Know How To Choose the Right ITR Form for FY 2023-24 (AY 2024-25)
Filing your Income Tax Return (ITR) correctly is crucial for complying with tax regulations and avoiding penalties. One common mistake is selecting the wrong ITR form, which can lead to complications and delays. In this post, we’ll guide you through the various ITR forms available for the financial year 2023-24 (assessment year 2024-25) and help you determine which one applies to your specific situation.
Understanding ITR Forms
The Income Tax Department of India has prescribed different ITR forms for different types of taxpayers and income situations. Let’s break down each form and its applicability.
ITR-1: Sahaj Form
Who Can File:
- Resident individuals with a total income up to ₹50 lakhs.
- Income sources can include:
- Salary or pension
- One house property (excluding cases where there is a brought forward loss or loss to be carried forward)
- Income from other sources (excluding winnings from lottery and income from racehorses)
- Agricultural income up to ₹5,000
Who Cannot File:
- Individuals with income exceeding ₹50 lakhs.
- Those with income from more than one house property.
- Individuals who have capital gains.
- Those who hold directorship in a company or hold unlisted equity shares.
ITR-2: For Individuals and HUFs Not Having Income from Business or Profession
Who Can File:
- Individuals and Hindu Undivided Families (HUFs) with income from:
- More than one house property
- Capital gains
- Foreign assets or income
- Agricultural income exceeding ₹5,000
- Directors in companies.
- Those holding unlisted equity shares.
Who Cannot File:
- Individuals with income from business or profession (other than as mentioned above).
ITR-3: For Individuals and HUFs Having Income from a Proprietary Business or Profession
Who Can File:
- Individuals and HUFs with income from:
- Business or profession
- As a partner in a firm
- Everything mentioned in ITR-2
- Presumptive income under Section 44AD/44AE exceeding ₹50 lakhs.
ITR-4: Sugam Form
Who Can File:
- Individuals, HUFs, and firms (other than LLP) with presumptive income under Sections 44AD, 44ADA, or 44AE.
- Income up to ₹50 lakhs.
Who Cannot File:
- Individuals with income exceeding ₹50 lakhs.
- Directors in companies or those holding unlisted equity shares.
- Individuals with income from more than one house property, capital gains, or foreign sources.
ITR-5: For Firms, LLPs, AOPs, BOIs, and Other Persons
Who Can File:
- Firms including Limited Liability Partnerships (LLPs).
- Associations of Persons (AOPs) and Body of Individuals (BOIs).
- Local authorities.
- Artificial judicial persons.
ITR-6: For Companies Other Than Those Claiming Exemption Under Section 11
Who Can File:
- Companies except those claiming exemption under Section 11 (income from property held for charitable or religious purposes).
ITR-7: For Persons Including Companies Required to Furnish Return Under Sections 139(4A), 139(4B), 139(4C), 139(4D), 139(4E), or 139(4F)
Who Can File:
- Entities including:
- Trusts, political parties, research associations, news agencies, institutions, universities, colleges, or other entities referred to in the mentioned sections.
Choosing the Correct ITR Form
Here’s a step-by-step guide to help you choose the correct ITR form:
- Identify Your Income Sources:
- List all your income sources, such as salary, house property, business income, capital gains, foreign income, etc.
- Check Your Residency Status:
- Determine if you are a resident, non-resident, or resident but not ordinarily resident (RNOR).
- Match with the ITR Forms:
- Use the descriptions above to match your income sources and residency status with the appropriate ITR form.
Examples:
- Example 1: If you are a salaried employee with one house property, income from other sources, and your total income is less than ₹50 lakhs, you should file ITR-1.
- Example 2: If you have income from salary, capital gains from the sale of shares, and own two house properties, you should file ITR-2.
- Example 3: If you run a small business as a sole proprietor and your total income exceeds ₹50 lakhs, you should file ITR-3.
- Example 4: If you are an individual with presumptive income from a small business under Section 44AD and your total income does not exceed ₹50 lakhs, you should file ITR-4.
Conclusion
Filing the correct ITR form is essential for a smooth and hassle-free tax filing process. Understanding the different forms and their applicability can help you avoid errors and potential penalties. If you are unsure which form to use, it is always advisable to consult with a tax professional.
By following this guide, you can ensure that you choose the right ITR form for FY 2023-24 (AY 2024-25), making your tax filing experience seamless and accurate. Happy filing!
