Taxpayers must pick their Income Tax Return (ITR) form based on their source of income and residential status. This form helps report income and file taxes with the Income Tax Department.
For FY 2023-24 (AY 2024-25) ITR filing, the Central Board of Direct Taxes (CBDT) released seven forms in April. These forms might confuse taxpayers, who are trying to determine which form applies to them.
This article explains ITR forms 1-4, which are most commonly used, and explain eligibility and non-eligibility criteria for filing each form.
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ITR-1 (Sahaj)
Eligibility Criteria:
ITR-1 can be filed by a resident and ordinarily, a resident individual whose total income from the following sources is up to Rs 50 lakh:
– Income from Salary/Pension
– Income from One House Property
– Income from Other Sources
Non-Eligibility Criteria:
ITR-1 cannot be used by individuals who:
– Have any assets (including financial interests in any entity) located outside India
– Have income from any source outside India
– Have any brought forward loss or loss to be carried forward under any head of income
– Receive income from Business and Profession or Capital Gains
ITR-2
Eligibility Criteria:
ITR-2 can be filed by individuals or Hindu Undivided Families (HUFs) who:
– Do not have earnings under the head “Profits and Gains of Business or Profession.”
– Are not eligible to file ITR-1.
Non-Eligibility Criteria:
ITR-2 cannot be used by individuals who receive income in the form of interest, salary, bonus, commission, or payment from a partnership firm.
ITR-3
Eligibility Criteria:
ITR-3 is for individuals or Hindu Undivided Families (HUFs) who:
– Have income under the head “Profits and Gains of Business or Profession.”
– Have income in the form of interest, salary, bonus, commission, or remuneration received from a partnership firm.
Non-Eligibility Criteria:
ITR-3 cannot be used by individuals who do not have income under the head “Profits and Gains of Business or Profession.”
ITR-4 (Sugam)
Eligibility Criteria:
ITR-4 is applicable for resident and ordinarily resident individuals or HUFs having:
– Total income from profession up to Rs 50 lakhs (Rs 75 lakhs in specified cases).
– Earnings from business up to Rs 2 crores (Rs 3 crores in specified cases) as follows:
- Income from business where such income is computed on a presumptive basis under section 44AD/44AE of the IT Act.
- Income from a profession where such income is computed on a presumptive basis under section 44ADA of the IT Act.
- Earnings from salary/pension, one house property, and other sources.
Non-Eligibility Criteria:
ITR-4 cannot be used by individuals who:
– Have any assets (including financial interests in any entity) located outside India.
– Have income from any source outside India.
– Anyone who has brought forward losses or has losses to be carried forward under any head of income
– Have income from other sources like winnings from the lottery.
– Have any claim of credit for tax deducted at source in the hands of any other person.
Note: Filing ITR-4 (Sugam) is not mandatory but is required if the taxpayer opts for presumptive taxation.
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