An Ultimate Guide to ITR Forms

Understanding the intricacies of ITR filing is crucial for all taxpayers. As the last date for ITR filing approaches, it is the right time to learn about all the types of ITR forms that are available and their specific uses. In this article, we explore the different available ITR forms, simplifying the ITR process and helping you stay compliant while maximising your tax benefits. 

What are ITR Forms?

ITR forms are an integral part of income tax filing. These are the documents containing all the information regarding your income and tax liabilities. Form 16 or Form 26AS are well known among taxpayers, but there are several others. One must choose the correct form under the correct income head to avoid erroneous filing and unwanted scrutiny from the IT Department.  

Before filing an ITR, taxpayers must assess their tax liability and make a payment. These are the various forms you should know about.

Types of ITR

The following list will help you understand which type of Income Tax Return you should file.

ITR 1

ITR 1 is for individuals who have an annual income of less than ₹50 lakh. The income heads covered under ITR 1 are:

• Salary or pension
• One house property
• Income from other sources, except from lotteries 
• Agricultural income less than ₹5,000

 There are also exceptions where individuals can’t file ITR 1. These include:

• Individuals with income exceeding ₹50 lakh
• Agricultural income of more than ₹5000
• Income from foreign sources 
• Income from businesses 
• Taxable capital gains 
• Individuals belonging to the resident not ordinarily resident (RNOR) and non-resident categories
• Own assets in a foreign country 
• Having income from more than one house property 
• Company director 
• Having access to the income of another person for which tax is deducted at the hand of the other person
• Brought forward losses or losses that will be carried forward 
• Tax deducted under 194N
• Payment or tax is deferred on ESOP 

If you belong to any of the above categories or have income heads from the exclusion list, you can’t file ITR 1.

ITR 2

ITR 2 forms are to be used by individuals and Hindu Undivided Family (HUF) who meets the following criteria in 2023-24:

• The total income exceeds ₹50 lakh
• Income from salary or pension
• Income from a house property
• Income from other sources, including a winning amount from lottery or horse racing
• Income as an individual director of a company
• Income generated from investment from equities in an unlisted company
• Agriculture income of more than ₹5000
• Income from capital gains 
• Income from assets outside India, including signing authority on a foreign account 
• Tax deducted under Section 194N
• NRIs generate income from jobs, homes, capital gains, and other sources 
• Deferred payment or tax deducted on ESOPs 
• Losses that need to be carried forward 

Individuals shouldn’t use ITR 2 if their total income includes income generated from a business or profession. These individuals must use ITR 3 or ITR 4.

Read more about ITR 1 vs ITR 2

ITR 3

Individuals and HUFs should file ITR 3 if they have income from the following sources:

• Income from business or property 
• Income from a profession
• Income generated from a partnership business 
• Income from investments in equity shares from unlisted companies during the financial year
• Individuals who have income from intraday trading or futures and options trading on the exchange    
• Income earned as an individual director of a company

In a nutshell, individuals and HUF who are not eligible to file under ITR 1, ITR 2, and ITR 4 must file ITR 3. Individuals may use ITR 3 to record income from jobs, capital gains, real estate, and other sources. 

ITR 4

ITR 4 should be filed by assessees whose income includes the following:

• ITR 4 is applicable to individuals, HUFs, and partnership firms 
• Income from salary or pension not exceeding ₹50 lakh
• Businesses with presumptive income under Section 44AD or 44AE
• Professional income under the presumptive income scheme of 44ADA
• Income from a property up to ₹50 lakh 
• Turnover from business not exceeding ₹2 crore
• Income from other sources not exceeding ₹50 lakh, excluding earnings from lottery or horse races
• Individuals earning presumptive income as freelancers from the above sources may also file ITR 4

The following categories are excluded from ITR 4:

• If income exceeds ₹50 lakh 
• Income from more than one house property
• Income from owning a foreign asset
• Having foreign income or sources from outside India
• A director of a company
• Investments in unlisted company equity shares 
• Resident not ordinarily resident (RNOR) and non-resident
• Assessable for income of another person when the tax is deducted in the hand of the other person
• When losses are brought forward or carried forward under any income head

ITR 5

You must file ITR 5 if you fall under the categories below:

• Firms 
• LLP or Limited Liability Partnerships 
• Association of Persons (APOs)
• Body of Individuals 
• Artificial Juridical Person 
• Estate of deceased
• Estate of insolvent 
• Business trust 
• Investment funds 

The above entities are required to file ITR 5 to disclose profits and other sources of income.  

ITR 6

Companies and businesses need to report income/profit using the ITR 6 form. The filing type in ITR applies to entities that are not exempt under Section 11 (income from properties held for religious or charitable purposes). 

ITR 7 

Businesses, companies, and trusts excluded from paying income tax must report their income using the ITR 7 form:

• Individuals under Section 139(4A) deriving income from properties exclusively held for religious or charitable purposes.
• Political parties filing under Section 139(4B)
• Entities under Section 139(4C): scientific research associations, news agencies, etc.
• Universities and colleges under Section 139(4D)
• Businesses and entities under Section 139(4E) which don’t fall in any other category 
• Investment funds referred in Section 115UB and filing under Section 139(4F)

Types of Forms Necessary to File ITR

The other useful types of ITR forms that taxpayers should learn about are the following:

Learn more How to e-Filing ITR

Form 16

The Form 16 is issued by the employer to salaried employees. It lists all details related to gross pay and exemptions, such as HRA and LTA. It provides a complete breakup of the employee’s total taxable income, reported revenue/losses, tax-saving investments, and TDS deducted on salary. 

Form 26AS

Form 26AS is issued when TDS is deducted on earnings from wages, debt, and selling immovable property, such as a house. The form contains details regarding self-assessment tax, advance tax payment, and listed financial transactions. 

Form 15G and Form 15H

Form 15G and Form 15H are TDS exemption forms. If your age is below 60 and your income is below the exemption limit, you can file Form 15G. Similarly, Form 15H is for senior citizens over 60 with a calculated zero tax liability on their net income.

Final Words 

You can make informed decisions as a learned taxpayer – meet tax compliance while maximising your returns. Filing an ITR is often a daunting task for most of us, but learning the Income Tax Rules will make it effortless. Now that you have learned about the ITR filing types, file your ITR without delay and by the last date of July 31, 2023.

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