or religious purposes and but have not claimed an exemption under Section 11.
  
  
• ITR 7  - ITR 7 is applicable for the persons and companies who have to furnish returns based on the following:
  
  
  • Section 139(4A) - For the income earned based on a property held under a trust for charitable or religious purposes.
  • Section 139(4B) - For a political party where the total income without considering section 139A exceeds the maximum limit and is not chargeable to tax.
  • Section 139(4C) - For the scientific research association, Association or Institution mentioned under Section 10(23A), Newsagency, Institution mentioned under Section 10(23B), and Fund, University, or Educational Institution, Hospital, or any Medical Institution.
  • Section 139(4D) - The income is not under any tax provisions stated in this section for universities, colleges, or other institutions.
  • Section 139(4E) - For business trust that does not have to furnish the income under any other provisions under this section.
  • Section 139(4F) - For investment funds(mentioned under Section 115UB), that need not detail the income under any provisions in this section.
     

  The choice of the ITR form will depend on the individual taxpayer's filing status and source of income. The taxpayer can reduce the liability based on investments made in specific financial instruments such as life insurance, National Pension Scheme, Senior Citizens Savings Scheme, etc. The taxpayer has to furnish the life insurance details, such as the premium paid or the payout received for the applicable tax deduction or exemption benefit. 

   

Conclusion
 

The Income Tax Department in India has introduced seven different Income Tax Returns (ITR) forms to help taxpayers furnish details related to their different sources of income and income tax liability. The various ITR forms vary based on the source of income, the category of the taxpayer, and the extent of income. It is important that every taxpayer file the ITR before the due date. Choosing the right form and filling in the correct ITR details is crucial for filing and successful verification. 
 

L&C/Advt/2022/Oct/2502