Income Tax Returns – ITR 1, ITR 2, ITR 3, ITR 4 – All you need to know

There are 7 different types of Income Tax Return Forms to be filed based on the eligibility of a person. It ranges from ITR 1 to ITR 7. Below we will see the eligibility for different Forms & links to detailed instructions for each of them.

Form – ITR 1 (Sahaj) Eligibility

This form is to be used by a resident whose total income for the respective financial year is under ₹50 Lakh. The earnings of a spouse or minor child can also be clubbed in this if it is eligible in the terms mentioned in this paragraph. To be eligible for Form 1 the income should be from the following sources –

1. Salary/Pension Income
2. One House Property Income
3. Income from Other Sources

This form cannot be used by a person, who –

1. Is a director in a company or holds unlisted equity shares
2. Holds any asset located outside India or has signing authority in overseas accounts or has overseas income
3. Generates any income from a business
4. Gets any sort of capital gains
5. Has income from more than one house property
6. Generates income from lottery, horse races or income taxable under 115BBDA or 115BBE
7. Has agricultural income greater than ₹5000
8. Is an RNOR(Resident not ordinarily resident) and non-resident

Form – ITR 2 – Eligibility

This form is to be used by a HUF(Hindu Undivided Family) or an individual who is not eligible to file Form 1 and who does not have any income from “Profits or Gains of Business/Profession”

Income source can be from –

1. Salary/Pension Income
2. House Property
3. Other Sources such as lottery winnings or race horses events
4. Directorship in a company
5. Investments in Unlisted Shares
6. Capital Gains
7. Foreign Assets/Foreign Income
8. Agricultural income > ₹ 5000

Form – ITR 3 – Eligibility

Form 3 is to be used by an individual or HUF who has income under “Profits/Gains of Business/Profession” and is not eligible for ITR 1 or ITR 2.

Income Source can be from –

1. A Business or a Profession
2. Individual Directorship in a Company
3. Investment in Unlisted Equity Shares
4. House Property, Salary and other sources as mentioned earlier
5. As a partner in a partnership firm

Form – ITR 4 (Sugam) – Eligibility

ITR 4 is to be used by an individual or HUF whose total income does not exceed ₹50 Lakhs and has income under following heads –

1. From businesses or profession where income can be computed on a presumptive basis under Section 44AE, Section 44AD & Section 44ADA*
2. Income from Salary/Pension
3. From One House Property or Other Sources

This form cannot be used by a person, who –

1. Has had profits from business/profession not computed under Sections 44AE, 44AD & 44ADA**
2. Has income from Capital Gains, more than one house property, other sources(lottery, horse betting etc.) & agricultural income in excess of ₹5,000
3. Has income to be allocated w.r.t Section 5A

Brief Summary of the Article

1. A salaried employee with no directorship or foreign income and a salary of <₹50 Lakhs should use ITR 1
2. A person with directorship, capital gains etc should use ITR 2
3. A person who has income from business or profession, or is a partner at a partnership firm should use ITR 3

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*Section 44AD – Gross Turnover up to ₹2 Crores, Section 44AE – Income from Goods Carriage < 10 Vehicles and Section 44ADA – Gross Receipt up to ₹50 Lakhs

**Speculative Business, Agency Business, Commission or Brokerage Business

Credits

https://www.incometaxindia.gov.in/pages/downloads/income-tax-return.aspx