With the window for assessment of income tax for Assessment Year 2024–25 already open, the very first and the most important step for all taxpayers is to determine the correct Income Tax Return (ITR) form. The incorrect form can lead to delays, rejection, or a defective return notice. Following is a clear cut analysis of who needs to file which ITR form.
ITR-1: For salaried taxpayers with straightforward finances
ITR-1, or Sahaj, is for resident individuals whose total income is not above ₹50 lakh. It has salary or pension income, one house property, and others such as bank interest income. If you have no business income, foreign income, or capital gains, this is likely the form for you.
ITR-2: For individuals with capital gains or foreign income
If your income is more than ₹50 lakh or if it includes capital gains, income from more than one house property, foreign assets or income, you are required to file ITR-2. You may file this form if you are a company director or if you hold investments in unlisted equity shares too.
ITR-3: Business professionals
Individuals and Hindu Undivided Families (HUFs) with income from a proprietor profession or business need to use ITR-3. These include freelancers, consultants, and all individuals who are engaged in their own business, even part-time. It also covers income from salary, house property, capital gain, and other sources.
ITR-4: For presumptive income taxpayers
ITR-4 or Sugam is for individuals, HUFs, and firms (excluding LLPs) who are taking the presumptive taxation scheme under sections 44AD, 44ADA, or 44AE. It is for professionals and small business people with total income of ₹50 lakh and a gross receipt of ₹75 lakh.
Other forms of ITR: For firms, LLPs, and trusts
· •ITR-5 is for LLPs, companies, associations of persons (AOP), and bodies of individuals (BOI).
· IT-6 is for companies not availing exemption under Section 11.
· IT-7 is for individuals such as trusts, political parties, or institutions who are required to file returns under specific sections such as 139(4A), 139(4B), etc.
Select the form based on your income to avoid trouble later
Selecting the right ITR form is crucial for hassle-free processing of your return and quick refund. Filing with the wrong form can not only take longer to process your refund but also result in legal notices. Take last year's form as a reference, but modify it according to any changes in your income sources. If unsure, take the help of a tax expert before clicking submit.
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