Types of ITR Forms & Which ITR to File?

Types of ITR Form and What type of ITR applies to me ?

Updated on 15 Mar, 2024

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Whenever one talks about income, paying taxes and filing income tax returns are important components.

Income Tax Return or ITR can be filed with the help of a form in which one can disclose their earned income and the resulting applicable taxes to the Income Tax Department. The different types of ITR forms are released under the Income Tax Act 1961.

The Income Tax Department releases different types of ITR forms with specific processes to be followed. Here is a brief explanation of the type of ITR forms and their use cases or applicability to different individual categories.

What are various types of ITR?

The Income Tax Department has notified seven different types of ITR forms that a taxpayer might want to know about. Currently, these forms are named ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7.

Which type of ITR needs to be filed depends on the taxpayer’s income sources, amount of income earned and the taxpayer’s category.

Here is a brief explanation of different ITR types.

1) ITR 1:

The ITR 1 form is also known as Sahaj and is the most common form used in India. This type of ITR filing applies to resident individuals with income less than equal to ₹50 lacs annually. This would also apply to individuals filing ITR in Assessment Year (AY) 2023-24. The ITR filing includes an individual’s income from salary, pension, one-house property, other sources, and agricultural income not exceeding ₹5000. Here, income from one house property excludes losses brought forward from the previous years. Similarly, income from other sources excludes income or winning from racehorses and lotteries.

2) ITR 2:

This type of ITR applies to individuals and Hindu Undivided Families (HUF) with an annual income of more than ₹50 lacs. Apart from income from salary, pension and other sources like ITR 1, the ITR-2 applies for more than one house/property, unlisted equities, foreign income, capital gains, agricultural income (more than ₹5000), signing authority or assets located outside India, ESOP deferred payment or tax deduction and more. This type of ITR form is applicable to Individual company directors and Residents, Net Ordinary Residents (RNOR), and non-residents. Individuals with tax deductions under Section 194N and those incurred brought forward or to be carried forward loss (under any income head).

3) ITR 3:

This type of ITR filing applies to individuals and HUF with professional or proprietary business income, income as a partner in a firm and individual director. ITR 3 also applies to unlisted equity share investment, returns on house/property, salary/pension and other sources of income.

4) ITR 4:

ITR 4 is commonly known as ‘Sugam’. This type of ITR applies to individuals, HUF and partnership firms (excluding LLPs) with specific components in their total income. These are presumptive business income under Section 44AD/44AE, presumptive professional income under Section 44ADA, salary/pension income up to ₹50 lacs, income from houses (up to ₹50 lacs) and freelancer income up to ₹50 lacs in a year. ITR 4 is not applicable to brought forward or to be carried forward loss. It also excludes gross receipts and gross turnover on owned commercial vehicles’ presumptive income component up to a certain limit.

5) ITR 5:

ITR 5 is for LLPs, AoPs (Association of Persons), Artificial Juridical Persons (AJP), Body of Individuals (BoIs), estates of insolvent or deceased, investment funds and business trusts.

6) ITR 6:

Those who earn income from property which is held for religious or charitable purposes can claim tax exemption by filing ITR 6. It is mandatory to file ITR 6 electronically.

7) ITR 7:

This type of ITR is for news agencies, scientific research institutions, business trusts, medical institutions, hospitals, and educational institutions like colleges and universities. Institutions and associations referred to under Section 10(23A and Section 10(23B) also have to fill out the ITR 7 form.

Conclusion

Different types of ITR forms serve different purposes and are applicable to different types of assessments. At present, these types of ITR filing forms are divided into seven types, each having a diverse set of use cases or applications.