By CA DHAVAL SHETH

WHICH ITR FORM TO CHOOSE & MISTAKES TO AVOID IN

FILING INCOME TAX RETURN

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The most of the confusion about income tax forms is choosing the correct income tax form / ITR for one’s income. It is very important to choose the correct form because choosing the wrong form will lead to your returns getting rejected.

Applicability of these forms depends on tax payer’s source of income. It is thus important to know the relevance of each of these forms.

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ITR - 1 OR SAHAJ

USED FOR: IndividualUSE IF HAVING INCOME FROM -

• Salary, Pension• Interest Income• One House Property (excluding cases where loss is brought forward

from previous years)DON’T USE IF –

• Exempt income is more than Rs 5,000 a year• Earning other income from lottery or horse-racing• Incurred loss under income from other sources• Have any assets in a foreign country• Claim tax benefit under foreign treaty

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ITR - 2USED FOR: Individual, HUF

USE IF HAVING INCOME FROM -• Salary, Pension• Capital Gains• Rental income from more than one house• Income from interest, other sources including lottery, horse-

racing.DON’T USE IF –

• Total income includes Income from Business or Profession.

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ITR - 3USED FOR: Individual, HUF being partners in a Partnership

Firm.USE IF HAVING INCOME FROM -

• Salary, Pension• Capital Gains• Rental income from one or more houses, carried forward losses• Income from interest, other sources including lottery, horse-

racing.• Partnership Firm

DON’T USE IF –• For sole proprietorship firms

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ITR - 4

USED FOR: Individual, HUF

USE IF HAVING INCOME FROM -• Proprietary business or profession

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ITR – 4S OR SUGAMUSED FOR: Individual, HUFUSE IF HAVING INCOME FROM –

• Presumptive Business covered under presumptive tax laws.DON’T USE IF –

• Self-employed• Made capital gains• Made gains from lottery or horse-racing• Earn commission from agency business• Income less than 8% of the turnover of your business• Income from speculative business etc….

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ITR – 5

USED FOR: Firm, AOP, BOI, Local Authority

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ITR – 6USED FOR: Companies

DON’T USE FOR –• Companies claiming exemption under section 11

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ITR – 7USED FOR: Trusts

USE FOR –• This Form can be used by persons including companies who are required to furnish return under section 139(4A) or under section 139(4B) or under section 139(4C) or under section 139(4D).

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ITR – V/Acknowledgement Form

It is an Acknowledgement form for all ITR- Forms

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SUMMARY CHARTFor Individuals, HUF

Sources of Income

ITR-1 ITR-2 ITR-3 ITR-4 ITR-4S

Individual Individual, HUF

1 Income from Salary/Pension ▪ ▪ ▪ ▪ ▪

2 Income from Other Sources (only Interest income or Family Pension)

▪ ▪ ▪ ▪ ▪

3 Income/Loss from Other Sources ▪ ▪ ▪ ▪

4 Income/Loss from House Property ▪ ▪ ▪ ▪

5 Capital Gains/Loss on sale of investments/property

▪ ▪ ▪

6 Partner in a partnership Firm ▪ ▪

7 Income from Proprietary Business/Profession ▪

8 Income from Presumptive Business ▪

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For Firms, Association of Persons (AoP), Body of Individuals (BoI), Local Authority(LA), Companies, Trusts, Fringe Benefit Tax (FBT) Return

Sources of IncomeITR-5 ITR-6 ITR-7 ITR-8

Firms, AOP, BOI, LA

Companies Trusts Only FBT# See Note

1 Income/Loss from Other Sources ▪ ▪ ▪

2 Income/Loss from House Property ▪ ▪ ▪

3 Capital Gains/Loss on sale of investments/property ▪ ▪ ▪

4 Income/Loss from Business▪ ▪ ▪

5 Fringe Benefit Tax▪ ▪ ▪ ▪

# ITR-8 is discontinued for e-filling from AY 2010-11 onwards, still continued for AY 2007-08,2008-09,2009-10

SUMMARY CHART

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Mistakes to Avoid while filing Income Tax Return

Choose correct ITR FormProvide correct contact details i.e. Postal address, contact no. and E mail id Provide correct bank details as refund will come through ECS only.Report all sources of Income (Don’t forget to report EXEMPT INCOME)Check 26AS while filing ReturnDo not ignore interest income: Interest earned on your savings account is allowed deduction up to Rs 10,000 but interest earned on bank deposits is taxable

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Mistakes to Avoid while filing Income Tax Return Cont…

File returns at the earliest: E-filing websites can get blocked closer to July 31/September 30 and refunds also come faster if filed on timeSend ITR-V post filing: Just e-filing isn't enough; you have to post signed ITR-V within 120 days of uploading the return to the CPC, BangaloreRead ITR-V instructions: ITR-V should be sent by speed post. Also, it should be printed in black and signed in original

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DYNAMIC ACCOUNTANTS FOR A COMPETITIVE WORLD

Thank You & Have a Happy Tax Return Filing

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