INCOME TAX RETURN & TYPE

 



Income Tax Return (ITR) and Its Types: A Complete Guide

Introduction

Filing an Income Tax Return (ITR) is a crucial responsibility for every taxpayer in India. Whether you are a salaried individual, a freelancer, or a business owner, you must file an ITR if your income crosses a certain threshold. Filing an ITR not only ensures compliance with tax laws but also helps in getting loans, claiming tax refunds, and establishing financial credibility.

Many people, however, find the process confusing—especially when it comes to choosing the right ITR form. In this blog, we will explain what an ITR is, why it is important, and the different types of ITR forms based on your income and profession.

What is an Income Tax Return (ITR)?

An Income Tax Return (ITR) is a document that taxpayers file with the Income Tax Department to declare their income, deductions, and taxes paid during a financial year. It helps the government track the income earned by individuals and businesses and ensures that they pay the correct amount of tax.

Who Should File an ITR?

Filing an ITR is mandatory if:

✅ Your annual income exceeds the basic exemption limit.
✅ You have assets or financial interests abroad.
✅ You have earned income from foreign sources.
✅ You have deposited more than ₹1 crore in a bank account.
✅ Your electricity bill exceeds ₹1 lakh in a year.
✅ Your total foreign travel expenses exceed ₹2 lakh.
✅ You want to claim a refund on excess TDS deducted.

Even if your income is below the taxable limit, filing an ITR is beneficial for obtaining loans, visas, and other financial transactions.


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Types of ITR Forms in India

The Income Tax Department has specified different ITR forms for different types of taxpayers. Choosing the correct ITR form is essential to avoid penalties and ensure smooth tax filing.

Here are the seven main types of ITR forms used in India:

1. ITR-1 (SAHAJ) – For Salaried Individuals

Who Should Use It?

  • Salaried individuals earning up to ₹50 lakh annually.

  • Pensioners.

  • Those with income from one house property.

  • Those earning interest from savings accounts, deposits, or bonds.

Who Cannot Use It?

  • Individuals with business or professional income.

  • Those having capital gains (from stocks, property, etc.).

  • People owning more than one house property.

  • Non-Residents (NRIs).

📌 Example: If you are a private-sector employee earning ₹40 lakh per year and have a home loan, you can file ITR-1.

2. ITR-2 – For Individuals & HUFs (Without Business Income)

Who Should Use It?

  • Individuals/HUFs with income above ₹50 lakh.

  • Those having capital gains from shares, property, or mutual funds.

  • People with foreign income or assets.

  • Directors of companies.

Who Cannot Use It?

  • Individuals having income from business or profession.

📌 Example: If you are a software engineer earning ₹60 lakh and you made capital gains from selling shares, you should file ITR-2.

3. ITR-3 – For Business Owners & Professionals

Who Should Use It?

  • Individuals or HUFs earning from business or profession.

  • Freelancers, consultants, doctors, lawyers, etc.

  • Directors of companies.

  • Partners in firms (not LLPs).

  • People having income from shares or mutual funds.

Who Cannot Use It?

  • Individuals with only salary and interest income.

📌 Example: If you are a chartered accountant earning ₹25 lakh from consulting clients, you should file ITR-3.

4. ITR-4 (SUGAM) – For Presumptive Taxation Scheme

Who Should Use It?

  • Small business owners, shopkeepers, and freelancers using the Presumptive Taxation Scheme (PTS) under Section 44AD, 44ADA, or 44AE.

  • Salaried individuals with additional business income.

  • Those earning less than ₹50 lakh (professionals) or ₹2 crore (businesses).

Who Cannot Use It?

  • Companies and LLPs.

  • People with foreign assets or income.

📌 Example: If you are a small shop owner earning ₹30 lakh annually, you can use ITR-4 under Section 44AD.

5. ITR-5 – For Partnership Firms & LLPs

Who Should Use It?

  • Partnership firms.

  • Limited Liability Partnerships (LLPs).

  • Associations of Persons (AOPs) and Bodies of Individuals (BOIs).

📌 Example: If you and your friend own a CA firm as a partnership, you should file ITR-5.

6. ITR-6 – For Companies (Except Those Claiming Exemptions Under Section 11)

Who Should Use It?

  • Private limited companies.

  • Public limited companies.

  • One Person Companies (OPCs).

📌 Example: If you run a private limited company offering IT services, you must file ITR-6.

7. ITR-7 – For Trusts, NGOs, & Charitable Institutions

Who Should Use It?

  • Charitable or religious trusts under Section 139(4A).

  • Political parties under Section 139(4B).

  • Educational institutions and research organizations.

📌 Example: If you manage an NGO providing free education, you should file ITR-7.

How to File Your ITR?            https://www.rctaxconsultancy.com/

Filing your ITR is simple if you follow these steps:

Step 1: Gather Required Documents

  • PAN card & Aadhaar card.

  • Form 16 (for salaried individuals).

  • Form 26AS (to verify TDS).

  • Interest certificates from banks.

  • Investment proofs for deductions (PPF, LIC, ELSS, etc.).

Step 2: Choose the Correct ITR Form

Select the appropriate ITR form based on your income source.

Step 3: Login to the Income Tax Portal

Visit www.incometax.gov.in and log in using your PAN.

Step 4: Fill in the Details

Enter your income, deductions, and tax-saving investments.

Step 5: Verify Tax Liability

Check if you need to pay additional tax or are eligible for a refund.

Step 6: Submit and Verify

After submitting, verify the ITR using Aadhaar OTP, net banking, or by sending ITR-V to CPC Bangalore.

ITR Filing Deadlines for FY 2024-25

  • Individuals & HUFs (without audit): July 31, 2025

  • Businesses (under audit): October 31, 2025

  • Revised Return Filing: December 31, 2025

Filing after the due date results in penalties up to ₹5,000 and interest on outstanding tax.

Conclusion

Understanding Income Tax Returns (ITR) and their types is essential for hassle-free tax compliance. Whether you are a salaried individual, a freelancer, or a business owner, choosing the right ITR form ensures smooth tax filing and prevents legal issues.

If you need help filing your ITR, NGO RC Tax Consultancy is here to guide you! Contact us for expert advice and seamless tax filing services.

https://www.rctaxconsultancy.com/

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