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Income Tax Return

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ITR stands for Income Tax Return. The Income Tax Act, 1961 governs all the ITR forms and procedures to be followed. This article gives an in-depth understanding of the ITR definition and types of ITR forms.

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What is ITR

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

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The department has notified 7 various forms i.e. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7 till 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 the taxpayer like individuals, HUF, company, etc.

Why should you file ITR?

It is mandatory to file income tax returns (ITR) in India if any of the conditions mentioned below are applicable to you:

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1. If your gross annual income is more than the basic exemption limit as specified below-

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Particulars                                                                                   Amount

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

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2. If you want to claim an income tax refund from the department.

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3. If you have earned from or have invested in foreign assets during the FY.

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4. If you wish to apply for visa or a loan

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5. If the taxpayer is a company or a firm, irrespective of profit or loss.

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Also, you are mandatorily required to file ITR even if your income is below the basic exemption limit but you meet one of the following conditions:  

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  1. Have deposited an aggregate amount of more than Rs.1 crore in one or more current bank accounts; or

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   2.Have incurred an aggregate expenditure of more than Rs 2 lakh on foreign travel for self or any other              person; or

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   3.Have incurred an expenditure aggregate of more than Rs.1 lakh towards electricity consumption.

Which ITR to file?

The following infographic will help you find out which type of income tax return is applicable to you for FY 2020-21 as well as previous year FY 2019-20. 

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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 2021-22 includes:

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  • Income from Salary/ Pension; or

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  • Income from One House Property (excluding cases where loss is brought forward from previous years); or

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  • Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)

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  • Agricultural income up to Rs.5000.

Who cannot use ITR 1 Form?

  • Total income exceeding Rs.50 lakh

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  • Agricultural income exceeding Rs 5000

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  • If you have taxable capital gains

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  • If you have income from business or profession

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  • Having income from more than one house property

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  • If you are a Director in a company

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  • If you have had investments in unlisted equity shares at any time during the financial year

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  • Owning assets (including financial interest in any entity) outside India) if you are a resident, including signing authority in any account located outside India

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  • If you are a resident not ordinarily resident (RNOR) and non-resident

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  • Having foreign assets or foreign income

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  • 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.

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Still, 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 2021-22 includes:

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  • Income from Salary/Pension; or

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  • Income from House Property; or

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  • Income from Other Sources (including Winnings from Lottery and Income from Race Horses).

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(Total income from the above should be more than Rs 50 Lakhs)

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  • If you are an Individual Director in a company

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  • If you have had investments in unlisted equity shares at any time during the financial year

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  • Being a resident not ordinarily resident (RNOR) and non-resident

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  • Income from Capital Gains; or

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  • Foreign Assets/Foreign income

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  • Agricultural income more than Rs 5,000

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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.

Who cannot use this Return Form

This Return Form should not be used by an individual whose total income for the AY 2021-22 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 the ITR-2 form.

ITR-3

The Current ITR3 Form is to be used by an individual or a Hindu Undivided Family who have income from proprietary business or are carrying on profession. The persons having income from the following sources are eligible to file ITR 3 :

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  • Carrying on a business or profession

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  • If you are an Individual Director in a company

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  • If you have had investments in unlisted equity shares at any time during the financial year

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  • Return may include income from House property, Salary/Pension and Income from other sources

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  • Income of a person as a partnert in the firm

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 include:

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  • Business income according to the presumptive income scheme under section 44AD or 44AE

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  • Professional income according to presumptive income scheme under section 44ADA

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  •  Income from salary or pension up to Rs.50 lakh

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  • Income from one house property, not more than Rs.50 lakh (excluding the amount of brought forward loss or loss to be carried forward)

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  • Income from other sources having income not more than Rs.50 Lakh (excluding income from lottery and race-horses )

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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.

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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

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  • Having income from more than one house property

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  • If you have any brought forward loss or loss to be carried forward under any head of income

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  • Owning any foreign asset

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  • If you have signing authority in any account located outside India

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  • Having income from any source outside India

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  • If you are a Director in a company

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  • If you have had investments in unlisted equity shares at any time during the financial year

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  • Being a resident not ordinarily resident (RNOR) and non-resident

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  • Having foreign assets or foreign income

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  • 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.

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.

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.

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).

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  • 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.

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  • 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.

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  • 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.

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  • Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish return of income or loss under any other provision of this section.

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  • Return under section 139(4E) must be filed by every business trust which is not required to furnish return of income or loss under any other provisions of this section.

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  • Return under section 139(4F) must be filed by any investment fund referred to in section 115UB. It is not required to furnish return of income or loss under any other provisions of this section.

Latest Updates

Latest Update:
CBDT has issued a circular on 9th Sep 21 extending the timelines for certain direct tax compliances for AY 2021-22.
1. ITR filing due date extension:
i) ITR filing by taxpayers not covered under audit is extended from 30th Sep 21 to 31st Dec 21
ii)  ITR filing for tax audit cases is extended to 15th Feb 22 
iii) ITR filing for transfer pricing is extended to 28th Feb 22
iv) ITR filing of belated or revised return for FY 20-21 is extended from 31st Dec 21 to 31st March 22

2. Furnishing audit report:
i) Due date to furnish the audit report is extended to 15th Jan 22
ii) Due date to furnish the audit report for transfer pricing cases is extended to 31st Jan 22

CBDT has notified all the Income Tax Return Forms (ITR Forms) for the AY 2021-22 with minimum changes in ITR Form 1 to ITR Form 7.
IT department has introduced JSON utility and discontinued Excel and Java version of utilities from the AY 2021-22.

Timelines for Partnership Firm Registration

The partnership firm registration process takes approximately 10 days, subject to departmental approval and reverts from the respective department.

Checklist for Partnership Firm Registration

  • Drafting of Partnership Deed.

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  • Minimum two members as partners.

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  • Maximum of equal to or less than twenty partners.

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  • Selection of appropriate name.

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  • Principal Place of business.

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  • PAN card and bank account of the firm.

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