We all know that ITR filing is the only way through which we can report our incomes and losses to the Income tax department. Under Income Tax Act, there are a total of 7 ITR forms available for filing tax returns. Out of which, only 4 ITR forms are applicable to Individuals.
In this article, let’s understand the applicability of these ITR forms under various circumstances and how to choose the right form.
Generally, each year depending on the nature of income & residential status, individuals have to choose the respective ITR form out of the given below ITR forms.
They are:
- ITR-1 (also known as SAHAJ)
- ITR-2
- ITR-3
- ITR-4 (also known as SUGAM)
ITR1
This form is only for Resident and Ordinary resident Individuals (other than those Not ordinarily resident) who is having the following incomes:
- Income from Salary / Pension
- Income from House Property (one property)
- Interest Income / Dividend / Family Pension
- Agricultural Income not more than Rs. 5,000
and Income from all the above sources should not be more than Rs. 50 Lakh
Also read: ITR1 is for whom? (A detailed article on ITR-1 applicability)
ITR2
This form is for Individuals & HUF who is having either or all of the following incomes:
- Income from Salary / Pension
- Income from House Property (one or more properties)
- Capital Gains
- Income from Other sources (including lottery income & gaming income)
This form can be used by Salaried, Pensioners, NRI’s and Directors of a company as well.
If you are having any other income other than business or professional income, then you can file ITR2.
Note: In case you sold any stock market investments i.e. either Stocks or Mutual Funds, then Capital Gains arising from such transactions have to be reported through ITR2 form.
ITR3
This form is for Individuals & HUF who is having either or all of the following incomes:
- Income from Salary / Pension
- Income from House Property
- Business Income / Professional Income*
- Capital Gains
- Income from Other sources
For any reason, if you are unable to file any other Form, then ITR3 is for you.
*Income arising from Intraday or F&O transactions will be considered as Business Income and hence such income has to be reported through ITR3 only.
ITR4
This form is for Individuals, HUF & Firms (other than LLPs) who are Residents and have either or all of the following incomes:
- Income from Salary / Pension
- Income from House Property (one property)
- Interest Income / Dividend / Family Pension
- Agricultural Income not more than Rs. 5,000 and
- Presumptive income from Business or Profession u/s 44AD, 44ADA & 44AE
Do remember, total income should not be more than Rs. 50 Lakh.
To put it in simple words, if you have all sources of income mentioned for ITR1 and want to declare your income under Presumptive Taxation (without the maintenance of accounts), then you may go for ITR4.
How to choose the correct ITR Form
At the end of each financial year, every individual has to determine their residential status and identify the nature of incomes earned by them during the relevant financial year.
These two factors are crucial to determine which ITR form is applicable for such an individual for that particular financial year.
The table given below gives some understanding of the ITR forms in a nutshell.
| ITR Form | Income from Salaries | House property income | Business/Professional Income | Capital Gains | Income from Other sources | Total Income |
| ITR1 | Yes | One property | – | – | Interest/Dividend/Family Pension | Upto Rs. 50 Lakh |
| ITR2 | Yes | Yes | – | Yes | Yes | NA |
| ITR3 | Yes | Yes | Yes | Yes | Yes | NA |
| ITR4 | Yes | One property | Presumptive Income | – | Interest/Dividend/Family Pension | Upto Rs. 50 Lakh |
Conclusion
It is a common misconception among many that ITR1 is sufficient for all their incomes. But each year one needs to check which form is right as per the nature of incomes or losses.
And do remember, every year we can file a different ITR form and hence ITR Form need not be the same across all years.
So please be careful in choosing the right ITR form, otherwise, your ITR will become defective and consequences of non-filing of ITR will follow.
Thank you for your time. In case you have any queries, please ask in the comments section.
