Deciding The Right ITR To File: Understanding Different ITR Forms For FY 2023-24 (AY 2024-25)

Understanding the correct Income Tax Return (ITR) form to file is crucial for taxpayers. This comprehensive guide will help you decipher the different types of ITR forms for the Financial Year (FY) 2023-24 (Assessment Year 2024-25).

ITR: A Brief Overview

ITR, an abbreviation for Income Tax Return, is a form that taxpayers use to provide information about their income and applicable taxes to the income tax department. Currently, the department has seven forms, namely ITR-1 to ITR-7, for different categories of taxpayers.

Why Filing ITR Is Important

Filing an ITR is not only a financial obligation but also has several benefits:

• To claim an income tax refund
• For visa or loan applications
• Mandatory for companies and firms, irrespective of profit or loss
• Necessary for carrying forward losses to the subsequent years

When Filing ITR Becomes Mandatory

Filing ITR becomes obligatory when your gross total income exceeds the basic exemption limit, which varies based on age groups. Additionally, it's mandatory under certain circumstances like high deposit values in bank accounts, large expenditure on foreign travel and more.

Understanding Different ITR Forms

The appropriate ITR form to file depends on the sources of income, the amount of income earned, and the category of the taxpayer.

ITR-1 OR SAHAJ

This form is applicable for a resident individual whose total income includes:

• Income from Salary/ Pension
• Income from One House Property
• Income from Other Sources
• Agricultural income up to Rs 5000

However, individuals with income exceeding Rs 50 lakh, agricultural income over Rs 5000, income from business or profession, multiple house properties, investments in unlisted equity shares, or any foreign income cannot use the ITR-1 form.

ITR-2

ITR-2 form is suitable for an individual or a Hindu Undivided Family (HUF) whose total income includes:

• Income from Salary/Pension
• Income from House Property
• Income from Other Sources
• Income from Capital Gains
• Agricultural income more than Rs 5,000
• Foreign income

This form, however, is not applicable for individuals with income from business or profession.

ITR-3

ITR-3 form is used by an individual or a Hindu Undivided Family engaged in a proprietary business or profession. It includes income from business/profession, house property, salary/pension, other sources, and a person's income as a firm partner.

ITR 4 or Sugam

This form is applicable for individuals, HUFs, and Partnership firms (other than LLPs) with income from:

• Presumptive Business Income
• Professional income according to presumptive income scheme
• Income from salary or pension up to Rs 50 lakh
• Income from one-house property
• Income from other sources up to Rs 50 Lakh

However, individuals with a total income exceeding Rs 50 lakh, income from multiple house properties, foreign assets/income, or investments in unlisted equity shares cannot use the ITR-4 form.

ITR-5

ITR-5 is for firms, LLPs, AOPs, BOIs, Artificial Juridical Person, Estate of deceased, Estate of insolvent, Business trust, and investment fund.

ITR-6

ITR-6 form is for companies not claiming exemption under section 11 (Income from property held for charitable or religious purposes). This form is to be filed electronically only.

ITR-7

ITR-7 is for persons required to furnish returns under multiple sections. It includes every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable, religious, or scientific research purposes.

Quick Reference Table for ITR Forms

For a quick decision on the right ITR form to file, refer to the following table.

Downloading ITR Forms

To download the ITR forms, click on the following links:

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

Filing the correct ITR form is crucial for accurate tax processing. Use this guide to understand the different types of ITR forms and file the appropriate one for FY 2023-24.