When you file an Income Tax Return (ITR), you need to do so using the right type of income tax return form. There are different types of ITR forms that you can choose from based on your filing status and type of income. Let’s find out more about this.

What is ITR Form?

An ITR form is a document that a taxpayer fills out when filing their income tax return. It includes details like their name, income, investments, savings, and any other information needed for tax filing. The form is available on the Income Tax Department’s website.

Types of ITR Forms available to Indian taxpayers

Below is a list of the different ITR form types available to taxpayers in India:

ITR 1

The ITR 1 form, known as Sahaj, is specifically for individuals whose total income for the financial year includes the following sources - salary or pension, income from single house property (except if any previous year’s loss is carried forward) and other sources of income (excluding lottery or racehorse winnings). Additionally, individuals with agricultural income up to ₹ 5,000 can use ITR 1.

ITR 2

This return is applicable for Individuals and Hindu Undivided Families (HUFs) not having Income under the head Profits and Gains of Business or Profession and who are not eligible for filing ITR-1.

ITR 3

The ITR 3 form is for individuals or HUFs whose income is generated from business or professional activities. Individuals can file ITR 3 if they are engaged in business or professional work and who are not eligible for filing ITR-1, ITR-2 or ITR-4.

ITR 4

This return is applicable for an Individual or Hindu Undivided Family (HUF), who is a Resident other than a 'Not Ordinarily Resident', or a Firm (other than LLP), which is a Resident having total income of up to ₹ 50 lakh and having an income from business or profession which is computed on a presumptive basis (u/s 44AD / 44ADA / 44AE) and income from any of the following sources:

• Salary / Pension
• One House Property
• Other sources (Interest, Family Pension, Dividend, and others.)
• Agricultural Income up to ₹ 5,000

ITR 5

The ITR 5 form can be used by various entities, including firms, Limited Liability Partnership (LLPs), Bodies of Individuals (BOIs), Associations of Persons (AOPs), Artificial Juridical Persons (AJPs), estates of deceased or insolvent individuals, business trusts and investment funds.

ITR 6

Companies that do not claim exemptions under Section 11, which relates to income from property held by charitable or religious trusts, should file under ITR 6. Filing for ITR 6 is required to be done electronically. It is the only ITR type that cannot be filed using the offline mode.

ITR 7

ITR 7 is designated for Individuals and Companies required to file under specific sections, including the following:

• Section 139(4A)
• Section 139(4B)
• Section 139(4C)
• Section 139(4D)
• Section 139(4E)
• Section 139(4F)

Why should you file Income Tax Returns (ITR)?

Below are some reasons to file your ITR:

Income Tax Refunds

Filing your income tax return ensures you receive a tax refund if you have overpaid your taxes. Often, the tax deducted or paid is more than what you actually owe to the Government. After accounting for deductions and exemptions, your tax liabilities usually decrease. Filing your ITR is the only way to claim a refund for the excess tax paid.

Easy Loan Approval

Lenders often check your ITR records to verify your income and financial responsibility. Your ITR provides them with a clear picture of your income over the past years, which can help demonstrate that you are a reliable borrower.

Smoother Visa Processing

For many countries, past ITRs are required as part of the visa application process. Keeping copies of your past ITRs can improve your chances of a smooth and successful visa process.

Income and Address Proof

Your ITR serves as proof of both your income and your address, which can be useful for a number of things. You can submit them when opening a bank account, applying for a loan and more.

Carry forward of losses

Filing your income tax return on time allows you to carry forward any business or capital losses you may have suffered in the previous year. This can help reduce your tax burden in future years when you have gains, as these losses can be used to offset the gains and lower your taxable income.

Income verification for Self-Employed

For self-employed individuals, an ITR acts as formal proof of income since there are no employer-provided salary slips. This can be important for various financial and legal purposes.

How to file ITR online?

Below are the steps to file your ITR online:

Step 1 - Go to the Income Tax e-filing website

Visit the official Income Tax Department’s e-filing portal.

Step 2 - Register or Log in to the website

If it is your first time filing, register on the platform. If you already have an account, simply log in with your credentials.

Step 3 - Enter the required details

Fill in essential information, including your name, address, date of birth, sources of income, investments, savings and other relevant information.

Step 4 - Select the mode of Filing

Select your filing mode. The two available options are online and offline. You can choose online here.

Step 5 - Select the status

Choose your status, such as individual taxpayer, HUF, firm, or other relevant option.

Step 6 - Select the appropriate ITR form

Pick the ITR form that applies to your income and filing status.

Step 7 - Summary of tax computation

Review the summary of your returns, validate all the details you have entered and pay any remaining balance tax, if applicable.

Step 8 - Proceed to validation

Many details, such as your name, date of birth, contact information, PAN, Aadhaar and bank details, are pre-filled in your ITR form. Carefully validate these before moving forward.

Step 9 - Submit the ITR

Once everything is complete and verified, you can submit your ITR for processing.

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