Choosing the Right ITR Form for FY 2024-25

Understanding Income Tax Returns (ITR)

An Income Tax Return (ITR) is the prescribed format in which taxpayers submit information about their earned income and applicable tax liabilities to the Income Tax Department. It is mandatory to complete this filing before the annual deadline. There are seven distinct ITR forms (ITR-1 through ITR-7). Selecting the appropriate form is determined by various criteria, including the source of income, total income volume, and the taxpayer’s classification (e.g., individual, Hindu Undivided Family, or corporation).

Overview of ITR Forms

The specific applicability of each form is detailed below.

ITR-1 (Sahaj)

Eligibility for ITR-1

This form is intended for resident individuals who meet the following criteria:

• Total income is ₹50 lakh or less.
• Income is derived from Salary or Pension.
• Income is derived from a single House Property (excluding cases with brought-forward losses).
• Income comes from Other Sources (excluding lottery winnings or racehorse income).
• Long-term capital gains under Section 112A do not exceed ₹1.25 lakh.
• Agricultural income is up to ₹5,000.

Exclusions for ITR-1

Individuals cannot use this form if they:

• Have a total income surpassing ₹50 lakh.
• Earn agricultural income over ₹5,000.
• Have taxable capital gains (other than the specific 112A exception).
• Earn income from a business or profession.
• Derive income from more than one house property.
• Hold the position of Director in a company.
• Held unlisted equity shares during the financial year.
• Own foreign assets or have signing authority in foreign accounts.
• Are Non-Residents (NRI) or Resident but Not Ordinarily Resident (RNOR).
• Have tax deducted under Section 194N.
• Have deferred tax payments on ESOPs.
• Need to carry forward or bring forward losses.

ITR-2

Eligibility for ITR-2

This form is suitable for individuals or HUFs who do not have income from a business or profession but meet other criteria:

• Income from Salary/Pension.
• Income from House Property (multiple properties allowed).
• Income from Other Sources (including lottery/racehorses).
• Directors of companies.
• Holders of unlisted equity shares.
• NRIs and RNORs.
• Capital Gains income.
• Foreign income or assets.
• Agricultural income exceeding ₹5,000.
• Deferred tax on ESOPs.

It is also used when clubbing income (e.g., spouse or child) falls into these categories. Total income can exceed ₹50 lakh.

Exclusions for ITR-2

Taxpayers who earn income specifically from a Business or Profession cannot utilize ITR-2.

ITR-3

Eligibility for ITR-3

This form is designed for Individuals and HUFs who:

• Earn income from a Business or Profession (including both audit and presumptive cases).
• Held investments in unlisted equity shares.
• Are partners in a firm.
• Also have income from Salary, Pension, House Property, or Other Sources.

Exclusions for ITR-3

• Companies.
• Charitable trusts.
• Partnership firms, Associations of Persons (AOPs), and Body of Individuals (BOIs).

Essentially, Individuals or HUFs ineligible for ITR-1, ITR-2, or ITR-4 must file ITR-3.

ITR-4 (Sugam)

ITR-4 applies to Individuals, HUFs, and Firms (excluding LLPs) opting for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE.

Eligibility for ITR-4

• Resident individuals.
• Total income does not exceed ₹50 lakh.
• Business and professional income calculated on a presumptive basis.
• Income from salary/pension.
• Income from one house property.
• Income from other sources (excluding lottery/racehorses).

Exclusions for ITR-4

• Total income exceeding ₹50 lakh.
• Income from multiple house properties.
• Ownership of foreign assets or foreign income.
• Directors of companies.
• Investors in unlisted equity shares.
• NRIs and RNORs.
• Deferment of tax on ESOPs.
• Brought forward or carried forward losses.
• Business turnover exceeding ₹2 crore (requires ITR-3).

ITR-5

Eligibility for ITR-5

This form is applicable to entities such as:

• Partnership firms.
• Limited Liability Partnerships (LLPs).
• Associations of Persons (AOPs).
• Bodies of Individuals (BOIs).
• Artificial Juridical Persons.

Exclusions for ITR-5

• Individuals.
• HUFs.
• Companies.
• Entities filing ITR-7.

ITR-6

Eligibility for ITR-6

This form is exclusively for companies.

Exclusions for ITR-6

Companies claiming exemptions under Section 11 (income from property held for charitable/religious purposes) cannot use this form.

ITR-7

ITR-7 is for persons and entities required to file returns under Section 139(4A) through 139(4F). This largely covers:

• Charitable or religious trusts.
• Political parties.
• Scientific research associations.
• News agencies.
• Universities, colleges, and medical institutions.
• Investment funds and business trusts.

Summary of ITR Form Applicability

Official PDF Downloads for FY 2024-25

Essential Documents for Filing

Form 16

Issued by employers, Form 16 is a certificate detailing the salary paid and the tax deducted at source (TDS). Part A covers TDS details, while Part B outlines salary breakdown and deductions.

Form 26AS

This is a consolidated statement showing all taxes deducted on your behalf (TDS), taxes collected (TCS), and advance tax paid. It effectively acts as a tax passbook.

Annual Information Statement (AIS)

A comprehensive statement that expands on Form 26AS by including details of high-value transactions, interest income, dividends, mutual fund transactions, and stock market trades.