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2019-10-07 17:50:52Accounting & TaxesEnglishThere are various types of ITR forms. As per the Act, a taxpayer needs to file returns with the income tax department on or before the...https://quickbooks.intuit.com/in/resources/in_qrc/uploads/2019/10/ITR-Forms-Rules-Types-and-Applicability-of-ITR-Forms.jpghttps://quickbooks.intuit.com/in/resources/accounting-taxes/itr-forms/ITR Forms: Rules, Types and Applicability

ITR Forms: Rules, Types and Applicability

9 min read

As per section 139(1) of the Income Tax Act, 1961, every person:

  • whether a company or firm
  • any person other than a company or firm

needs to file an income tax return on or before the due date. Provided if his total income or total income of any other person in respect of which he is assessable under the Act exceeds the threshold limit of income not chargeable to tax.

Also, an income tax return needs to be furnished in the prescribed ITR form. Now, the type of Income Tax Return (ITR) form to be filed depends upon the following factors:

  • amount of income you earn as a taxpayer
  • what category you belong to i.e. whether you are an individual, company or HUF
  • sources through which you earn income as a taxpayer

So, let’s first understand what is an income tax return before discussing the different types of ITR Forms.

What is Income Tax Return?

Income Tax Return (ITR) is a form in which an assessee furnishes information regarding his income earned during the previous year to the income tax department. Further, it also mentions the tax calculated on such income earned during the previous year.

Now, there are various types of ITR forms that a taxpayer can file depending upon the factors as discussed above. These include ITR1, ITR2 ITR3, ITR4, ITR5, ITR6 and ITR7.

As per the Income Tax Act, 1961, the taxpayer needs to file returns with the income tax department on or before the specified dates.

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How To File Your First Income Tax Return?

Types of ITR Forms

ITR 1(Sahaj)

Who is Eligible to File this Return Form?

This return form is filed by an individual who is:

  • a resident in India but not ordinarily resident in India
  • whose total income for the assessment year 2019 – 2020 does not exceed Rs. 50 lakhs
  • who has income under the following income heads:
    • salary/pension
    • one house property
    • other sources (interest etc)

Further, there are cases where the income of another person like spouse, minor child etc need to be combined with the income of the assessee. In such cases, this return form can be used, provided the income to be combined comes under the above income categories.

Who is not Eligible to File this Return Form?

Form ITR 1 should not be filed by an individual who:

  • is a director in a company
  • has held unlisted equity shares at any time during the previous year
  • holds any assets including having a financial interest in an entity located outside India
  • has a signing authority in any account located outside India
  • he has income from any source outside India
  • has any income of the following nature during the previous year
    • profits and gains from business and profession
    • capital gains
    • income from more than one house property
    • income from other sources including:
      • winnings from lottery
      • activity of owning or maintaining race horses
      • income taxable at special rates under section 115 BBDA or section BBE
    • income to be apportioned according to the provisions of section 5A
    • agricultural income exceeding Rs. 5,000
  • he has any claims of loss/deductions/relief/tax credit etc including:
    • losses to be carried forward under the head ‘Income from House Property’
    • any loss under the income head ‘Income from Other Sources’
    • claim of relief under section 90 and/or section 91
    • any claim of deduction under section 57 other than deduction under clause ( iia) relating to family pension
    • claim of credit of Tax Deducted at Source in the hands of any other person

ITR 2

Who is Eligible to File this Return Form?

This return form is filed by an individual or Hindu Undivided Family (HUF) who is:

  • a Resident not Ordinarily Resident (RNOR) and Non – Resident
  • whose total income for the assessment year 2019 – 2020 exceeds Rs. 50 lakhs
  • who has income under the following income heads:
    • salary/pension
    • one house property
    • other sources (interest etc)
  • is an individual Director in a company
  • has held investments in unlisted equity shares at any time during the previous financial year
  • one who has income from Capital Gains
  • the one who holds any assets including having a financial interest in an entity located outside India and has income from any source outside India
  • who has agriculture income exceeding Rs. 5,000

Further, there are cases where the income of another person like spouse, minor child etc need to be combined with the income of the assessee. In such cases, this return form can be used, provided, the income to be combined comes under the above income categories.

Further, this return form cannot be used by an individual whose total income for the assessment year 2019 – 2020 includes income under the head ‘profits or gains from business or profession’. So, in order to communicate incomes to the IT department, the individuals must use ITR 3 or ITR 4.

ITR 3

Who is Eligible to File this Return Form?

This return needs to be filed by an individual or HUF who:

  • has income under the head ‘profits or gains from business or profession’ and
    is not eligible to file form ITR 1 (Sahaj), ITR 2 or ITR 4 (Sugam)

Further, an individual:

  • who is a director in a company;
  • has held unlisted equity shares at any time during the previous year
  • who has income under the following income heads:
    • salary/pension
    • one house property
    • other sources (interest etc)
  • has income as a partner in a firm

can use ITR 3 to file an income tax return.

ITR 4

Who is Eligible to File this Return Form?

This return form is to be filed by an individual or HUF:

  • who is a resident other than not ordinarily resident or a firm (other than LLP) which is a resident;
  • whose total income for the assessment year 2019 – 2020 does not exceed Rs. 50 lakhs
  • who has income from the following income heads:
    • income from business where such income is computed on presumptive basis as per section 44AD (ie. gross turnover upto Rs. 2 crores) or section 44AE (income from goods carriage upto 10 vehicles)
    • income from profession where such income is calculated on presumptive basis as per section 44ADA (i.e. gross receipt upto Rs. 50 lakhs)
    • income from salary/pension
    • the income from one house property
    • income from other sources

Further, the income calculated on presumptive basis under sections 44AD, 44AE or 44ADA shall be presumed to have calculated after taking into consideration the following items under the ITR act:

  • every loss,
  • allowance,
  • depreciation or
  • deduction

Also, there are cases where the income of another person like spouse, minor child etc need to be combined with the income of the assessee. In such cases, this return form can be used, provided, the income to be combined comes under the above income categories.

Who is Not Eligible to File this Return Form?

ITR 4 shall not be used by a person who:

  • is a director in a company
  • has held unlisted equity shares at any time during the previous year
  • holds any assets including having a financial interest in an entity located outside India
  • has a signing authority in any account located outside India
  • who has income from any source outside India
  • has any income including:
    • profits and gains from business and profession that are not required to be calculated under sections 44AD, 44ADA and 44AE. This includes income from speculative business, agency business, commission or brokerage income etc.
    • capital gains
    • income from more than one house property
    • income from other sources including:
      • winnings from lottery
      • activity of owning or maintaining race horses
      • income taxable at special rates under section 115 BBDA or section BBE
    • income to be apportioned according to the provisions of section 5A
    • agricultural income exceeding Rs. 5,000
    • has any claims of loss/deductions/relief/tax credit etc including:
      • losses to be carried forward under the head ‘Income from House Property’
      • any loss under the income head ‘Income from Other Sources’
      • claim of relief under section 90 and/or section 91
      • any claim of deduction under section 57 other than deduction under clause ( iia) relating to family pension
      • claim of credit of Tax Deducted at Source in the hands of any other person
Note

An assessee has an option to file ITR 4 or other regular return forms like ITR 3 or ITR 5. In case an assessee is eligible to declare profits or gains from business or profession on presumptive basis under section 44AD, 44ADA or 44AE, he is required to file ITR 4.

However, if an assessee maintains books of accounts and other documents as per section 44A and gets his accounts audited as per section 44AB, filing of ITR 4 is not necessary. In such a case he can file ITR 3 OR ITR 5 whichever is applicable.

ITR 5

Who is Eligible to File this Return Form?

This form needs to be filed by a person who is a :

  • firm
  • Limited Liability Partnership (LLP)
  • Association of Persons (AOP)
  • Body of Individuals (BOI)
  • Artificial Juridical Person (AJP)
  • Local Authority
  • Representative Assessee
  • Cooperative Society
  • Societies registered under the Societies Registration Act 1860 or any law of any state
  • Trust other than trusts eligible to file Form ITR 7
  • Estate of a deceased person
  • The Estate of an insolvent
  • Business Trusts as per section 139 (4E)
  • Investment funds as per section 139 (4F)

Who is Not Eligible to File this Return Form?

A person who is required to file an ITR as per sections 139 (4A), 139 (4B) or 139 (4D) shall not use this form.

ITR 6

Who is Eligible to File this Return Form?

This return form needs to be filed by a company other than companies filing ITR 7 (i.e. claiming exemption under section 11 where income is from property held for charitable or religious purposes)

Who is Not Eligible to File this Return Form?

ITR 6 cannot be filed by the following category of persons.

  • individuals, HUF, firm, AOP, BOI, local authority and artificial juridical person (AJP)
  • companies that claim exemption under section 11 (income from property held for charitable and religious purposes)

ITR 7

Who is Eligible to File this Return Form?

This form can be filed by companies, firms, local authority, association of persons and artificial juridical person claiming exemption as one of the following:

  • charitable or religious trusts under section 139 (4A)
  • political party under section 139 (4B)
  • scientific research institutions under section 139(4C)
  • universities or colleges or institutions or khadi and village industries under section 139 (4D)

Who is Not Eligible to File this Return Form?

ITR 7 shall not be filed by an assessee who is not claiming exemption under sections 139 (4A), 139 (4B), 139 (4C) or 139 (4D)

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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