Income Tax Return for FY 2023-24: Which ITR Form Should You Choose?
Mitali Dhoke
Jun 25, 2024 / Reading Time: Approx. 7 mins
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The Income Tax Return, or ITR, is a mechanism that taxpayers use to provide reports to the IRS (administrative revenue service of the Government of India) about their earnings and tax payments.
Don't be late to file your tax returns. Every taxpayer should file their ITR on or before the specified due date, i.e. July 31st, 2024. Begin the process of filing your Income Tax Return today with the help of our article Easy ITR Filing Process: 10 Steps to File Your ITR Online for FY 2023-24 (AY 2024-25). Also, keep your documents ready before you start filing your Income Tax Return for FY 2023-24 (AY 2024-25) by checking out our comprehensive list of the most important ITR documents.
The Income Tax Department has notified different ITR forms for different categories of taxpayers and their income sources, such as individuals, HUFs, corporations, and so on. While filing your taxes, the first and foremost step is to figure out 'Which ITR Form applies to you? How to choose the appropriate Income Tax Return form?'
Through this article, we will provide an in-depth understanding of every aspect related to Income Tax Return forms in a very simplified manner.
What Is Income Tax Return (ITR) Form?
ITR Form is a prescribed format through which you, the taxpayer, can communicate the details of your income earned, deductions claimed, and taxes paid in a financial year to the Income Tax Department. It also allows you to carry forward the losses and claim a refund from the Income Tax Department.
The Income Tax Department has notified 7 forms, i.e., ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-7, till date. The applicability of ITR forms varies depending on the taxpayers' income sources, residential status, the amount of the income earned and the category of the taxpayer like individuals, HUF, company, etc.
Why Should You File ITR?
Individuals who earn income above a certain threshold limit are generally required to file an Income Tax Return (ITR). For the Financial Year 2023-24 (AY 2024-25), individuals with total income exceeding the Basic Exemption Limit as mentioned below are required to file tax returns:
If your total income (before deductions) exceeds these thresholds, you are required to file an ITR.
| Particulars |
Amount (in Rs) |
| For individuals below 60 years |
Rs 2.5 lacs |
| For individuals above 60 years but below 80 years (senior citizens) |
Rs 3 lacs |
| For individuals above 80 years (super senior citizen) |
Rs 5 lacs |
Individuals with certain types of income - Regardless of the income threshold, certain individuals are required to file an ITR in India, which includes:
- Individuals who have earned income from business or profession
- Individuals who are claiming a refund of taxes
- Individuals who have earned income from Capital Gains, such as the sale of property or investments like mutual funds, etc.
- Individuals who have earned income from foreign assets or have foreign income
- Individuals who are eligible for relief or deduction under double taxation avoidance agreements
Also, you are mandatorily required to file Income Tax Return even if your income is below the basic exemption limit, but you meet one of these conditions:
- Deposited more than Rs 1 crore in your 'Current' bank account
- Deposited more than Rs 50 lacs in your 'Savings' bank account
- Spent more than Rs 2 lacs on foreign travel
- Electricity expenditure is more than Rs 1 lacs
- Tax deducted at source (TDS) or TCS is more than Rs 25,000
- Business turnover is more than Rs 60 lacs
- Professional income is more than Rs 10 lacs
What are the types of Income Tax Return Forms and how to choose a suitable one?
One of the most common mistakes taxpayers do when filing an Income Tax Return is using the wrong ITR Form. Using an incorrect form leads to a defective filing that the Income Tax Department will reject; thus, ensure you select the appropriate ITR Form for yourself.
Here's a list of ITR forms which are most commonly applicable for taxpayers:
|
Type of ITR Form
|
Applicable to
|
Eligibility
|
| ITR-1 (Sahaj) |
Individual (Resident) |
Individuals residing in India with a total income of up to Rs 50 lacs are eligible for ITR-1. This return form is for a resident individual whose total income for the FY 2023-24 include:
- Income from salary/pension
- Income from One House Property (excluding cases where loss is brought forward from previous years); or
- Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)
- Agricultural income up to Rs 5,000
|
| ITR-2 |
Individual, HUF |
ITR-2 is for Individuals and HUF with a total income exceeding to Rs 50 lacs and who earn revenue from sources like:
- Every type of income included in the ITR-1
- Individual who is a director in a company
- Individuals who have investments in unlisted equity shares at any time during the financial year
- Individual who is a Resident (ROR/RNOR)or non-resident.
- Income earned from capital gains (includes Crypto income or income from other VDAs)
- Income from foreign assets/other foreign income.
- Agricultural income of more than Rs 5,000/-
- Incomes where clubbing provisions are applicable
- Individuals having a financial interest in assets located outside India, which includes any signing authority for accounts held outside India
- One who desires to carry forward or bring forward loss under income from house property
- Any tax has been deducted under Section 194N
- In cases where payment or deduction of tax has been deferred on ESOP
|
| ITR-3 |
Individual or HUF, Partner in a firm |
This form is to be used by either an individual or a HUF carrying on a profession or a business (including presumptive income) and other sources. ITR-3 is for those with a total income for the FY 2023-24 exceeding Rs 50 lacs. It includes:
- Every income stated under ITR-2
- Income from business/profession
- Income from House Property (one or more)
- One with income under the head profits or gains of business or profession and who is not eligible to file Form ITR-1 (Sahaj), ITR-2 or ITR-4 (Sugam).
- Income earned from capital gains (includes Crypto income or income from other VDAs, reported as business income)
|
| ITR-4 (Sugam) |
Individual, HUF, Firm |
Individuals, HUFs, and partnership companies are subject to a presumptive taxation system on their earnings. ITR-4 is used to report revenue from a company with a turnover of up to Rs 2 crore that is subject to Section 44AD taxation.
In addition, ITR-4 is for revenue from an occupation with a turnover of up to Rs 50 lacs that is subject to Section 44ADA taxation. ITR-4 may be filed by a freelancer who works in a notified occupation. |
| ITR-5 |
Partnership Firm/ LLP |
ITR-5 is for firms, LLPs (Limited Liability Partnership), AOPs (Association of Persons), BOIs (Body of Individuals), Artificial Juridical Persons (AJP), Estate of deceased, Estate of insolvent, Business trust and investment fund. |
| ITR-6 |
Company |
This form can be used by companies which are not claiming any exemptions under Section 11(Income from property held for charitable or religious purposes) and by a person who is required to file the return in Form ITR-7. |
| ITR-7 |
Trust |
For persons including companies that are required to file returns under Section 139(4A), Section 139(4B), Section 139(4C), Section 139(4D), Section 139(4E) or Section 139(4F) should choose ITR-7 Form. |
What are the key changes notified in the new ITR Forms for FY 2023-24 (AY 2024-25)?
The CBDT released Notification No. 04/2023 on February 10, 2023, with revised versions of the Income Tax Return (ITR) forms and the ITR Acknowledgement. Although there are no major changes in the form, the substantial changes that are made are provided below:
-
There are no changes with respect to the eligibility criteria for the ITR-1 Form.
-
A new schedule for reporting Income from Virtual Digital Assets (VDA) such as Cryptocurrencies, Non-fungible tokens, etc., has been included under Capital Gains. As per this amendment, taxpayers must report the date of acquisition, date of transfer, cost of acquisition, and the proceeds received on the sale of VDAs.
-
The taxpayers have to report in the ITR-3 and ITR-4 forms if they have opted out of the new regime in the last assessment year and the year they opted out.
-
A disclosure for 'Income from retirement benefit accounts' is added, as per which the taxpayers need to make a disclosure about the taxable income on which relief under Section 89A was claimed in any of the earlier years.
-
In forms ITR-3/ITR-5/ITR-6, a new section for turnover and income from intraday trading must be reported under the 'Trading Account' Section.
-
In the current year's ITR Form, a new column has been added to 'Table D'. This column requires disclosure of the ARN (Donation Reference Number) for donations made to entities where a 50% deduction is allowed, subject to the qualifying limit.
-
Foreign institutional investors (FII/FPI) must share their SEBI registration number as an additional disclosure measure.
Now that you have understood the specifics of different types of ITR Forms, it will be easy for you to select the suitable one and file your tax returns accurately on time. Thanks to technology, filing your Income Tax Return is no longer a daunting task; the government has provided taxpayers with the convenience of filing their ITR online in the comfort of your home or office.
Download ITR forms for FY 2023-24 and AY 2024-25 - https://www.incometax.gov.in/iec/foportal/downloads/income-tax-returns
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MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.
She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.