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Types of ITR: Which ITR Should I File for F.Y. 2023-2024 (A.Y. 2024-2025)?

Updated: Jul 2


Types of ITR: Which ITR Should I File for F.Y. 2023-2024 (A.Y. 2024-2025)

There are so many forms of ITRs for various types of income and taxpayer categories. Therefore, one is required to be very careful in choosing the right one for compliance and maximizing one's tax benefit. It can make all the difference in ease of filing your return and/or the processing efficiency of the Income Tax Department. In this comprehensive article, we will walk you through the types of ITR forms and let you know the specific purposes for which each type is used so as to choose the correct one for your financial position in the F.Y. 2023-2024 (A.Y. 2024-2025). Be it a salaried employee, freelancer, business owner, or a person having multiple sources of income, our article will let you know which ITR form applies to you.

 

Table of Content

 

What is an Income Tax Return (ITR)?


An Income Tax Return (ITR) is a form used to report an individual's income, expenses, tax deductions, investments, and taxes paid during the financial year. It helps the Income Tax Department assess the tax liability of a taxpayer. The forms of ITR are different based on the sources of income of the taxpayer, the amount of income earned by him, and the category to which he belongs, like individual, Hindu Undivided Family (HUF), company, and so on.


In terms of the Income Tax Act, 1961, ITR filing is mandatory for all those individuals and other concerned entities whose income is beyond certain limits. It may further be required to file returns even in cases where no tax is payable, if the income is more than the basic exemption limit. Return filing would also be required for claiming refunds, carrying forward any losses, or for compliance with the statutory requirement if one has foreign assets or any financial interest outside of India.


Who Should File ITR?


ITR filing is mandatory under various instances. The rules and guidelines for this are laid down under the Income Tax Act, 1961. The main conditions where filing of ITR is mandatory have been summarized here in below:


  • Gross total income before deductions under Sections 80C to 80U exceeds the basic exemption limit: Any person whose gross total income before deductions under sections 80C to 80U exceeds the basic exemption limit has to file an ITR. For F.Y. 2023-2024, the basic exemption limits under the old tax regime at different levels are as follows:

    • INR 2,50,000 for individuals below the age of 60.

    • INR 3,00,000 for senior citizens aged 60 years or above but less than 80 years.

    • INR 5,00,000 for super senior citizens aged 80 years and above.

  • Firm or Company: Whether earning profits or incurring losses, all companies and firms are required to file an ITR.

  • Foreign Assets or Financial Interest: Resident individuals having any asset or financial interest in any entity located outside India or signing authority in any account located outside India needs to file an ITR, irrespective of the amount of income earned by them.

  • To Claim Refund: The filing of ITR is necessary if one is expecting a refund from the Income Tax Department due to excess tax paid or deducted.

  • Losses to be Carried Forward: In order to carry forward a loss under any head of income, an ITR must be filed before the due date.

  • Residential Status: ITR is required to be filed by residents not ordinarily resident and non-residents if their income is accruing or arising in India.

  • Income from property held under a trust for Charitable or Religious purpose, Political party, Research Association, News Agency, Educational or Medical Institution, Trade Union, and so on: Assessee who receives income from property held under trust or other legal obligation wholly for charitable or religious purposes is required to file ITR.

  • Foreign Income: Resident who derives any part of his income from sources outside India.

  • Current Account Deposits: Any depositor or HUF depositing over INR 1 crore in one or more current accounts during the financial year has to report an ITR.

  • High Expenditure: An assessee who has incurred expenditure in a sum or aggregate of sums in excess of INR 2 lakh for travel to any foreign country, either himself or another person, or has incurred an expenditure above INR 1 lakh on electricity consumption in the financial year has to file an ITR.

  • Investment in Unlisted Equity Shares: Individuals having an investment in unlisted equity shares at any time during the previous year is required to furnish the return, irrespective of the income level.


Who is Not Required to File an Income Tax Return (ITR) in India?


Not everyone in India is required to file an ITR. Those whose total income does not exceed the basic exemption limit, which varies by age and type of income, are exempt from filing the ITR. In particular, senior citizens above the age of 75 years are exempt if their sources of income are only pension and interest from the same bank from which their pension is disbursed, and the bank has deducted TDS. Individuals may also be exempted from filing an ITR when the income is from agriculture only and below the taxable limit. Others who may not need to file include non-residents or foreign nationals covered under specific DTAA, provided their income is effectively managed within those treaties. One should, therefore, evaluate his or her income against those criteria to determine his or her need to file an ITR and, in case of doubt, seek the advice of a tax professional to stay compliant with the tax laws.


Understanding the Different Types of ITR Forms: Detailed Analysis of Each ITR Form


Below is the detailed analysis of all the different ITR forms available for a taxpayer in India, which will help to clearly understand the purposes for which they should be used, given individual circumstances and nature of incomes:


ITR-1

Applicable For: ITR 1 form applies to resident persons whose total income comprises: 

  • Salary or pension

  • Income from only one house property, assuming the loss is not brought forward from any previous year;

  • Income from Other Sources; and 

  • Agricultural income not exceeding INR 5,000.


Not Applicable For: ITR 1 cannot be used by individuals who are either Directors in any company, invested in unlisted equity shares, have income from more than one house property, income from winning lotteries, taxable capital gains, agricultural income exceeding INR 5,000, or income from business or profession.


ITR-2

Applicable For: ITR 2 is for individuals and Hindu Undivided Families who do not have business or professional income under any proprietorship. It is applicable for the following:

  • Individuals having income from more than one house property

  • Income from capital gains

  • Foreign assets/income

  • Agricultural income above INR 5,000


Not Applicable For: Individual or HUF having income from business or profession under any proprietorship.


ITR-3

Applicable For: It is designed for individuals and HUFs who have income from a proprietary business or profession or are partners in a firm but the business is not conducted by the firm.

  • This includes income from business/professions, salary/pension, house property, capital gains, and other sources.


Not Applicable For: It is not intended for individuals who only have salary income and no business or professional income.


ITR4(SUGAM)

Applicable For: This form is for resident individuals, HUFs, and partnership firms excluding LLPs, which have declared their income through the presumptive scheme under Sec 44AD or Sec 44ADA or Sec 44AE of the Income Tax Act.

  • This category includes business income, professional, salary/pension, and income from one house property.


Not Applicable For: Not suitable for taxpayers who have capital gains, income from more than one house property, or foreign assets/income.


ITR-5

Applicable For: It is used by firms, LLPs, AOPs, BOIs, artificial juridical persons, estate of deceased, estate of insolvent, business trust and investment fund.

Covers all types of income except those incomes which are to be filed in ITR-7.


Not Applicable For: Not for individuals, firms, and entities who are required to furnish ITR-7.


ITR-6

Applicable For: Only for companies, except those exempted under Section 11. 

(Income from property held for charitable or religious purposes).

  • All sources of income are covered in ITR 6 form which is to be filed electronically with a digital signature.


Not Applicable For: Individuals, HUFs, or companies qualifying under Section 11.


ITR-7

Applicable For: For persons including companies required to furnish returns under sections 139(4A), 139(4B), 139(4C), and 139(4D). This includes trusts, political parties, institutions, colleges, and other entities that receive income from property held under trust for charitable or religious purposes.


Not Applicable For: Not for individual taxpayers or entities not included in sections of the above type.


Choosing the Right ITR Form for Your Needs


With the help of the below table you will be able to easily decide, which ITR form suits your needs:


Right ITR Form for Your Needs

Recent Changes and Updates in ITR Filing for A.Y. 2024-2025


For the F.Y. 2023-24, the process for filing Income Tax Returns in India has undergone a lot of changes. Recent updates in concise pointer format are as follows: 


  • Updated ITR Forms: ITR forms have been revised by the CBDT to incorporate changes in tax laws and provisions.

  • Pre-filled ITR Forms: Now the additional information in pre-filled ITR forms includes: capital gains from listed securities, dividend income, and interest from banks/post offices. This has decreased the hassle in filing.

  • AIS and TIS: Under the new regime, taxpayers will have to cross-check the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) before filing returns to ensure that all taxable transactions have been captured.

  • High-Value Transactions: The transactions pertaining to high-value information such as: travel abroad, allowance expenses incurred on electricity greater than INR 1 lakh, and deposit in the current account above INR 1 crore are under Income Tax scrutiny.

  • Compulsory e-Filing for Certain Categories: e-Filing of ITR is now compulsory for all taxpayers; however, super senior citizens above 80 years have the option of filing either electronically or physically.

  • Cryptocurrency Taxation: Virtual digital assets or VDAs are taxable at a flat 30% tax on income from cryptocurrencies and other VDAs, along with the applicable surcharge and cess on such income.

  • Updated Rules for Set-Off and Carry Forward of Losses: Particular changes in the rules about set-off and carrying forward of losses concerning VDAs.

  • Tax Exemption Limit on Insurance Payment Received by Disabled Dependents: Increase in tax exemption limit under clauses (b) and (c) of Section 80DDA on the insurance payment received by disabled dependents.

  • New TDS Provisions: New provisions for the TDS on various transactions were introduced that have changed the way of reporting of such transactions in ITR forms.

  • Faceless Assessments: Emphasis on faceless assessments has been increased to reduce the human interface in matters of income tax assessment and appeals. Hence making the tax administration system more transparent and more accountable.


Income Tax Forms F.Y. 2023-24 PDF Download: How To Download ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7 Forms?


Download ITR forms using the following links:


ITR Form

Download Link

ITR-1

Download ITR-1 Form

ITR-2

Download ITR-2 Form 

ITR-3

Download ITR-3 Form

ITR-4

Download ITR-4 Form 

ITR-5

Download ITR-5 Form 

ITR-6

Download ITR-6 Form 

ITR-7

Download ITR-7 Form 

FAQ

Q1. What is ITR-1, and who should file it?

ITR-1, also known as SAHAJ, is for resident individuals having income up to INR 50 lakhs from salaries, one house property, other sources like interest, and agricultural income up to INR 5,000.


Q2. Can I use ITR-2 in case of income from business or profession?

No, ITR-2 is for individuals and HUFs who do not have business or professional income. It includes more than one house property income, capital gains, and foreign income.


Q3. Who is eligible to file ITR-3?

ITR-3 is suitable for individuals and HUF, those who have income from proprietary business or profession. This includes the partners in firms but does not include companies or LLPs.


Q4. What form would a freelance professional earning his income from a variety of clients use?

Because freelancers are under the category of Individuals earning income from a profession or business as sole proprietors, they will file ITR-3.


Q5. Does a specific ITR form exist for persons with presumptive income?

Yes, ITR 4 or SUGAM is for taxpayers opting for presumptive income schemes under Section 44AD, 44ADA, or 44AE. It applies to small businesses and professionals.


Q6. Which ITR form should be used by the company? 

Form ITR-6 shall be used for companies except when the companies are exempt under Section 11 (income from property held for charitable purposes).


Q7. What is the suitable ITR form for a partnership firm?

Partnership firms should file ITR-3 only if it is directly involved in business activities. Whereas, LLPs use ITR-5 form to file the tax return.


Q8. Who should file ITR-5?

ITR-5 is for LLPs, Association of Persons (AOPs), Body of Individuals (BOIs), and other artificial juridical persons.


Q9. When should I use ITR-7?

ITR-7 is used by individuals including companies required to furnish returns under sections 139(4A), 139(4B), or 139(4C), such as trusts, political parties, and institutions.


Q10. How do I choose the right ITR form if I have both salary and freelance income?

If you have both salary and freelance income, you should file ITR-3, as it allows for a combination of salary and business/professional income.



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24 eFiling
24 eFiling
Jun 16, 2023

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