Tax return: which RTI form to choose? Just check your sources of income

As the original July 31 due date for filing the income tax return (ITR) approaches, taxpayers must file their return by the end of the month, unless further extended, to avoid penalties and the payment of taxes. additional interest on tax payable, if any, and to enjoy many other benefits.

As there are a number of ITR forms available to taxpayers, one may wonder which form to select for filing one’s tax return.

Although there are many conditions to decide on a declaration form, but the main indicators are the sources of income.

Here’s how to select an appropriate ITR form based on your sources of income:

ITR-1 (Sahaj)

The ITR1 Sahaj form is applicable to resident individuals (residents and ordinary residents) with total income of up to Rs 50 lakh from the following sources:

  • Salary / Pension
  • Up to a house property
  • Income from other sources such as interest, family pension, dividends, etc.
  • Agricultural income up to Rs 5,000

ITR-2

There is no prescribed income limit for ITR-2 and the form is suitable for taxpayers with the following incomes:

  • Salary / Pension
  • One or more properties of the house
  • Income from other sources such as interest, family pension, dividends, etc.
  • Capital gains – short and long-term gains, including gains from intraday trading and futures and options (F&O)
  • Agricultural income of more than Rs 5,000

ITR-3

In addition to the above sources of income, ITR-3 can be used by assessees with business and professional income.

  • Salary / Pension without limit
  • One or more properties of the house
  • Income from other sources such as interest, family pension, dividends, etc.
  • Capital gains – short and long-term gains, including gains from intraday trading and futures and options (F&O)
  • Agricultural income of more than Rs 5,000
  • Business and Profession income form

ITR-4 (Sugam)

Taxpayers meeting the conditions of the ITR-1, but with presumed business and/or professional income can use the ITR-4.

  • Salary / Pension
  • Up to a house property
  • Income from other sources such as interest, family pension, dividends, etc.
  • Agricultural income up to Rs 5,000
  • Income from an alleged business or profession

In Presumptive Business and Profession, small business owners and professionals don’t really need to estimate actual income by deducting expenses from income, but can simply take a percentage of total income as presumed income and pay taxes on it . Inferred activities and professions include legal, medical, engineering or architectural services, accounting, technical consulting, interior design or any other profession notified by CBDT, but exclude life insurance agents, commissions of any kind and the management of the business of supplying, renting or leasing car goods.

In addition to sources of income, some instances where ITR-1 cannot be filed by any taxpayer include:

  • Taxpayer who is a Director in a company,
  • Taxpayer who held unlisted shares at any time during the previous year,
  • Taxpayer with an asset (including a financial interest in an entity) located outside India,
  • Taxpayer having signing authority over any account located outside India,
  • Taxpayer having income from any source outside India,
  • Taxpayer being a person in whose case tax has been deducted under Section 194N of the Income Tax Act (“IT Act”) for a withdrawal of excess money,
  • Taxpayer being a person in case the tax payment or deduction was deferred on the ESOP received from the employer being a qualifying startup,
  • Taxpayer who has a loss carried forward or a loss to be carried forward under a head of income,
  • Taxpayer who is “Resident and not ordinarily resident” or “Non-resident”,
  • Taxpayer with other income (other than qualifying income) such as business income, capital gains, income from more than one property of the home, etc.
  • Taxpayer claiming u/s 57 deduction for income from other sources, other than family pension deduction,
  • Taxpayer claiming tax credit/relief under Section 90 or Section 91,
  • Taxpayer claiming a tax credit withheld at source from any other person,
  • Taxpayer with “income from other sources” taxable at special rates, for example, lottery winnings,
  • Taxpayer with unexplained taxable income u/s 115BBE
  • Taxpayer with income to be split between spouses as governed by the Portuguese Civil Code in accordance with the provisions of Section 5A

About Joan Dow

Check Also

Busy thieves threaten licenses and steal pandemic relief

Anyone licensed by the state – barbers, counselors, cannabis growers, etc. – has been tipped …