ITR filing is necessary, and selecting the appropriate form from the seven types of ITR Forms is crucial for accurate tax filing.
With the deadline to file income tax returns for the financial year 2023-24 nearing on July 31, taxpayers face the crucial task of selecting the correct form. The Income Tax Department issues seven different forms, each designed for specific taxpayer profiles and income sources. For first-time filers, choosing the right form can be confusing. If you're filing your income tax return (ITR) for the first time, here's a reference to help you choose the correct form to fill out.
Here are the 7 types of ITR Forms:
ITR Form 1
Form 1 is for Indian residents earning up to Rs 50 lakh per year. Salaried people frequently utilize it to submit returns, which include income from pay, pension, house property, and other sources. Agricultural income of up to Rs 5,000 is also included. However, if you are a company director, invest in unlisted firms, generate capital gains, have income from numerous homes, or have business income, you must file a separate form.
ITR Form 2
Form 2 is applicable if your annual income exceeds Rs 50 lakh. This form accommodates income from multiple residential properties, capital gains or losses on investments, dividend income exceeding Rs 10 lakh, and agricultural income above Rs 5000. Additionally, if you earn interest on PF, you should also use this form.
ITR Form-3
ITR-3 is intended for individuals and Hindu Undivided Families (HUFs) who work in proprietary enterprises or professions. It also applies whether you earn money via interest, wages, bonuses, capital gains, horse racing, the lottery, or renting out numerous properties. Freelancers should also fill out this form. In brief, individuals or HUFs that are ineligible to submit ITR-1, ITR-2, or ITR-4 should file ITR-3.
ITR Form 4
The ITR-4 applies to individuals, Hindu Undivided Families (HUFs), partnership firms (excluding LLPs), and professions (such as doctors or lawyers) who are residents with incomes ranging between Rs 50 lakh and Rs 2 crore. Freelancers with annual income exceeding Rs 50 lakh should also use this form.
ITR Form 5
ITR-5 applies to businesses, LLPs (Limited Liability Partnerships), AOPs (Associations of Persons), BOIs (Bodies of Individuals), Artificial Juridical Persons (AJPs), estates of deceased individuals, estates of insolvents, business trusts, and investment funds.
ITR Form 6
ITR-6 is the electronic filing form intended for companies, with the exception of those claiming income exemption under Section 11 related to religious or charitable properties.
ITR Form 7
ITR-7 is required for filing by entities such as companies under Section 139 of the Income Tax Act. This includes individuals with income from properties held under trust for charitable or religious purposes (Section 139(4A)), political parties exceeding tax-exempt income limits (Section 139(4B)), scientific research associations, news agencies, educational institutions, hospitals (Section 139(4C)), universities or colleges not covered under other provisions (Section 139(4D)), business trusts (Section 139(4E)), and investment funds (Section 139(4F). Filing must be done electronically for all eligible entities.