The clock’s ticking down to the deadline. The last date to file income tax returns for FY 2022-2023 is July 31, 2023. Have you done the needful? It’s always advisable to not postpone this exercise to the eleventh hour but do it as soon as possible.
Income tax filing is done in different forms prescribed by the Income-Tax Department. Here, we take a look atimportant ITR forms, who should opt for what, and also the key changes over the past year.
Easy form for simple earnings
ITR 1 or SAHAJ is the most commonly used form, especially by the salaried class. It is for those assessees who have income from salary or pension, income from one house property (not a case of brought forward loss or loss to be carried forward) or income from other sources (not being lottery winnings and income from race horses and income chargeable to tax at special rates).
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This form is applicable to assessees whose annual income is not more than ₹50 lakh and agricultural income (if any) does not exceed ₹5,000. This ITR form is strictly for resident individuals and therefore any non-resident or not ordinarily resident is prohibited from using it. This form is also not applicable for individuals who are directors of any company or those who have held equity shares of an unlisted company.
High income earners
ITR 2 is for Individuals and HUFs (Hindu Undivided family) who do not have any income chargeable to tax from business or profession. Individuals and HUFs with income over and above ₹50 lakh will have to file their returns in this format. In the case of ITR 1, only resident individuals with salary/pension income with single house property file their return. However, ITR 2 can be used by individuals and HUFs whose income is higher than ₹50 lakh and the source of income can also include capital gains, income from multiple house property, foreign income, etc. ,in addition to income from salary/pension.
This form can also be used by the director of a company, who holds unlisted shares. In the ITR 2 form released for FY 2022-23, a new schedule for VDA (Virtual Digital assets) has been added i.e., for crypto earnings, if any. Capital gains have to be bifurcated as income from transfer of VDA and other capital gains. In addition, income taxable during the previous year on which relief under Section 89A was claimed in any earlier previous year also has to be furnished.
Inflows from business and other sources
This form is for individuals and HUFs who have income from business/profession. The income of assessees may also include that from house property, salary, other income, or capital gains, in addition to income from business or profession.
ITR 3 for assessment year 2023-2024 has a few changes regarding intraday trading income. In the new ITR 3, turnover and income from intraday trading has to be mentioned and included as profit/loss from speculative business. The form also seeks break-up of the income of business and profession to arrive at income from virtual digital assets for considering separately.
Presumptive taxation
ITR 4 can be used by an individual/HUF/Firm whose total income has business income and who has opted for presumptive taxation (u/s 44AD, 44AE and 44ADA) in addition to incomes under other heads such as salary, house property or capital gains. It must be remembered that the sections of presumptive income apply only if the income from business or profession is not more than ₹50 lakh.
ITR 4 for assessment year 2023-24 has one difference compared to the previous year. The new form seeks information with respect to concessional tax regime under Section 115BAC, this disclosure is sought in both ITR 3 and ITR 4. Assessees who have opted for the new regime will have to provide details of Form 10IE.