Which ITR To File?

ITR file refers to an Income Tax Return file used in India for filing taxes, containing financial information for assessment.

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What Is An Income Tax Return?

ITR is a form wherein taxpayers submit reports on their income earned and the tax payable to the income tax agency. The Department has informed 7 different ways, i.e. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7. Any taxpayer must file an ITR on or about the stated deadline. The acceptability of the ITR forms differs based on the origin of the taxpayer’s income, the sum of the income received and the classification of the taxpayer belonging to the individuals, the HUF, the business, etc.

The deadline of filing the ITR for AY 2020-21 (FY 2019-20) is postponed to 31/12/2020. The deadline for tax audits and TP instances is 31/1/2021.

Who should file an Income Tax Return?

ITR-File-Docuemnts
  1. If your annual income is more than – 

  • If you are an individual below 60 years old and earns more than 2.5 lakhs
  • If you are an individual above 60 years but below 80 years old and earns more than 3 lakhs
  • If you are an individual above 80 years old and earns more than 5 lakhs

  1. If any individual has more than one stream of revenue, such as house ownership, capital gains, etc.
  2. If you’d like to obtain a reimbursement of income tax from the department.
  3. If you received or invested in overseas assets during the fiscal year.
  4. If you would like to apply for a visa or a loan, please.
  5. If the taxpayer is a corporation or a company, regardless of benefit or loss.

Which ITR Should I file?

For FY 2020-21, the below image will enable you to find out what form of ITR is available to you.

ITR-1
ITR-2
ITR-3
ITR-4
ITR-5
ITR-6
ITR-7

ITR-1 (also know as SAHAJ)

This Return Form is for an Indian citizen whose total income is included in the 2020-21 AY.

Income from –

    • Salary/ Pension
    • One House property (Except situations where the loss from past years is carried forward)
    • Other Sources (Except Lottery Winning and Race Horses Profits)
    • Agriculture up to 5000/-

Documents-ITR-to-file

Who should not use ITR-1

  • Total revenues of more than Rs 50 lakh.
  • Agricultural income of greater than Rs 5000.
  • If you have capital gains that are taxable.
  • If you have business or professional profits.
  • Profits from more than one property in a building.
  • If you’re a business owner, you’re a company boss.
  • If at any point during the FY, you had investments in unregistered equity shares. 
  • Owning properties (such as financial interest in any organisation located outside Indian territory) if you are a citizen of any account situated beyond India territory, as well as the signing authority.
  • If you are a non-ordinarily resident (RNOR) or non-resident.
  • Having foreign assets or foreign sales.
  • Where you are taxable on the wages of another person for which tax is subtracted from the other person’s hands.

Read - In-depth guide on ITR - 1

ITR-2

ITR 2 is for an individual or a Hindu Undivided Family (HUF) whose income for AY 2020-21 includes profits from :

  • Salary/Pension.
  • House Property.
  • Other sources (along with lottery winnings and racehorse revenue). 

Total revenue has to be greater than Rs 50 Lakhs from the above.

  • If you are the only director in a company.
  • If at any point mostly during FY, you had investments in non – listed equity shares.
  • Being a non-ordinary citizen (RNOR) and a non-resident. 
  • Capital Gains income.
  • Foreign income (including income from foreign assets).
  • More than Rs 5,000 in agricultural revenue.

In addition, in a situation in which another person’s revenue, including such one’s spouse, child, etc., is to be clubbed with the assessee’s income, this Return Form could be used where this income falls into either of the aforementioned groups.

Who cannot use it

A person whose total revenue for the AY 2020-21 includes Business or Profession Income shouldn’t be using this Return Form.

You will need to use ITR-3 or ITR-4 to declare these forms of profits.

Read - In-depth guide on ITR - 2

ITR-3

The Present ITR3 Form is to be filed by an individual or a Hindu Undivided Family who are working on a profession or income from a proprietary company. Individuals with earnings from the below sources are entitled to file ITR 3:

  • Handing on a business or career
  • If you are the only director in a corporation
  • If at any period mostly during FY you had investments in unregistered equity shares. 
  • House property revenue, salary/pension and earnings from other sources can be included in the return.
  • The income of an individual who is a partner in any organisation

Read - In-depth guide on ITR - 3

ITR-4 (Also known as Sugam)

The new ITR 4 refers to individuals and HUFs, partnership companies (other than LLPs) that have income from a business or occupation as residents. It also includes those who, under Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act, had applied for a presumed income policy. If the revenue of the company crosses Rs 2 crore, ITR-3 would have to be submitted by the taxpayer.

Who should not use ITR 4 Form

  • If your overall revenue is over Rs 50 lakh,
  • Profits from even more than one property in a building.
  • When you have some forward deficit or loss placed under any head of revenue to be taken forward.
  • Any international asset holding.
  • If you have a signature authority based outside of India in any account.
  • Getting any source of income beyond Indian territory.
  • If you are the only director in a company.
  • If at some point mostly during the financial year, you had holdings in unregistered equity shares.
  • Being a non-ordinary citizen (RNOR) and a non-resident.
  • Getting foreign reserves or foreign sales.
  • Where you are taxable on the wages of another individual on whom payment is withheld from the other person’s hands.

Read - In-depth guide on ITR - 4

ITR-5

ITR 5 is for –

  • Firms
  • LLPs (Limited Liability Partnership)
  • AOPs (Association of Persons)
  • BOIs (Body of Individuals), 
  • Artificial Juridical Person (AJP)
  • Estate of deceased, 
  • Estate of insolvent, 
  • Business trust and investment fund.

Read - In-depth guide on ITR - 5

ITR-6

This return shall be submitted digitally only for entities other than companies seeking an exception within section 11 (Income from land owned for charitable or religious purposes).

Read - In-depth guide on ITR - 6

ITR-7

For individuals, such as firms expected to supply returns pursuant to Section 139(4A) or Section 139(4B) or Section 139(4C) or Section 139(4D) or Section 139(4E) or Section 139(4F)

  • Returns pursuant to section 139(4A) are necessary to be submitted by any person earning income arising from property held under trust or other legal duty solely for charitable or religious motives.
  • Returns pursuant to section 139(4B) are required to be submitted by a political party if, without lending effect to the provisions of section 139A, the overall income reaches the permissible sum which is not subject to income tax.
  • Returns under section 139(4C) must be submitted by all.
  • Association for scientific research;
  • News Agency
  • The association or institution referred to in point (23A) of section 10;
  • An institution referring to in section 10(23B);
  • Fund or college or university or other institution of education, or other hospital or other organization of medicine.
  • Returns under section 139(4D) are required to be submitted by any university, college or other entity which, under any other clause of this section, is not necessary to supply returns on profits or losses.
  • Any corporate trust that is not necessary to furnish a return on profits or loss under any provisions of this act shall file a return pursuant to Section 139(4E).
  • Any investment fund specified in section 115UB shall file a return pursuant to section 139(4F). It is not necessary to include, under any terms of this act, a refund on gain or loss.
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Read - In-depth guide on ITR - 7