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Know the right ITR form to file your Tax Returns

Income tax return filing is one of the most important financial activities of the year. All individuals having taxable income or those who satisfy other prescribed conditions are required to file annual income tax return (ITR) within the specified due date. The last date to tax return for the financial year 2019-20 is December 31, 2020.

In respect of individuals who are required to get their accounts audited (including Partner of firms whose accounts are audited), the due date is extended to 31 January 2021, from the original date of 31 October 2020.

Filing ITR for FY2019-20 is mandatory if:

The individual's taxable income exceeds the maximum amount not chargeable to tax. The basic exemption limit for FY 2019-20 is Rs 3 lakh for senior citizens (aged 60 years or more but less than 80 years), Rs 5 lakh for super senior citizens (aged 80 years or more), and Rs 2.5 lakh for others;

The individual needs to claim an income tax refund;

The individual qualies as an ordinarily resident during FY 2019-20 and holds foreign assets which need to be specically reported in the ITR. These assets include foreign bank accounts, foreign properties, nancial assets, signing authority, etc.;

The individual has undertaken specic transactions viz (a) payment of electricity bill in excess of Rs 1 lakh during the FY (b) deposited more than Rs 1 crore in one or more current accounts during the FY or (c) spent more than Rs 2 lakh on overseas travel for self or any other person during the FY.

ITR Forms: The Income-Tax Department (I-T department) provides various forms to file an Income-Tax return (ITR). Each form is for a different type of taxpayer. These forms are ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7. ITR-1 form is also known as 'Sahaj'and ITR-4 as 'Sugam'. It is applicable to those individuals who get income from salary, pension, house property, or other sources under certain circumstances.

In order to make tax compliance more convenient, pre-filled Income tax Returns (ITR) have been provided to individual taxpayers. The ITR form now contains pre-filled details of certain incomes such as salary income. Know that the Income Tax department introduced pre-filled forms with the intention of making the process of filing tax forms easier. 

Know the right ITR form to file the correct tax return:

ITR-1 (Sahaj): It is the most simple ITR form meant for resident individuals whose total annual income is less than Rs 50 lakh and income from salaries, one house property, other sources such as interest income and agricultural income up to Rs 5,000. However, if you have incomes from business, profession, capital gains or more than one house property, you can not use ITR-1 form.

ITR-4 (Sugam): This form is applicable for resident individuals, HUFs and firms (other than LLP) with total income of up to Rs 50 lakh and having income from small business or profession taxable under presumptive income provisions of Sections 44AD, 44ADA or 44AE of Income Tax Act, 1961. However, if these taxpayers have income from capital gains they cannot use ITR-4.

Both the ITR-1 and ITR-4 forms have minimum disclosure requirements. But these forms will not be applicable for an individual who is either a director in a company or has invested in unlisted equity shares.

ITR-2: This form is applicable for individuals and HUFs not having business income but not eligible for ITR 1 (Sahaj) for having income from capital gains or other income as mentioned above.

ITR-3: This form is applicable for individuals and HUFs having business income, but not eligible for ITR 4 (Sugam).

ITR-5, ITR-6, ITR-7: All categories of taxpayers other than individuals and HUFs (for whom ITR-1 to ITR 4 is applicable), companies or charitable trusts/ institutions, are required to use ITR-5 form. Hense, ITR-5 is applicable for partnership firms (other than those qualifying for ITR-4), LLPs, Association of Persons, Body of Individuals, etc., to whom no other form applies. Companies are required to use ITR-6 form while charitable trusts/ institutions need to file the ITR-6 form.

Worth mentioning here is that the new ITR forms are revised versions of older forms to incorporate the benefits of various timeline extensions granted by government due to Covid-19 induced lockdown. With the help of new forms, taxpayers can claim the deductions in respect of tax-saving investments done between April 1 and June 30, 2020 for the previous financial year.


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