The income tax authorities notified the new tax return forms applicable for the financial year 2017-18 in April (online utility tools for a couple of forms have been published). An individual who is required to file a return of income for the financial year 2017-18 needs to do so by July 31, 2018 (unless extended). This deadline is not applicable for individuals / partner of a firm, whose books of accounts are required to be audited. Different tax return forms are applicable to different types of tax assesses. Choosing the right form is important as a wrong form will make your return defective. Various factors like the type of income, quantum of income, residential status of the tax payer etc. need to be considered to select the right form.
The new forms incorporate the changes brought about in the Finance Act, 2017. This year forms have been notified well in advance, providing sufficient time for the taxpayers to collate information and keep it ready.
Who can use ITR 1 Sahaj?
An individual who is a Resident and Ordinarily resident (ROR), having income from salaries, one house property, income from other sources (other than winnings from lottery, maintaining race horses, etc.), and having total income up to Rs 50 lakh is eligible to use ITR 1.
Unlike last year’s ITR 1 form, ITR 1 Sahaj can only be used by an individual who qualifies as ROR, which means that an individual who either qualifies as Not Ordinarily Resident (NOR) or a Non-resident (NR) cannot use this form. Another major change in ITR 1 as compared to previous year’s form is that, this year’s form has an additional requirement to furnish break-up of salary components along with the details of exemptions claimed. Individuals may find this additional disclosure requirement a bit difficult, especially if the information is not appropriately captured in the Form 16 issued by the employer. This year’s ITR 1 form also mandates to furnish a break up of income under the head income from house property which was earlier mandatory only in ITR 2 and other forms.
Who can use ITR 2?
ITR 2 is applicable to individuals and Hindu Undivided Families (HUFs) who are not eligible to file ITR 1 Sahaj and who do not have income under the head “Profits and Gains from Business or Profession” (PGBP). The field “PGBP”, which was reflecting in Part B -section TI (computation of total income) in last year’s ITR 2 form, is no longer available in the current year’s ITR 2 Form. Similarly, Schedule relating to details/income from partnership firms have also been removed in this year’s ITR 2 form. This means that anyone earning income from a partnership firm, has to file ITR 3, and not ITR 2.
Given that ITR 1 is not applicable for NORs and NRs anymore, ITR 2 will become the first suitable option for filing their return of income.
Details of applicability/non-applicability of ITR 1 and ITR 2 are mentioned in the below table.
|Forms||Applicable to||Not applicable to|
|ITR-1 Sahaj||* Individuals qualifying as Residents and Ordinary Residents (RORs)
* Total income consisting of:-
a) Salary/ Pension
b) One House Property (excluding cases where there is brought forward or carry forward loss from previous year)
c) Income from Other Sources (excluding winning from lottery and maintaining race horses)
|* An individual whose total income exceeds Rs 50 lakh
* Total income consisting of any of the following:
a)Income from more than one house property and where there is brought-forward or carry-forward loss from previous year
b)Winnings from lottery or income from race horses
d)Dividend income exceeding Rs 10 lakh received from domestic companies
e)Unexplained cash credits, investments, etc
f)Apportionment of income under the Portuguese Civil Code
g)Agricultural income in excess of Rs 5,000
h)Income from Business or Profession
i)Loss under the head ‘Income from other sources’
j)Claim for relief of foreign tax paid
k)Foreign asset reporting
l)Foreign sourced income
|ITR 2||Individual or HUF
a)who is not eligible to file ITR 1 Sahaj (Please refer to the non-applicability of ITR 1 Sahaj in the above row for the exhaustive list); and
b)who is NOT having any income from Business or Profession.
|Individual whose total income includes Income from Business or Profession|
ITR 3 & 4 – Applicability
The ITR 3 form has been specifically prescribed for individuals and HUFs having income from business or profession. This form cannot be used by any taxpayer other than individuals or HUFs (like companies, partnership firms, etc.) having income from business or profession.
ITR 4 has been prescribed for individuals, HUFs and partnership firms having “Income from business or profession” on presumptive basis. Additional reporting requirement for quoting GSTR (Goods and Services Tax return) Number, and turnover/gross receipts as per GST return filed has been included in the new form. Further, financial particulars of the business, where a tax payer has to declare details like partners/ members’ capital, secured loans, unsecured loans, advances, fixed assets, etc. have also been incorporated.
|Forms||Applicable to||Not applicable to|
|ITR 3||Individual or HUF having income from business or profession||Individual or HUF NOT having income from business or profession|
|ITR 4 Sugam||Individual/ HUF/ Partnership Firm who has:-
* Presumptive business income
* Salary/ Pension
* Income from One House Property (excluding cases where there is brought forward or carry forward loss from previous year)
* Income from Other Sources (excluding winning from lottery and maintaining race horses).
|Individual/ HUF/ Partnership Firm who has any of the following:-
* Income from more than one house property or where there is brought forward or carry forward loss from previous year
* Winnings from lottery or income from race horses
* Capital gains
* Dividend income exceeding Rs 10 lakh received from domestic companies
* Unexplained cash credits, investments, etc
* Agricultural income in excess of Rs 5,000
* Speculative Business income
* Agency business income or commission or brokerage
* Claim for relief of foreign tax paid
* Foreign asset reporting
* Foreign sourced income