ITRs are prescribed forms of IT department through which a tax payer should file his yearly IT return. You can not file your IT return in any other format.
Based on your IT status and income, different IT Return forms are prescribed by IT department. Till date, IT department has prescribed 8 ITRs out of which you have to choose one IT Return Form. You have form ITR 1, ITR 2, ITR 3, ITR 4, ITR 4S, ITR 5, ITR 6 and even ITR 7.
ITR 1 has to be used by those individuals whose income includes income from;
- salary or
- pension or
- house property
- other sources
However being an individual you can not use this form if you are full filling any of the following criteria;
- If you have house property losses which are brought forward from previous year.
- If during the financial year you have anything from “winning from lottery and race horses”.
- If the person has any asset located outside India.
- If you have exempt income of more than Rs. 5000 during the financial year.
ITR 2 has to be used by an individual or HUF whose total income of the financial year includes income from;
- house property
- other sources
In case, you have some income which prohibits you from filling ITR 1 then you can try ITR2 as in this form you can file your losses from house property, income from winning of lottery and crossword puzzle and exempted income of more than Rs. 5, 000.
However, if you have any business income then you can not use this IT Return form. For business income you have to choose between ITR 3, ITR 4 or ITR 4S.
ITR 3 can also be used by an individual or a HUF. But it can only be used if such individual or HUF is a partner in a partnership firm or LLP. Such individual or HUF should not have any income under the head profits and gains of business or profession except interest, salary, bonus, commission or remuneration due to or received from firm.
If you are a self employed person and has income from your business then this form is not for you. You have to choose between ITR 4 and ITR 4S.
If you are carrying your business or profession as an individual or HUF in India then this form is for you. However in certain cases where businesses like transportation and others are taxed on presumptive basis, ITR 4S has to be filled.
In addition to your business income, if you are employed and getting salary or having income from other sources like house property or other incomes then you can include those incomes in addition to your business income in ITR 4 form.
In income tax, we have presumptive taxation where a tax payer will be taxed either based on a percentage on turnover or on the basis that IT department has decided. These provisions are optional. If an assessee has decided to pay tax according to these sections then they can do so or else they can pay tax based on the normal income tax procedures.
If you have chosen to pay tax based on these presumptive sections then you have to file your IT return in ITR 4S. In addition to this presumptive business income if you have any other income like salary or pension or income from house property or from other sources then you can use this form.
- Section 44AD – Presumptive basis of calculating business profit
- Section 44AE – Presumptive taxation for businesses of plying, leasing or hiring trucks
This IT return form is not applicable to an individual or HUF. It has to be used only by a firm, AOP, BOI, artificial judicial person, cooperative society and local authority to file their income with IT department.
This IT Return form will be used only by companies except those companies claiming exemption under section 11. Other than these companies no one can use this form. Companies under tax audits are required to file tax audit reports in addition to filling this form.
Also Read: Tax audit under Under Section 44AB
ITR 7 can only be used by trust, political parties, universities, colleges and institutions, news agencies and others who are required to file IT return under section 139 (4A), 4B, 4C and 4D.
Based on your income, IT department has made it mandatory for certain tax payers to file their ITR forms online i.e. electronic filling. However in the case of ITR 6 it has to be compulsorily filled online even though the company does not have any income.
Also Read: IT efilling compulsory