Income Tax Return filing: ITR 1, ITR 2, ITR 3, or ITR 4? Which income tax form applies to you?

There are four Income Tax Return (ITR) forms applicable to an individual. The deadline to file the Income Tax Return (ITR) for the financial year 2022-23 (assessment year 2023-24) is 31st July 2023. The income tax department has enabled online filing of ITRs 1 and 4.

Who should file an ITR?

You are mandatorily required to file your ITR if the aggregate of your income from all sources is more than the threshold of the basic exemption limit. The threshold of basic exemption is ₹2.50 lakh for those below 60 years, and 3 lakh for individuals between 60 and 80. It is ₹5 lakh for those over 80 years.

“The income to be considered for this purpose is the income before various deductions available under Chapter VIA, which comprises mainly Section 80C, 80 CCD, 80D, 80 G, 80TTA, 80 TTB, etc,” said tax and investment expert Balwant Jain.

Although individuals are waiting for their Form-16 to file their ITR. Generally, salaried individuals receive Form 16 from their employer on or before the 15th of June of the assessment year.

Selection of the correct ITR Filing form is important

One of the most common mistakes when filing an ITR is using the wrong ITR form. “Using an incorrect form leads to a defective filing that will be rejected by the Income Tax Department,” said Archit Gupta, Founder, and CEO, ofClear

The choice of the appropriate ITR form primarily depends on your sources of income. For instance, if you are a salaried individual, you can file returns using ITR Form 1. However, if you have both salaried income and capital gains from investments, you should use ITR Form 2, said Gupta.

On the other hand, if you are self-employed with business profits as your income source, you should file your returns using ITR Form 3, he added.

ITR Form 1: This can be filed by an ordinary resident individual (not HUF) having an income of up to ₹50 lakh. Total income for this purpose includes-- income from salary or pension, income from one house property, income from other sources such as interest from a bank account

ITR form 2: Individuals and HUFs having a total income of more than ₹50 lakh. The income should not be from profits and gains of business or profession can file ITR-2. 

ITR Form 3 - For individuals and HUF having income from business or profession, or an individual holding partnership in a firm may file ITR-3.

ITR Form 4 are simpler forms that cater to a large number of small and medium taxpayers.

ITR Form 5 is filed by LLPs and businesses

ITR Form  6 is filed by businesses respectively

ITR Form 7 is filed by LLPs and businesses.

The income tax department is yet to separately issue the instructions regarding the applicability of different ITR forms for the Financial Year (FY) 2022-23.  The Central Board of Direct Taxes (CBDT) notified income tax return (ITR) forms for FY 2022-23 via a notification in February.