Individuals and businesses in India can submit their income tax returns (ITR) using one of six forms provided by the Income Tax Department. It is essential to select the appropriate form to avoid a defective return declaration. The individual’s income and taxpayer category determine which form to choose.
Indian citizens with annual incomes of up to Rs 50 lakh from salary, family pension, residential property, or up to Rs 5,000 from agriculture are eligible to file the ITR-1. This does not include earnings from the racetrack or lottery. However, this form cannot be completed by directors of a company or shareholders of an unlisted company.
ITR-2 is for Hindu Undivided Families (HUFs) and individuals who earn more than Rs 50 lakh annually but do not make any business profits. It necessitates information on multiple residential properties, a capital gain or loss on an investment, dividend income exceeding Rs 10 lakh, and agricultural income exceeding Rs 5,000. If the provident fund is receiving interest, the form must also be filled out.
ITR-3 is for people and HUFs procuring from the benefits of a business. All ITR-1 and ITR-2 income categories must be included on this form. A separate ITR form must be completed by a partner in a company. If there is income from interest or dividends, capital gain from the sale of shares or property, or both, the same form must be completed.
ITR-4, otherwise called Sugam, is for people, HUFs, and organizations other than Restricted Obligation Associations whose complete pay is more than Rs 50 lakh for each annum and who are procuring from sources like segment 44AD, 44ADA, or 44AE. Directors of any company, investors in equity shares, and individuals who earn more than Rs 5,000 from agriculture are ineligible for this benefit.
Cooperative societies, LLP companies, associations of people, bodies of people, artificial juridical persons, and local authorities are all eligible to use ITR-5.
ITR-6 is for businesses that have not claimed exemption under section 11, which provides tax exemption for charitable or charitable work-related income from trust property.
When filing an ITR, it is critical to select the appropriate form; otherwise, the Income Tax Department may declare the return to be defective. Citizens can keep away from disarray via cautiously surveying their pay and expense obligation and picking the proper structure appropriately. Individuals and businesses should begin preparing to file their ITRs in advance to avoid rushes at the last minute.
