Every Indian who pays taxes must file their tax returns at the end of the financial year. Filing tax returns is important not only because it is the legal duty of every Indian citizen to pay taxes but also because banks and commercial lenders use income tax returns to understand a loan applicant’s repayment capacity and decide the terms and conditions of the loan.
Filing taxes can be confusing as there are many different types of ITR forms available. Let us walk you through the different types of income tax forms available in India. But, before that, know that all ITR forms can be broadly categorized under two categories.
Types of ITR: Understanding Which Form to File
1. ITR form for individuals, salaried individuals and Hindu Undivided Families or HUFs
Individuals who are not salaried should fill the ITR form if they meet the following conditions:
– If they are under 60 years of age and their yearly income is at least Rs.2 Lakh
– If they are between 60 and 80 years of age and their income is above Rs.3 Lakh.
– If they are below 80 years of age and their yearly income is at least Rs.5 Lakh.
Individuals, salaried individuals, and Hindu United Families can file their taxes using form 1 and form 2.
2. ITR forms for companies, trusts and partnership firms
Companies, trusts, partnership firms and LLPs or limited liability partnerships must file their taxes using forms 5, 6 and 7. Please note that one cannot file taxes on income from capital gains using these forms.
So, basically Indians can file taxes under many different categories using different types of ITR forms. Let us now also look at the different types of forms available for filing taxes.
Different Types of ITR Forms Available and Which One Should You Use
1. ITR Form 1
Also known as Sahaj form, this form should only be used by individual tax payers to file their taxes. If you are drawing income from salary or pension, if your income from agricultural resources is up to Rs.5000, if you draw income from one house or from other sources, you must use this form to file your ITR. However, if your total income exceeds Rs.50 Lakh or your income from agricultural sources exceeds Rs.5000, you cannot use this form to file your ITR.
2. ITR-2 Form
Form 2 is for Hindu Undivided Families. Further, those who have earned money by selling property or those who earn money from sources outside of India can also use this form to file their taxes. If you draw income from salary or pension or a home or any other sources and your income exceeds Rs.50 Lakh, you must use this form to file your ITR. If you are a director in a firm or own unlisted equity shares, you must file your taxes using the ITR-2 form.
3. ITR-3 Form
Individual taxpayers and Hindu Undivided Families (HUFs) who are partners in any firm but do not do any business through the firm must use this ITR form to file their taxes. In general, taxpayers who cannot use ITR 1, ITR2 and ITR 4 to file their taxes can use the ITR-3 form to file their taxes.
4. ITR-4S Form
ITR-4S form, also known as the Sugam form, is for individuals who run a business and earn income from it. Other professionals, such as doctors, contractors, agents, designers, shopkeepers, etc. can also use this form to file their taxes. Individual borrowers who earn income up to Rs.50 Lakh from salary or pension, salaried individuals who earn professional income as per scheme 44ADA and business professionals who earn income under Section 44AD and 44AE can use this form to file their taxes. Further, taxpayers whose income from one home or other sources does not exceed Rs.50 Lakh can also use this form to file their taxes.
5. ITR-5 Form
ITR-5 form is for companies that qualify as partnership firms or LLPs. Association of Persons or AOPs, Artificial Juridical Person or AJPs, Body of Individuals or BOIs, Business Trust, Estate of Deceased, Estate of Insolvent and Individual Funds must use this ITR form to file their taxes.
6. ITR 6 Form
All companies except those that are eligible to claim tax exemption under Section 11 can file ITR using this form.
7. ITR Form 7
Individuals or companies that must file returns under Section 139(4A), 139(4C), 139(4D), 139 (4E) and 139 (4F) can file income tax return using this form.
These are the different ITR forms available in India. Individual tax payers must must develop a clear understanding of which form would be the right choice for them. If they are confused, they must talk to a tax expert and have them file their taxes for them. Doing so may require them to pay a fee but it is crucial to have one’s taxes filed the right way.
