Income Tax Return Forms in India
Assessees who earn a taxable income must declare their total income earned by filing an income tax return form. Tax returns for a financial year must be filed by July 31 of the next financial year.
India’s Central Board of Direct Taxes (CBDT) has introduced new and simplified Income Tax Returns (ITR) forms for the financial year (FY) 2016-17 and assessment year (AY) 2017-18.
In its most recent update, the income tax department has inserted new columns in every ITR form seeking details on cash deposits made during the demonetisation window, i.e., from November 9, 2016 to December 30, 2016. Any such deposit needs to be reported only if it exceeds Rs 200,000 (US$3,100).
The CBDT has now made it compulsory for individuals and businesses to quote their Aadhaar number while filing tax returns.
Moreover, all income tax returns have to be filed electronically. Paper returns can only be filed by ‘super senior’ citizens (above 80 years of age) or by an individual whose income is less than Rs 500,000 (US$7,754) and who has not claimed any refund in his/her return.
The ITR forms notified for AY 2017-18, their applicability, and key changes are stated below:
The previous seven-page form is now replaced by a simplified one page form, called Sahaj, making it easier for taxpayers to file their annual income tax returns.
ITR-1 Sahaj is to be used by salaried employees, individuals, and Hindu Undivided Family (HUF), who have income under the following heads, totalling up to Rs 50 lakh (US$77,000) and dividend income up to Rs 10 lakh (US$15,509):
- Income from salary or pension;
- Income from one house property; or
- Income from other sources like interest income, etc. (excluding winning from lottery and income from race horses).
The existing ITR-2, ITR-2A, and ITR-3 forms have been merged into a single ITR-2 form.
The new ITR-2 form is to be used by individuals and HUFs who are not carrying out business or profession under any proprietorship, but have the following:
- Income from salary or pension;
- Income from capital gains;
- Income from multiple houses;
- An asset in a foreign country or income from a source outside India;
- Agricultural income of more than Rs 5,000 (US$77); or
- Income from other sources (including lottery or horse racing).
In this classification, ‘business’ refers to trade, commerce, manufacturing, or anything concerning them, while ‘profession’ refers to special knowledge that is only acquired after study and application.
The old ITR-4 tax form has been renamed ITR-3. If you’ve e-filed an ITR-3 for FY 2015-16, then you must file an ITR-2 now.
The ITR-3 form is to be used by individuals and HUFs if they meet any of the following criteria:
- Carrying on a business or profession (or earning income as a partner in a partnership firm);
- Eligible for presumptive business income but where turnover/gross receipts exceed Rs 2 crore (US$310,000); or
- Returns include income from house property, salary or pension, as well as income from other sources.
The old ITR-4S tax form has been renamed ITR-4. If you’ve e-filed an ITR-4 for FY 2015-16, then you must file an ITR-3 now.
The new ITR-4 is to be used by individuals and HUFs who have:
- Presumptive income from business or profession where turnover/gross receipts do not exceed Rs 2 crore (US$310,000) in case of businesses, and Rs 50 lakh (US$77,550) in case of professionals;
- No capital gains;
- Agricultural income, which is less than Rs 5,000 (US$77);
- Income from not more than one house property; or
- Income from other sources.
The ITR-5 form is to be used by business that includes: firms, LLPs (limited liability partnerships), AOPs (association of persons), and BOIs (body of individuals).
The ITR-6 form is to be used by companies other than companies claiming exemption under Section 11 of the Income Tax Act, 1961, i.e. income from property held for charitable or religious purposes.
The ITR-7 form is to be used by persons (including companies), which are required to provide income tax returns under:
- Section 139 (4A) – Charitable or Religious trusts;
- Section 139 (4B) – Political parties;
- Section 139 (4C) – Research associations, news agencies, institutions etc.; or
- Section 139 (4D) – Universities, colleges, etc.
Editor’s Note: This article was first published in February 2013 and has been updated on April 26, 2017 as per the latest regulations. Read our follow up article to learn more about the process of filing tax returns in India here.
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