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What is ITR? Who should file ITR?

Government imposes a tax on the taxable income of all the persons who are Individual, HUF, Company, firms, LLP, AOP, BOI, Local Authority and any other Artificial Judicial Person as Indias IT Law is framed by the government.

According to these laws, levy of tax on a person depends upon his Residential Status. Every Individual who is resident of India is required to pay tax on his Global Income. Every Financial Year, taxpayers are required to file their ITR.

In this Article, we will cover the following aspects:

  1. What is ITR?

  2. Who should file ITR?

  3. Types of ITR or Which ITR should I file?

  4. Benefits of filing ITR.

What is ITR?

ITR is a form which a person submits to the Income Tax Department of India. It contains the information about the persons income and taxes to be paid on it during the year. Information filed in ITR should relate to a particular F.Y i.e starting from 1 April and ending 31 March of the next year.

Income can be from 5 heads

  • Income from Salary or Pension

  • Income from House Property

  • Income from Business and Profession

  • Income from Capital Gains

  • Income from Other Sources like dividend, interest on deposits, royalty income, lottery etc

Who should file ITR?

  • The Gross Total income( before the deduction u/s 80C to 80U) exceeds 250,000 in a Financial Year.

  • The limit is Rs 3 lakhs for Senior Citizen (aged above 60 years but less than 80)

  • The limit is Rs 5 lakhs for Super Senior Citizen (aged 80 years)

  • If you have more than 1 source of income like House Property or Capital Gains.

  • A Firm or Company having Profit or Loss in a F.Y

  • If you want to claim an IT Refund from the Department.

  • If you earned from or have invested in foreign assets during F.Y.

  • If you wish to apply for a loan or Visa.

Which ITR should I File?

The Department has notified 7 various forms:- ITR 1,2,3,4,5,6,7

ITR 1

Income from Salary or Pension

Income from one House Property( H.P)

Income from Other Sources like lottery, interest, Dividend

But income from above does not exceed 50 Lakhs.

Agriculture income upto 5000.

ITR2

All income from ITR 1 exceeds 50 lakhs

Income from more than one H.P

Income from Capital Gain

Income from foreign Income/ Asset

Agriculture income exceeds 5000

ITR3

It includes the income in ITR 2

Income from Business or Profession, partner in partnership firm or Individual director in a company.

ITR 4

It is filed by individuals,HUF, Partnership firm.

Opted for Presumptive Tax Scheme u/s 44AD, 44ADA,44AE and annual turnover upto2 crore.

ITR 5

It is used by entities such as firms, LLPs, BOI, AOP , AJP

ITR6

It is used by the companies to file ITR if they do not claim tax exemption under Section 11 of IT Act 1961.

ITR7

Income under Section 139(4A), (4B), (4C), (4D), (4E),( 4F).

Benefits of Filing ITR

  • It acts as a Legal Document in both ways i.e Identity proof and Income proof.

  • Important Document when applying for loans or Visa.

  • Help you to claim deduction

  • Losses can be carried forward and many more.