ITR (Income Tax Returns)

What is ITR?

Income Tax Return (ITR) is a form in which the taxpayers file information about their income earned and tax applicable, to the income tax department.

The department has notified 7 various forms i.e. ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-7 to date. Every taxpayer should file his ITR on or before the specified due date. The applicability of ITR forms varies depending on the sources of income of the taxpayer, the amount of the income earned and the category of the taxpayer like individuals, HUF, company, etc.

Why should you file ITR?

• If you want to claim an income tax refund from the department.
• If you have earned from or have invested in foreign assets during the FY.
• If you wish to apply for a visa or a loan
• If the taxpayer is a company or a firm, irrespective of profit or loss.
• If you have loss from business/profession or under capital gains head, you will not be allowed to carry them forward to the next years unless you file the return before the due date.

When is it mandatory to file income tax returns (ITR) in India?

• If your gross total income is more than the basic exemption limit-

Age Group	Basic Exemption Limit
For individuals below 60 years	Rs 2.5 lakh
For individuals above 60 years but below 80 years	Rs 3.0 lakh
For individuals above 80 years	Rs 5.0 lakh

• If your income is below the basic exemption limit, you will still be required to file your tax return if you meet any of these conditions:

1. Deposited more than Rs 1 crore in ‘current’ bank account: You have to mandatorily file a tax return if you have deposited a total of Rs. 1 crore or more in one or more current accounts with a bank. However, no such requirement has been specified for deposits made in with post office current accounts; or
2. Deposited more than Rs 50 lakh in ‘savings’ bank account: You have to mandatorily file a tax return if you have deposited a total amount of Rs 50 lakh or more in one or more of your savings bank account.
3. Spent more than Rs 2 lakh on foreign travel: You have to mandatorily file a tax return if you have incurred a total expenditure of more than Rs 2 lakh on foreign travel whether for yourself or any other person; or
4. Electricity expenditure is more than Rs 1 lakh: You have to mandatorily file a tax return if you have incurred more than Rs.1 lakh towards electricity consumption during the previous year; or
5. TDS or TCS is more than Rs 25,000: If the tax deducted at source (TDS)/ tax collected at source (TCS) exceeds Rs 25,000 in the previous year. In the case of a senior citizen (above 60 years), this limit is Rs 50,000.
6. Business turnover is more than Rs 60 lakh: In case you are a businessman and your total sales, turnover, or gross receipt is more than Rs 60 lakh during the previous year, then you have to mandatorily file a tax return
7. Professional income is more than Rs 10 lakh: You have to mandatorily file a tax return if you are engaged in a profession and your gross receipts are more than Rs 10 lakh during the previous year.

Which ITR to file?

The following infographic will help you find out which type of income tax return is applicable to you for FY 2022-23.

Once you figure out which ITR you need, click on the links below to learn more about them.

ITR-1 OR SAHAJ

This Return Form is for a resident individual whose total income for the AY 2023-24 includes:

• Income from Salary/ Pension; or
• Income from One House Property (excluding cases where loss is brought forward from previous years); or
• Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)
• Agricultural income up to Rs 5000.

Who cannot use ITR-1 Form?

• Total income exceeding Rs 50 lakh
• Agricultural income exceeding Rs 5000
• If you have taxable capital gains
• If you have income from business or profession
• Having income from more than one house property
• If you are a Director in a company
• If you have had investments in unlisted equity shares at any time during the financial year
• Owning assets (including financial interest in any entity) outside India, including signing authority in any account located outside India
• If you are a resident not ordinarily resident (RNOR) and non-resident
• Having any foreign income
• If you are assessable in respect of income of another person in respect of which tax is deducted in the hands of the other person.
• If tax has been deducted under Section 194N
• If in case payment or deduction of tax has been deferred on ESOP
• If you have any brought forward loss or loss needs to be carried forward under any income head

Still, do you have any doubts about ITR-1 in your mind?
Read our comprehensive guide on ITR-1 to get answers to all your questions.

ITR-2

ITR-2 is for the use of an individual or a Hindu Undivided Family (HUF) whose total income for the AY 2023-24 includes:

• Income from Salary/Pension
• Income from House Property
• Income from Other Sources (including Winnings from Lottery and Income from Race Horses)
• If you are an Individual Director in a company
• If you have had investments in unlisted equity shares at any time during the financial year
• Being a resident not ordinarily resident (RNOR) and non-resident
• Income from Capital Gains
• Having any foreign income
• Agricultural income more than Rs 5,000
• Owning assets (including financial interest in any entity) outside India, including signing authority in any account located outside India
• If tax has been deducted under Section 194N
• If in case payment or deduction of tax has been deferred on ESOP
• If you have any brought forward loss or loss needs to be carried forward under any income head

Further, in a case where the income of another person like one’s spouse, child etc. is to be clubbed with the income of the assessee, this Return Form can be used where such income falls in any of the above categories.

The total income can be more than Rs 50 Lakhs.

Who cannot use ITR-2?

This Return Form should not be used by an individual whose total income for the AY 2023-24 includes Income from Business or Profession. For declaring these types of Income, you may have to use ITR-3 or ITR-4. Go through our comprehensive guide on ITR-2 to know how to fill out the ITR-2 form.

ITR-3

The current ITR-3 Form is to be used by an individual or a Hindu Undivided Family who have income from a proprietary business or is carrying on a profession. The persons having income from the following sources are eligible to file ITR-3:

• Carrying on a business or profession
• If you are an Individual Director in a company
• If you have had investments in unlisted equity shares at any time during the financial year
• The return may include income from House property, Salary/Pension and Income from other sources
• Income of a person as a partner in the firm

In short, individuals or HUFs who are not eligible to file ITR-1, ITR-2, and ITR-4, should file ITR-3
Click here to read our comprehensive guide to the ITR-3

ITR 4 or Sugam

The current ITR-4 applies to individuals and HUFs, Partnership firms (other than LLPs), which are residents and whose total income includes:

• Business income according to the presumptive income scheme under section 44AD or 44AE
• Professional income according to presumptive income scheme under section 44ADA
• Income from salary or pension up to Rs 50 lakh
• Income from one house property, not more than Rs 50 lakh (excluding the amount of brought forward loss or loss to be carried forward)
• Income from other sources having income not more than Rs 50 Lakh (excluding income from lottery and race-horses )

Please note that any individual earning income from the above-mentioned sources as a freelancer can also opt for a presumptive scheme if their gross receipts are not more than Rs 50 lakhs.

A presumptive income scheme under sections 44AD, 44AE and 44ADA is when an individual or an entity opts to derive its income on a presumptive basis, i.e. when the income is presumed at a minimum rate based on a percentage of gross receipts / gross turnover or based on ownership of commercial vehicles. However, if the business turnover exceeds Rs 2 crore, the taxpayer will have to file ITR-3.

Who cannot use ITR-4 Form?

• If your total income exceeds Rs 50 lakh
• Having income from more than one house property
• Owning any foreign asset
• If you have signing authority in any account located outside India
• Having income from any source outside India
• If you are a Director in a company
• If you have had investments in unlisted equity shares at any time during the financial year
• Being a resident not ordinarily resident (RNOR) and non-resident
• Having foreign income
• If you are assessable in respect of the income of another person in respect of which tax is deducted in the hands of the other person.
• If in case payment or deduction of tax has been deferred on ESOP
• If you have any brought forward loss or loss needs to be carried forward under any income head

Click here to read our comprehensive guide to the ITR-4

ITR-5

ITR-5 is for firms, LLPs (Limited Liability Partnership), AOPs (Association of Persons), BOIs (Body of Individuals), Artificial Juridical Person (AJP), Estate of deceased, Estate of insolvent, Business trust and investment fund.

Click here to read our comprehensive guide to the ITR-5

ITR-6

For Companies other than companies claiming exemption under section 11 (Income from property held for charitable or religious purposes), this return has to be filed electronically only.

Click here to read our comprehensive guide to the ITR-6

ITR-7

For persons including companies required to furnish returns under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) or section 139(4E) or section 139(4F).

• Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
• Return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount, not chargeable to income-tax.
• Return under section 139(4C) is required to be filed by every –
  • Scientific research association;
  • News agency;
  • Association or institution referred to in section 10(23A);
  • Institution referred to in section 10(23B);
  • Fund or institution or university or other educational institution or any hospital or other medical institution.
• Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish a return of income or loss under any other provision of this section.
• Return under section 139(4E) must be filed by every business trust which is not required to furnish a return of income or loss under any other provisions of this section.
• Return under section 139(4F) must be filed by any investment fund referred to in section 115UB. It is not required to furnish a return of income or loss under any other provisions of this section.

ITR Form	Applicable to	Salary	House Property	Business Income	Capital Gains	Other Sources	Exempt Income	Lottery Income	Foreign Assets/Foreign Income	Carry Forward Loss
ITR-1 / Sahaj	Individual, HUF (Residents)	Yes	Yes(One House Property)	No	No	Yes	Yes (Agricultural Income less than Rs 5,000)	No	No	No
ITR-2	Individual, HUF	Yes	Yes	No	Yes	Yes	Yes	Yes	Yes	Yes
ITR-3	Individual or HUF, partner in a Firm	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
ITR-4	Individual, HUF, Firm	Yes	Yes(One House Property)	Presumptive Business Income	No	Yes	Yes (Agricultural Income less than Rs 5,000)	No	No	No
ITR-5	Partnership Firm/ LLP	No	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
ITR-6	Company	No	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
ITR-7	Trust	No	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes

Want to know more about the ITR-7 Form? Why not read our comprehensive guide to the ITR-7 Form?