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How To Select The Relevant ITR Form
Written by Gagandeep Arora - Printed on - Date - 9th June 2022
The tax imposed by the government on the income of individuals, Hindu Undivided families, companies, firms, LLP, associations of persons, the body of individuals, local authority, and any other artificial juridical person. The tax liability for an assessee depends on the income earned by him in the financial year. Taxpayers file their information according to the income earned and tax applicable to the income tax department via a form known as the Income Tax Return form famously known as” ITR Form”. The Income-tax authorities have issued seven forms as of now Form1, Form2, Form3, Form4, Form5, Form6, and Form7. The applicability to respective forms varies accordingly to the type of assessee and the income earned. It is mandatory for an individual who has an income to file an ITR Form. It is time to understand in detail about these forms. .
Select the Right ITR Form
It is important to file your tax returns through an ITR Form. Let us see the applicability of different forms for different individuals. For easier tax compliance for the assessee, the authorities have distinguished the forms into different groups.
ITR1- Sahaj Form
A famous and a favourite section amongst the taxpayers as an investment in instruments mentioned in this section will result in a reduction in their tax liability. Schemes covered under this section are-
APPLICABILITY- Resident Individual
INCOME COVERED-
⚫ Earnings from salary/ pension
⚫ Income from one house property ( loss brought forward from previous years is not included)
⚫ Amounts earned from other sources ( any wins from lottery or racehorses are not included)
The important changes in the ITR FORM 1For The AY 2022-23
There are a few changes which have been implemented for the AY 2022-23 are-
⚫ An assessee can disclose income from retirement benefits accounts maintained in the notified country under section 89 A and claim relief, under the head ‘Salary’.
The pensioners need to select ‘Nature of employment.’( Central Government, State Government, Public sector units).
ITR2
APPLICABILITY- Individuals and HUF earning income other than income from ‘ profit and gains from business or profession’.
INCOME COVERED
⚫ Earnings from salary
⚫ Income from house property ( it can be more than one property)
⚫ Wins or losses from Capital gains/ loss on sale of investments/property ( both short term and long term)
⚫ Earnings from other sources ( including winning from the lottery, bets on race horses, and other legal means of gambling)
⚫ Foreign income
⚫ Agricultural income of more than Rs. 5000.
The total income from all these sources may exceed Rs. 50 lakh.
The Important Changes in The ITR Form 2 For AY2022-23
⚫ The Foreign Assets (Schedule FA)- For reference, the terminology “Accounting period “ has been replaced by “ Calendar year”, which means an assessee shall give all the details of all foreign assets held during the period 1.1.2021 to 31.12.2021. This change specifies the reporting period of the foreign assets.
⚫ Fifty thousand is allowed for senior citizen parents.
⚫ Medical check-ups are allowed as a deduction of up to five thousand.
⚫ A deduction up to fifty thousand, if any medical expenditure is incurred by the senior citizen or the expense is incurred for senior citizen parents provided they are not covered under any mediclaim policy. If an employer has paid the premium on behalf of the employee then also the premium paid is eligible for deduction.
ITR3
APPLICABILITY - Individual, HUF, Partner in a firm
INCOME COVERED-
⚫ An assessee earning from a business or profession
⚫ Individual director in a company
⚫ Earnings from investments in unlisted equity shares in a financial year.
⚫ Income from house property, salary/ pension and income from other sources.
⚫ Earnings because you are a partner in a firm.
ITR4
Applicability-
INCOME COVERED-
⚫ Business income about the Presumptive income under section 44AD and AE
⚫ Professional income about the Presumptive income under section 44ADA.
⚫ Salary or pension income up to Rs.50 lakh
⚫ Income from one house property is not more than Rs. 50 lakh not including the amount brought forward loss.
⚫ Income from other sources having income not more than Rs. 50 lakh not including income from lottery and horse racing.
⚫ An individual earning from any of the above said schemes and his income is not exceeding Rs. 50 lakhs.
ITR5
Applicability- Firms, Limited liability partnership, Association of Persons, Body of Individuals, Artificial Juridical person, Estate of deceased, Estate of Insolvent, Business Trust and Investment Funds
The Important Changes In The ITR 5 For The AY2022-23
⚫ The tax audit limit has been increased to Rs.10 crores where cash transactions are less than 5% of the total transactions.
⚫ Changes have been incorporated in the ITR Form to include the change made in the AY 2021-22 that is dividend is taxable in the hands of the receiver. TDS deductions for cash withdrawals under section 194 N are not allowed to be carried forward to subsequent years.
⚫ TDS deductions for cash withdrawals under section 194 N are not allowed to be carried forward to subsequent years.
ITR6
Applicability- Companies claiming exemption under section 11. This form is filed electronically only.
ITR7
Applicability- Trust
Income Covered-
⚫ If any property is held under trust or other legal obligation wholly for charitable purposes then a return is filed under section 139(4A)
⚫ If the total income exceeds the maximum limit without giving effect to the provisions of section 139A, then under section 139 (4B) a political party is required to file a return.
⚫ Assessees which are covered under section 139(4C)
1 Scientific research association
2 News agency
3 Association or institution referred to in section 10(23 A)
4 Institution referred in Section 10(23 B)
5 Fund, institution, university, educational institution, hospitals, and medical institutions.
⚫ Any university, college or institution which is not required to file a return under any other provisions of the act, is required to file a return under section 139(4D)
⚫ Every business trust which is not required to file a return under any other provisions of this section is required to file a return under section 139(4E).
⚫ Any investment fund referred to in section 115UB is required to file a return under section 139 (4F), if not required to furnish a return under any of the provisions of the act.
Conclusion- Knowledge of the ITR form is important Although to file return a person can take professional help but it is important to understand the ITR form you need to file your tax return in.
