scorecardresearchIncome Tax: What are the different types of I-T return forms and which one is meant for you?

Income Tax: What are the different types of I-T return forms and which one is meant for you?

Updated: 21 Jul 2022, 10:20 AM IST
TL;DR.
There are many ITR forms to choose from. Not all are supposed to be filled. The level and sources of income determine which form(s) must be filled to pay tax. 
Not all ITRs are meant to be filled. Choose the one that lists your sources of income and helps you to estimate your tax burden accordingly.

Not all ITRs are meant to be filled. Choose the one that lists your sources of income and helps you to estimate your tax burden accordingly.

Indians are struggling to file their income tax returns (ITRs) before the due date, which is July 31 unless they are willing to pay penalties and interest on outstanding tax or forego tax deduction benefits if they file later. With so many ITR forms to choose from, taxpayers are confused and curious about which forms to fill.

Having multiple sections and forms does not mean that all are relevant and must be filled. Which form must be filled depends on the nature and source of your income, thus, indicating that you must be aware of your sources of income and the sections under which they must be included for the purpose of tax collection.

Let us look at the various ITR forms and the income sources corresponding to which they must be selected and filled.

ITR-1 (Sahaj)

This form is best filled by those earning up to 50 lakh from the following sources.

• Salary/Pension

• Income from house property subject to income from not more than one property.

• Income from other sources including interest income, family pension, dividend income, etc.

• Agricultural income up to 5,000

ITR-2

This form is best for those earning from multiple sources with the department not mentioning the earning limit for assessees filling up this form. This form must be filled in by taxpayers having access to the following income sources.

  • Salary/Pension
  • Income from one or more house properties.
  • Income from other sources like interest income, family pension, dividends received, etc.
  • Income includes both short-term and long-term capital gains apart from earnings from intraday trade and Future & Options (F&O).
  • Agriculture income in excess of 5000.

ITR-3

Not all taxpayers may rely on salary income alone. This form caters to those earning from business and profession apart from salaried income. Those with the following income sources must fill in this form.

• Very high salary/pension as the Income Tax Department does not mention any limit regarding the same.

• Income from multiple house properties.

• Income from other sources including interest income, family pension, dividend income, etc.

• Income from capital gains including both short-term and long-term capital gains including those from intraday trade and Future & Options (F&O)

• Agricultural income in excess of 5000.

• Income from business and profession.

ITR-4 (Sugam)

Taxpayers who fulfil the conditions as given in ITR-1 but earn income from presumptive business and or profession may resort to filling in details given in ITR-4. These taxpayers may submit details regarding the following

  • Income from salary/pension.
  • Regular earnings from not more than one house property.
  • Income from multiple sources including interest income, family pension, dividend income, etc.
  • Agricultural income of more than 5000.
  • Income from presumptive business or profession.

Many taxpayers often wonder what it means by earning from a presumptive business or profession. The Income Tax Department maintains that small business owners and professionals do not need to estimate their actual income after reducing their expenses from their earnings. Rather, they can use a percentage of the total revenue as presumptive income and pay their taxes on that. 

Presumptive business and professions include legal, medical, engineering or architectural, accountancy, technical consultancy, interior decoration or any other profession as notified by the Central Board of Direct Taxes (CBDT), but exclude earnings by life insurance agents, commissions of any kind and running plying, hiring or leasing goods carriages businesses.

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First Published: 21 Jul 2022, 10:20 AM IST