INCOME TAX

Income Tax (Direct Tax)

Anyone earning an income above a certain amount is subject to income tax. The income could be from salary, rent, and interest income from savings, income from mutual funds, sale of property or business or professional income. Income tax rates are decided at the start of the financial year in the Union Budget (in the Parliament of India). The tax paid on these incomes is called the income tax.

Income Tax Return

It is simply a Form to be filed with the Income Tax Department. A Form to be filed as a statement of income earned. It is arranged in such a way that calculating tax liability, scheduling tax payments or requesting refunds for the overpayment of taxes has been made convenient for the taxpayers. They must, first, determine the type of Income Tax Return (ITR) Form they need to fill before actually filing their Returns. Which Form is to be filled, depends on the income that the taxpayer earns. Its purpose is to report our income and taxes paid thereon to the government.

ITR -1: Form ITR-1 (also referred to as SAHAJ popularly) has to be filed by individuals who have an income of not more than INR 50 lakhs from the following sources in a financial year:

  • Salary/Pension
  • House Property
  • Other sources
  • Agricultural Income (Up to INR 5,000)

ITR-2 must be filed by individuals and HUFs who are not eligible to file ITR-1 Sahaj form.

ITR-3

The ITR-3 Form applies particularly to those Individuals and Hindu Undivided Families who have income from carrying on a profession or from Proprietary business. If an Individual/HUF is having income as a partner of a partnership firm that is carrying out business/profession, he cannot file ITR-3. In such case, he is required to file ITR 2.

ITR-4

Form ITR-4 is required to be filed by those individuals whose income comes from the following sources:

  • Business Income under Section 44AD/Section 44AE
  • Income from profession as per Section 44ADA
  • Income up to INR 50 lakhs from Salary/Pension
  • Income up to INR 50 lakhs from One House Property (does not include brought forward loss or loss to be brought forward under this head)
  • Income from other sources up to INR 50 lakhs (does not include winning from lottery or horse races)
  • Form ITR-4 can also be filed by freelancers in case their income does not exceed INR 50 lakhs.

ITR-5

The following are eligible for filing Form ITR-5:

  • A Firm
  • Limited Liability Partnership
  • Association of Persons (AOP)
  • Body of Individuals (BOI)
  • Artificial Juridical Person (AJP) referred to in Section 2(31)(vii)
  • Local Authority referred to in Section 160(1)(iii) or 160(1)(iv)
  • Cooperative Society
  • Society registered under Societies Registration Act, 1860 or under any State law trust (except trusts eligible for filing Form ITR-7)
  • Estate of Deceased person
  • Estate of an insolvent
  • Business Trust referred to in Section 139(4E)
  • Investment Fund referred to in Section 139(4F)

ITR-6

Every Company irrespective of its structure registered under the Companies Act 2013 or earlier under the Companies Act, 1956, shall file Income Tax Return through form ITR-6. However, those companies whose income is from the charitable or religious organization are not required to file Form ITR-6 (exempt under Section 11).

The taxpayer liable to file Form ITR-6 must obtain an audit report under Section 44-AB. As per section 44-AB, an entity whose sales, turnover, or gross receipt exceed INR 1 Crore in the preceding financial year must compulsorily get its accounts audited from a Chartered Accountant.

Connect with us

This field is required.
This field is required.
This field is required.
This field is required.
This field is required.