Income Tax Return (ITR) is a form where taxpayers provide information about their income earned and applicable tax to the income tax department. The Income-tax Act of 1961 has released seven ITR forms, such as ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7. Each taxpayer must file their ITR before the specified due date. The applicability of ITR forms depends on the taxpayer's income sources, income amounts, and categories, such as individuals, HUFs, or companies.

Requirement of filing income tax returns (ITRs) in India:

Tax Exemption Limits and Requirements

• Basic exemption limit: Rs. 2.5 lakh for individuals under 60yrs, Rs.3 lakh for those above 60yrs but below 80yrs, and Rs. 5 lakh for those above 80yrs.

A mandatory tax return is required in the following cases:

• Deposit over Rs 1 crore in 'current' bank account.
• Deposit over Rs 50 lakh in savings bank account.
• Spending over Rs 2 lakh on foreign travel.
• Electricity expenditure over Rs 1 lakh.
• TDS or TCS exceeding Rs 25,000 in the previous year.
• Business turnover over Rs 60 lakh.
• Professional income over Rs 10 lakh.

Types of ITR forms:

ITR-1 or SAHAJ:

The ITR-1 form is a popular income tax form for residents with a total income of less than Rs 50 lakh. It covers various income sources, including salaries, single-house property income, savings accounts, deposits, income tax refunds, enhanced compensation, interest income, agricultural income up to Rs 5,000, and family pension.

Ineligibility to use ITR-1 Form

• Total income exceeding Rs 50 lakh.
• Agricultural income exceeding Rs 5000.Taxable capital gains.
• Income from business or profession.
• Income from multiple house properties.
• Directors in a company.
• Investments in unlisted equity shares.
• Assets outside India, including financial interest.
• Resident not ordinarily resident (RNOR) and non-resident.
• Foreign income.
• Assessable with respect to the income of another person.
• Tax deducted under Section 194N.
• Deferred tax payment or deduction on ESOP.
• Bring forward loss or loss to be carried forward under any income head.

ITR-2:

• For individuals or Hindu Undivided Families (HUF) with a total income over Rs 50 Lakhs for AY 2024-25.
• Includes income from salary/pension, house property, other sources, and investments in unlisted equity shares.
• Applicable to individuals such as Individual Directors, RNORs, non-residents, capital gains, foreign income, agricultural income over Rs 5,000, assets outside India, deducted tax under Section 194N, deferred tax payments on ESOP, brought forward losses, and VDAs trading.
• It can be used if another person's income, like spouse, child, etc., is combined with the assessee's income.
• ITR-2 is not suitable for individuals with total income from business or profession for the AY 2024-25, as they may need to use ITR-3 or ITR-4 to declare these types of income.

ITR-3:

• Eligible for individuals or HUFs with income from proprietary businesses or professions.
• Eligible income sources include:

- Businesses or professions are not opting for presumptive income.

- Businesses or professions are required to maintain or audit accounts.

- Individual Directors in a company.

- Investments in unlisted equity shares.

- Income from house property, salary/pension, and other sources.

-Income of a partner in the firm.

• Individuals or HUFs not eligible for ITR-1, ITR-2, and ITR-4.

ITR-4 or SUGAM:

• ITR-4 is designed for resident individuals, Hindu Undivided Families (HUF), and firms (excluding LLP) with incomes not exceeding ₹50 Lakh.
• Income from Business and Profession is calculated presumptively under sections 44AD, 44ADA, or 44AE of the Indian Income Tax Act.
• Income sources include Salary or Pension, Agricultural Income (up to ₹5000/-), a single House Property, and any other miscellaneous sources.
• Additional income sources include interest from savings accounts, deposits, income tax refunds or family pensions.
• Specific income sources, such as winnings from Lotteries and Income earned from racehorses, are not eligible for inclusion under ITR-4.
• Ineligible individuals include Resident Not Ordinarily Resident (RNOR) or non-resident Indians (NRIs), those with agricultural income exceeding ₹5,000, directors in a company, income from multiple house properties or sources, unlisted equity shares, deferred income tax on Employee Stock Option Plans (ESOP), any foreign asset held, any income earned outside India or failing to meet eligibility criteria.
• Documents for filing ITR-4 include Form 16, Form 26AS and AIS, Form 16A, bank statements, housing loan interest certificates, donation receipts, rental agreements, rent receipts, and investment premium payment receipts.

ITR-5:

• Caters to various entities, including Firms, LLPs, AOPs, BOIs, AIs, Cooperative Societies, Local Authorities, Estate of deceased, insolvent, business trusts, and investment funds.
• It is designed in a way that meets the reporting requirements of these entities, excluding sections 139(4A), 139(4B), 139(4C), or 139(4D).
• Divided into two sections and 31 schedules.
• Taxpayers follow a prescribed sequence for completing returns: Part A, Schedules, Part B, and Part C, as well as the Verification section.

ITR-6:

• The companies that are registered under the Companies Act 2013 or 1956 must file the ITR 6 Form.
• Companies with income from properties held for religious or charitable purposes are exempt from filing the ITR 6 Form.
• If audited by a certified accountant, assessees must provide audit report details, including the auditor and electronic submission date.
• Compliance with e-filing requirements is crucial for fulfilling obligations under the Income Tax Act.

ITR-7:

• Tax Return Requirements under ITR-7 for Persons and Companies
• Section 139(4A): Filing for income derived from property held under trust or legal obligation for charitable or religious purposes.
• Section 139(4B): Filing by a political party in case the total income is greater than the maximum amount, which is not chargeable to income tax.
• Section 139(4C): Filing by scientific research association, news agency, institution referred to in section 10(23A), institution referred to in section 10(23B), fund, university, educational institution, or hospital.
• Section 139(4D): Filing by every university, college, or other institution, not required to furnish a return of income or loss.
• Section 139(4E): Filing by every business trust, not required to furnish a return of income or loss.
• Section 139(4F): Filing by any investment fund referred to in section 115UB is not required to furnish a return of income or loss.