Choosing the right ITR form for your Income Tax return filing can be quite confusing. We demystify the ITR forms and all the jargon associated with it. Keep it handy for your returns in 2010.
Every individual whose total income before allowing deductions under Chapter VI-A of the Income-tax Act, 1961 exceeds the maximum exemption limit, is obligated to furnish his return of income.
All sources of income are categorised into 5 heads under the IT Act –
I) Income from Salary;
II) Income from House Property;
III) Income from Capital Gains;
IV) Profits or Gains of Business of Profession; and
V) Income from Other Sources.
The source(s) of income will decide the type of ITR form to be used by the assessee.
Earlier this month, the government has released improved ITR forms that need to be used for filing one’s tax returns. Let’s understand the types of ITR forms available -
[A] On the basis of source(s) of income:
ITR-1: Recently upgraded as SARAL-II, it is to be used by an individual having –
i) Income from Salary/Pension; and/or
ii) Income from ‘only 1’ House Property (Excluding - cases where loss is brought forward from previous years); and/or
iii) Income from Other Sources (Excluding – Winnings from lotteries and horse races).
Note: In case income from the above sources (of the individual’s spouse, minor child) needs to be clubbed, the same can be done in ITR-1 itself.
The new ITR-1 (SARAL-II) requires minimal paperwork as no document needs to be attached with the form.
ITR-2: It is to be used by an individual and HUF having –
i) Income from Salary/Pension; and/or
ii) Income from ‘more than 1’ House Property; and/or
iii) Income from Other Sources; and/or
iv) Income from Capital Gains
ITR-3: It is to be used by an individual and HUF who is a partner in a firm.
ITR-4: It is to be used by an individual and HUF having profits/gains from business/profession.
ITR-5: It is to be used by a partnership firm, Assocation of Persons (AOP), Body of Individuals (BOI), Artificial Judicial Person (AJP), Co-operative Society or local authority.
ITR-6: It is to be used by a company.
ITR-7: It is to be used by Trusts and Non-Profit Organizations.
- ITR V: Where the data of the Return of Income in Forms Saral-II (ITR-1), ITR-2, ITR-3, ITR-4, ITR-5 & ITR-6 is transmitted electronically without digital signature.
- Acknowledgement Form: It is issued by Income Tax Department as acknowledgement copy for filing return (s).
[B] Types of Income Tax Returns (on the basis of time of filing):
- Loss Return: A loss return is filed in case of loss from business/profession and/or capital gains. A loss return must be filed within the due date of filing tax return, otherwise it is not allowed.
- Belated Return: An IT return not filed within the relevant due date is called a ‘belated return’. A belated return can be filed earlier of the below 2 –
a) Within 1 year from the end of the relevant Assessment Year (AY); or
b) On completion of assessment
- Revised Return: A ‘revised return’ is one which has been rectified of errors/mistakes made while filing the original IT return. Any mistake/error is the original return must be rectified and submitted by the earlier of the below 2 –
c) Within 1 year from the end of the relevant Assessment Year (AY); or
d) On completion of assessment
- Defective Return: A defective return is one in which there are mistakes, errors and/or incomplete filing.
If the AO (Assessing Officer) feels that there are mistakes, omissions and other defects in the original return filed, he may send back such a return to the assessee (tax payer) to rectify the defects. The assessee needs to make the necessary updates and re-file the same within 15 days of receipt of defective return. Else, it will be deemed to be not submitted at all by the AO.
Note: If the assessee re-files the defective return after the stipulated time of 15 days but before the completion of assessment, the AO can treat the amended return as a valid one.
The author Priya Rao is a CFP certified financial planner