It’s that time of the year when you must fill out and file your income tax returns (ITRs) for the financial year 2022-23 (assessment year 2023-24). One can see the various income tax returns ITR-1, ITR-2, ITR-3, ITR-4 and ITR-5 on the Income Tax website www.incometaxgov.in to enable the online filing of the returns.
Many taxpayers are not aware of which form to fill in. Most of them are unaware of how the various ITRs pertain to various details including sources of income, residential status and asset/liability, reporting requirements and more.
Not all ITRs suit everyone, which is why one must know which of these forms apply to them. Just looking at the notified ITR forms can help, though a detailed assessment can help avoid the trouble of filling out and submitting the wrong form.
ITR-1
- The taxpayer must be an individual qualifying as an ordinary resident.
- The total taxable income must not exceed ₹50 lakhs.
- The income sources of the taxpayer may include income from salaries or family pension, rental income from one residential property, income from other sources such as rental income and agricultural income. However, the agricultural income must not be more than ₹5000.
Also, taxpayers must note that the aforementioned conditions are applicable too if they have clubbed the income and income sources of their spouses too. The spouse’s income must also be from one of the above-mentioned source(s) of income.
ITR-2
- Only individuals and Hindu Undivided Families (HUFs) are eligible to file ITR-2 to pay their taxes.
- Only those earning more than ₹50 lakh in a year can file their taxes using this form.
- This form can be filed if the income does not come from the earnings and gains of a business or profession.
ITR-3
- This form suits best individuals and HUFs earning from business or profession.
- Also, individuals earning from partnerships in business or firms can file this form.
ITR-4
- Resident individuals or HUFs or firms other than LLPs with a total income of up to ₹50 lakhs can file their returns using this form.
- The taxpayers must have business income or income from profession assessed on a “presumptive basis”.
- The restrictions against filing this ITR are similar to those of ITR-1.
ITR-5
- Any taxpayer barring individuals or HUFs or companies can file their returns using this ITR. These could include firms or LLPs or Association of Persons (AOPs) or business trusts or investment funds.
The last date for filing the ITR is July 31, 2023, for salaried individuals and taxpayers whose books of accounts need not be audited. The ITR must be filed by the due date, non-compliance of which will invite a penalty ranging between ₹1000 and ₹5000. Most importantly, taxpayers with no taxable income must also file this ITR, or else they would also be penalized.
Moreover, taxpayers can save on their taxes by offsetting their losses against their income. However, this benefit is not available in the case of late tax filing. Apart, to be eligible for the new tax regime, one must file their ITR on or before July 31, 2023. An individual who files a late ITR will not be eligible to choose a new tax regime.
Also, to avoid getting income/tax mismatch warnings later, one must additionally confirm the information gathered by the tax authorities in the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) before completing the ITR for FY 2022-23.
