What is ITR? Everything you need to know

Aug 11, 2022

What is ITR?

Income Tax Return (ITR) is a form in which the taxpayers file information about their income earned and tax applicable to the income tax department.

The department has notified 7 various forms i.e. ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-7 to date. Every taxpayer should file his ITR on or before the specified due date. The applicability of ITR forms varies depending on the sources of income of the taxpayer, the amount of the income earned and the category of the taxpayer like individuals, HUF, company, etc.

Why should you file ITR?

It is mandatory to file income tax returns (ITR) in India if any of the conditions mentioned below are applicable to you:

  1. If your gross annual income is more than the basic exemption limit as specified below-
Particulars Amount
For individuals below 60 years Rs 2.5 lakh
For individuals above 60 years but below 80 years Rs 3.0 lakh
For individuals above 80 years Rs 5.0 lakh

 

  1. If you want to claim an income tax refund from the department.
  2. If you have earned from or have invested in foreign assets during the FY.
  3. If you wish to apply for a visa or a loan
  4. If the taxpayer is a company or a firm, irrespective of profit or loss.

Also, you are mandatorily required to file ITR even if your income is below the basic exemption limit but you meet one of the following conditions:  

  1. Have deposited an aggregate amount of more than Rs.1 crore in one or more current bank accounts; or
  2. Have incurred an aggregate expenditure of more than Rs 2 lakh on foreign travel for self or any other person; or
  3. Have incurred an expenditure aggregate of more than Rs.1 lakh towards electricity consumption.
  4. If the tax deducted at source (TDS)/ tax collected at source (TCS) exceeds Rs 25,000 in the previous year. In the case of a senior citizen (above 60 years), this limit is Rs 50,000.
  5. In case you are a businessman and your total sales, turnover, or gross receipt exceeds Rs 60 lakh during the previous year.
  6. You are liable to file a tax return if you are engaged in a profession and your gross receipts are more than Rs 10 lakh during the previous year.

Which ITR Form to File when filing Income Tax Return?

Form Applicability Salary Exempt Income Capital Gains House Property Business Income Other Sources
ITR 1 Resident Indian individuals and HUFs Yes Yes. However, income from agriculture cannot be more than Rs.5,000. No Yes. However, it can be only for one house property. No Yes
ITR 2 HUFs and individuals Yes Yes No Yes No Yes
ITR 3 Partner in a firm, HUF, or individuals Yes Yes No Yes Yes Yes
ITR 4 Firm, HUF, or individual Yes Yes. However, income from agriculture cannot be more than Rs.5,000. Yes Yes. However, it can be only for one house property. Only for business income that is presumptive Yes
ITR 5 LLPs or Partnership Firms No Yes No Yes Yes Yes
ITR 6 Companies No Yes No Yes Yes Yes
ITR 7 Trusts No Yes No Yes Yes Yes

 

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