The Income Tax Return, or ITR not a new term to you we believe. When there is a buzz around the ITR deadline which is 31st July 2023, it is high time you keep your proofs handy to justify your earnings!
Well, the very next thing that comes to your mind when you file your income tax return is that which ITR applies to you. As a first-time taxpayer, it may come as a surprise to you that there are different types of ITR, and choosing the right kind is essential.
Read on as we discuss the types of return in income tax here.
Types of ITR Forms 2023
The Income Tax Department notifies 7 types of ITR returns:
- ITR 1
- ITR 2
- ITR 3
- ITR 4
- ITR 5
- ITR 6
- ITR 7
The first four ITR categories, that is, ITR 1 to ITR 4, are for individuals, whereas the latter 3 categories are for companies, firms, trusts and Limited Liability Partnerships (LLPs).
Every taxpayer has to identify his/ her category and file the ITR accordingly before the due date. The applicability of the various ITR forms depends on the source of income of the person concerned, the total amount of income and the taxpayer’s category, whether they are a company, a member of HUF (Hindu Undivided Family) or an individual. Let us take a look at the different individual categories in detail.
ITR 1
Also called the Sahaj Form, ITR-1 is probably the most common ITR filing type for individuals. It is for people who:
1. Draw income from:
- Salary
- Pension
- One house property
- Other sources like the interest from the bank accounts, excluding lottery winnings, horse racing
2. Have an income of up to ₹50 lakhs.
If you fall in this income group, then you can file your ITR using Form 16. As compared to various ITR forms filing of ITR 1 is quite simple.
Despite being the most common types of return in income tax, not everyone is eligible. Let us take a look at people who do not fall into the category of ITR 1:
- The total income is over ₹50 lakhs
- Agricultural income exceeds ₹5,000
- Have capital gains that are taxable
- An income from a profession or business
- Income from more than 1 house property
- Income from directorship in a company
- Have any foreign income
- Investments in any unlisted equity shares during the financial year
- Own assets outside India.
ITR 2
Salaried individuals can choose ITR 1 to file their return, however, if you are salaried but have had capital gains from your investments, you would have to choose ITR 2. ITR-2 is for people who:
1. Draw income from:
- Salary
- Pension
- Lottery winnings
- Capital gains
- Agricultural income that is over ₹5,000
- One or more house property
- Foreign income/ foreign assets
2. Have an income of more than ₹50 lakhs
3. Hold individual directorship in a company
>> Must Read: Don’t Miss Income Tax Return (ITR) Filing 2023 Deadline
ITR 3
ITR 3 is for individuals and members of HUFs that have some income from their profession or business, or hold a partnership in a firm. People who have an income through the following are eligible for ITR 3:
- A business or profession
- Individual directorship in a company
- Have made investments in any unlisted equity shares during the financial year
- Individuals or HUFs who are not eligible for ITR 1, 2 or 4 can file ITR 3.
The following cannot file ITR 3:
- Companies
- Co-Operative Societies
- Trusts
- Local authority
- Individuals or businesses with an annual turnover of less than ₹2 crores.
ITR 4
Also called Sugam, ITR 4 is only applicable to HUFs, individuals and Partnerships (other than Limited Liability Partnerships, i.e. LLPs) who have an income in the following forms:
- Business income that is as per income scheme under section 44AD or 44AE
- Professional income that is as per the income scheme under section 44ADA
- The pension or salary earned is less than ₹50 lakhs
- Income from only one house property, but that is less than ₹50 lakhs
- Income from other sources, excluding lottery winnings, horse racing
The following cannot file ITR 4:
- The total income in a financial income is over ₹50 lakhs
- Have an income from more than 1 house property, whether self-occupied or let out
- Own a foreign asset
- Income from an outside India source
- Directorship in a company
- Agricultural income that is over ₹5,000.
ITR 5
- ITR filing type 5 is for:
- LLPs (Limited Liability Partnerships)
- Firms
- Local authorities
- Artificial Juridical Person (AJP)
- BOIs (i.e. a Body of Individuals)
- AOPs (Association of Persons)
- Estate of the insolvent and deceased
- Investment fund
- Business trust.
ITR 6
ITR 6 is for companies to file their tax returns. Keep in mind that companies can file income tax return 6, electronically only. The following are eligible for ITR 6:
- All companies except those under Section 11
- Income from business
- Income from housing property
- Income from various sources
- Individuals or HUFs cannot file ITR 6.
ITR 7
ITR filing type 7 is for Limited Liability Partnerships (LLPs) and businesses. Salaried individuals or HUFs cannot file ITR 7.
>> Also Read: How to Fill Schedule 80d in ITR
It’s Your Turn Now!
Filing your ITR is good practice. It not only makes your income legal but also comes with a long list of benefits. You can claim a tax refund, you are easily eligible for getting a loan or a visa. However, when filing, you need to understand the types of return in income tax. People often make the mistake of choosing the incorrect ITR filing type. This can lead to ITR rejection. Make sure you are able to identify the category that you fall in and file your ITR correctly.
Disclaimer: Plan features, benefits, coverage, and underwriting of claims are subject to policy terms and conditions. Please refer to the brochure, sales prospectus, and policy documents carefully.
Home
Diseases
