How to Select Income Tax Return ITR

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Income Tax Return ITR

Income tax return ITR has undergone changes from being only 1 form named ‘Saral’ to 8 ITR forms. It has become easy for professional but confusing for general users. Lot of tutorials and information material is available online explaining the types of forms but most of them explain it superficially leaving a chance of mistake in selecting correct ITR forms applicable to individuals and other entities.

Most issues arise with individuals who are having salary income as well as by those who are self-employed and have their own business.

This article will primarily focus on explaining how to choose correct ITR form as applicable to an individual and HUF and other entities as firm, companies and trust a separate article can be found elsewhere on this site.

S. No.

Source of income

Individual

Individual, HUF

ITR 1

ITR 2

ITR 3

ITR 4

ITR 4S

1

Income from Salary/Pension      ✔

2

Income from other sources(only interest income or family pension)      ✔

3

Income/Loss from other sources

4

Income/Loss from House property

5

Capital Gains/Loss on sale of investments/property

6

Partner in Partnership firm

7

Income from Proprietary business/profession

8

Income from presumptive business

 

Although the chart above is self-explanatory but still many a times a few points or information is missed out due to which wrong selection of ITR is made by individuals. Lets’ explain them in detail, when and which ITR shall be selected.

ITR 1: Income from Salary/pension + Interest Income* or family pension

Point to remember:

– *Interest Income should only be interest from savings bank and no other interest, like interest on FD, etc.

– In short, it can be said that the individual is employed and has salary income only or for retired person who have retired from active service and are earning pension income only.

ITR 2: Income as in ITR 1 + Income/Loss from other sources + Income/Loss from House property + Capital Gains/Loss on sale of investments/property

Point to remember:

– *Individuals with house property income/loss or housing loan must consider filing ITR 2.

– *NRI’s who wish to file ITR in India although they do not have any income received in and accrued from India, shall also file ITR 2.

ITR 3: Income as in ITR 1 and 2 + Partner in Partnership firm

– *It also means that if you do not have any other source of income but you are a partner in a firm then too you will have to file ITR 3.

ITR 4: Income as in ITR 1, 2 and 3 + Income from Proprietary business/profession

Point to remember:

– *Any person who carries on his own business/profession or say is a proprietor then he will have to file ITR 4.

ITR 4S: Income from Salary/Pension + Income from other sources (only interest income or family pension) + Income/Loss from other sources + Income/Loss from House property + Income from presumptive business

Point to remember:

– *This return is applicable to those who claim or avail the scheme of presumptive income.

Presumptive Income scheme is offered to small businessmen who do not want to maintain books of accounts required under Section 44AA, but instead pay tax on fixed amount of profit presumed to be earned from the business engaged.

Sections related to presumptive income are Section 44AE, 44AF, 44AD.

To select the correct ITR, the gist is in the points to remember. Before selecting the return, the chart must be referred to but in case any doubt arises, the points to remember must also be referred simultaneously for correct selection, preparation and filing.

Leave your comments if still any doubt exists as to selection of the return.