How to Choose the Perfect Income Tax Return Form for You

By | July 9, 2015
Photo credits : Alan Cleaver

Photo credits : Alan Cleaver

Supandi, from Tinkle, was a dear but very confused character that many of us still enjoy. He was most likely to go to a Dentist for an ache in his eye (probably caused by the spoon in his cup). This tax filing season, you might be feeling just as confused as Supandi and don’t know which form to turn to.

Here we explain the diagnosis – your type of income, and the treatment – the right form for you, so that you can file your returns smoothly.

Understanding different income types:

Before getting into different ITR forms, we should discuss the breakup of various income types as specified in the taxation aspects.

  • Income from salary: If you earn any income as an employer/employee with any company, your income is considered as an income from salary. Any pension that you may receive is also considered under the same section.
  • Income from house property: Any earnings that you get from any residential or commercial property, like rental income falls under this category.
  • Income from business or profession: This includes an income through any business – a private consultation/practice or through any part time/freelance assignments.
  • Income from capital gains: All earnings from capital assets, like equity markets, property, stocks or gold are considered earnings from capital gains. Based on your earnings and the total time you’ve held the asset, you are liable for either short term or long term capital gains tax on your earnings.
  • Income from other sources: Any income which does not fall into any of the above categories is considered a part of income from other sources. This includes interest income from saving bank accounts, lottery winnings, gifts in the form of money etc.

The different income tax return forms:

Here is a list of various income tax return forms. You can choose the form applicable to you depending on your type of income.

ITR 1 (Sahaj): ITR 1 or Sahaj is a simple form for individuals who have income from salary or pension. Those who earn income from other sources, like rental income from one property or interest income etc., can also use this. Individuals/ HUFs (Hindu Undivided Family), who have exempt income (like dividends) of more than Rs.5000, can also now use Form ITR 1.

However, people having incomes from foreign assets or winning of lotteries, are not allowed to file their tax returns using this form. Likewise if you are seeking any tax deduction under Section 90 or 91, this form is not applicable.

ITR 2: This is a more complex form.Any individual or a HUF whose whole income comes from salary or more than one house property can use this. This form can also be used if there is a loss of income from house/property.

But here, the individual should not have any income from capital gains or any foreign income. Those who earn their income from business or profession are also not supposed to use ITR 2.

ITR 2A: ITR 2A is a newly introduced form. All tax payers having any income from salary/pension and/or income from more than 1 house properties and/or income from other sources must use the form 2A to file their tax returns.

But those having incomes from capital gains or from foreign assets or tax deduction under Section 90 or 91, are not supposed to use this form.

ITR 3: If you are a partner of any firm, you will need to use ITR 3 to file your tax returns. But sole business owners or proprietors are not supposed to use this form.

ITR 4: Any individuals or HUF having an annual income from a business or profession, exceeding 60 lakhs need to use ITR Form 4 to file their tax returns.

ITR 4S (Sugam): Any small business owners or professionals, including individuals and HUFs, earning a gross income not more than Rs. 60 Lakhs can use ITR 4S form to file tax.

ITR 5: ITR form 5 is attributed to filing tax returns for all firms, including LLPs, AOPs (Association of Persons) and BOIs (Body of Individuals), co-operative banks etc.

ITR 6: Any companies, other than companies claiming exemption under Section 11, must use ITR Form 6 to file their annual income tax returns.

ITR 7: ITR form 7 is a specialized form reserved for individuals or companies that need to submit their returns under Section 139(4A) or Section 139(4B), Section 139(4C) or Section 139(4D).

All forms are available online as downloadable versions. Once you know which ITR form to choose, you can easily file your tax return online and you no longer have to feel like Supandi.


YOU MAY ALSO WANT TO:  Check out these calculators to help you figure out if your investments are doing well – SIP Calculator, Income Tax Calculator , GST Calculator.

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2 thoughts on “How to Choose the Perfect Income Tax Return Form for You

  1. Mudita

    I fall in this category: “Income from business or profession: This includes an income through any business – a private consultation/practice or through any part time/freelance assignments.”

    Which ITR form should I submit?

    1. Team BankBazaar

      Hi Mudita,

      You can use Form 4 or 4S for filing your returns.

      Team BankBazaar


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