*******Income Tax Return: Which ITR Form to choose? Simply check your sources of income | The Financial Express

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While there are many conditions involved in deciding a Form for filing return, the main indicators are however the sources of income.

tax, income tax, income tax return, ITR, income tax return filing, ITR filing, ITR Forms, which ITR Form to choose, ITR-1, ITR-2, ITR-3, ITR-4, salary, pension, income from other sources, business, profession, presumptive incomeAs there are a number of ITR Forms available for the taxpayers to choose, one may get confused which Form to select for filing of his/her return of income.

With the original due date of July 31 for filing of Income Tax Return (ITR) is approaching, taxpayers need to file their return by the month end, unless extended further, to avoid penalties and paying additional interest on tax payable, if any, and to enjoy many other benefits.

As there are a number of ITR Forms available for the taxpayers to choose, one may get confused which Form to select for filing of his/her return of income.

While there are many conditions involved in deciding a Form for filing return, the main indicators are however the sources of income.

Here is how to select a suitable ITR Form depending on your sources of income:

ITR-1 (Sahaj)

ITR1 Form Sahaj is applicable for individuals being residents (Residents and Ordinarily Residents) having total income up to Rs 50 lakh from the following sources:

  • Salary / Pension
  • Up to one House Property
  • Income from Other Sources such as Interest, Family Pension, Dividend etc.
  • Agricultural Income up to Rs 5,000

ITR-2

There is no earning limit prescribed for ITR-2 and the Form is suitable for the taxpayers having following incomes:

  • Salary / Pension
  • One or more House Properties
  • Income from Other Sources such as Interest, Family Pension, Dividend etc.
  • Capital Gains – both short-term and long-term gains including gains from intraday trade and Future & Options (F&O)
  • Agricultural Income of over Rs 5,000

ITR-3

Along with the above sources of income, ITR-3 may be used by the assessees having Income from Business and Profession.

  • Salary / Pension without any limit
  • One or more House Properties
  • Income from Other Sources such as Interest, Family Pension, Dividend etc.
  • Capital Gains – both short-term and long-term gains including gains from intraday trade and Future & Options (F&O)
  • Agricultural Income of over Rs 5,000
  • Income form Business and Profession

ITR-4 (Sugam)

Taxpayers fulfilling the conditions of ITR-1, but having Income from Presumptive Business and/or Profession may use ITR-4.

  • Salary / Pension
  • Up to one House Property
  • Income from Other Sources such as Interest, Family Pension, Dividend etc.
  • Agricultural Income up to Rs 5,000
  • Income from Presumptive Business or Profession

In Presumptive Business and Profession, the owners of small businesses and professionals don’t really need to estimate actual income by deducting expenses from revenue, but can simply take a percentage of the total revenue as presumptive income and pay tax on that. Presumptive Business and Profession include legal, medical, engineering or architectural, accountancy, technical consultancy, interior decoration or any other profession as notified by CBDT, but exclude life insurance agents, commission of any kind and running the business of plying, hiring or leasing goods carriages.

Apart from the earning sources, some instances when ITR-1 cannot be filed by any taxpayer include:

  • Taxpayer who is a Director in a company,
  • Taxpayer who has held any unlisted equity shares at any time during the previous year,
  • Taxpayer having any asset (including financial interest in any entity) located outside India,
  • Taxpayer having signing authority in any account located outside India,
  • Taxpayer having income from any source outside India,
  • Taxpayer being a person in whose case tax has been deducted u/s 194N of the Income Tax Act (“IT Act”) for excess cash withdrawal,
  • Taxpayer being a person in whose case payment or deduction of tax has been deferred on ESOP received from employer being an eligible startup,
  • Taxpayer who has any brought forward loss or loss to be carried forward under any head of income,
  • Taxpayer who is “Resident and not ordinarily resident” or “Non-resident”,
  • Taxpayer having any other income (other than eligible income) such as Business income, capital gains, income from more than one House property, etc.
  • Taxpayer claiming deduction u/s 57 for Income from Other sources, other than deduction pertaining to Family Pension,
  • Taxpayer claiming tax credit / relief under section 90 or section 91,
  • Taxpayer claiming credit of tax deducted at source in the hands of any other person,
  • Taxpayer having ‘Income from Other Sources’ taxable at special rates for instance, Lottery Winnings,
  • Taxpayer having unexplained income taxable u/s 115BBE
  • Taxpayer having any income to be apportioned between spouse as governed by Portuguese Civil Code in accordance with provisions of section 5A

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