- Date : 02/02/2023
- Read: 4 mins
Depending upon the source of income, whether the taxpayer is an individual or an entity, and the total earnings, different types of ITR can be filed.
With over 12 million taxpayers contributing to the growth and development of India, these taxpayers must be aware of Income Tax Returns (ITR). These taxpayers must have easy access to information related to ITR, the different types of ITR, and the ITR forms that must be filled. This article intends to bring all this information into one place!
What is Income Tax Return?
The government decides the tax to be paid by a taxpayer by considering factors such as sources of income, total earnings, type of entity, etc. A taxpayer pays these taxes to the government throughout the financial year. At the end of the financial year, the taxpayer must provide the government with a record of the earnings and the tax paid during the year. This allows the government to calculate if the taxpayer has paid any excess tax. If an excess amount has been paid, the taxpayer becomes eligible for a return from the government.
What are the different types of ITR that the taxpayer can file?
7 types of ITR can be filed by a taxpayer depending upon the source of income and the type of taxpayer. Each ITR form can be filed by only the taxpayers who fulfill the criteria for the form. Let us go through each type and understand which taxpayers can fill the ITR and which cannot!
- ITR - 1
Taxpayers who are residents of India and have an annual income of less than Rs 50 lakhs can fill out the ITR 1 form. The source of income must be a job, an owned property, or income from interest. Individuals residing outside the country or earning more than 50 lakhs cannot file this ITR.
- ITR - 2
Taxpayers, including individuals and HUF who have an income from sources different from their business or job, are eligible to file this ITR. The taxpayer can be living within the country or an NRI. The source of income can be from a second job, an owned property, capital investments, or the sale and purchase of stocks.
- ITR - 3
Individuals earning income from an organization or an occupation can file this ITR. Salaried taxpayers who make earnings from trading different financial securities must file this ITR. This ITR can be utilized to keep a record of earnings from a job, owned property, gains from trading, or any investments.
- ITR - 4
ITR - 4 can be filed by individuals, HUFs, and companies in partnership. The ITR can be used to report the earnings during the financial year. A company with a revenue of more than 2 crores or an individual with an income less than Rs 50 lakh, which is subjected to section 44AD and section 44ADA of taxation, can file this ITR. An individual working as an occupational freelancer can also file this ITR.
- ITR - 5
Companies formed by two or more people, such as LLP, AOP, and BOI, utilize ITR - 5 to disclose their earnings and other income sources.
- ITR - 6
Businesses can utilize this type of ITR to disclose earnings from the industry, occupation, or other sources.
- ITR - 7
This form of ITR is for entities excluded from taxable entities. These incorporate trusts and businesses. The earnings by these excluded entities must be filed in this ITR.
What are the different type of ITR forms are used while filing ITR?
Four different types of ITR forms are utilized while filing ITR:
- Form 16
The employer and details regarding the employee's salary components provide in this form.
- Form 26AS
This form comprises TDS which is liable for different sources of earnings such as income, property sale, loans, etc. The tax paid by the individual and the transactions carried out is listed in this form.
- Form 15G and 15H
If the taxpayer's income (below age 60) is not taxable or below the exemption limit, form 15G must be filed. If the taxpayer is above 60 years of age and has no salary, form 15H must be filed.
Income tax returns are mandatory and legally required for each individual and entity. The taxpayers must understand which ITR to file and the different forms which should be utilized.