As the financial year has come to an end, salaried and self-employed professionals now have to start preparing so that they can file their income tax return (ITR) for FY 2019-20 on time. To avoid the mad rush of making last minute tax saving investments and glitches, it’s better to prepare ahead of time.
If your question is: Which ITR should I file? Which one to use from the various types of ITR? Read on to find out simple and practical answers.
Let identify the right type of ITR form based on your tax profile, income source and amount. Here are the various types of ITR forms and their applicability.
ITR-1 form is applicable if you are an individual resident earning income from salary/pension, one house and other sources, including agriculture income not exceeding Rs. 5,000. Your total annual income should not exceed Rs. 50 lakh in this case.
ITR-2 is applicable if total income from sources mentioned in ITR-1 is above Rs. 50 lakh and if:
ITR-3 form should be used for filing income tax returns if you have a business or you or a professional. This type of ITR is also applicable if you are an individual director in a company and own unlisted shares of a company.
The income tax return file should also include income from house property, salary, pension, as a partner in a firm and other sources.
ITR-4 or SUGAM form is used for individuals, HUFs and partnership firms (except LLPs) being a resident having Total Income upto Rs.50 lakhs and having income from Business and Profession which is computed under sections 44AD, 44ADA or 44AE.
ITR-5 is applicable for Limited Liability Partnerships (LLPs), Artificial Juridical Person (AJP), Association of Persons (AOPs) and Body of Individuals (BOIs). The form is also used by investment funds, business trusts, and estates of the deceased and insolvents.
ITR-6 can only be filed electronically and is applicable for all other companies except those claiming exemption under Section 11 of the Income Tax Act, 1961.
ITR-7 is applicable for charitable trusts, political parties, religious organizations, news agencies, scientific research associations, universities, colleges and hospitals.
In January 2020, while the Central Board of Direct Taxes (CBDT) first notified ITR form for FY 2019-20 in advance for the convenience of taxpayers, they also announced revisions to the rules for ITR-1 and ITR-4 form applicability.
According to CBDT, an individual taxpayer who is a joint-owner in a single house property can now file the return in ITR-1 or ITR-4. Secondly, if a person who is otherwise not required to file return but is required to file return due to fulfilment of one or more conditions in the seventh proviso to section 139(1) of the Income-tax Act, 1961 (the Act), i.e., has deposited more than Rs. 1 crore in a bank account or spent Rs. 2 lakh in foreign travel or 1 lakh on electricity during the previous year, and was also made eligible to file ITR-1 Form. You need to keep these new revisions in mind for income tax return filing FY 2019-2020 before selecting the right ITR form.
If you are opting to take advantage of income tax exemptions and deductions, don’t wait till the last minute. It’s always recommended to make tax saving investments early on to avoid faulty decision making. iSelect Smart360 Term Plan from Canara HSBC Life Insurance is a tailor-made plan for your family with whole life cover, return of premium, multiple payout options, increased coverage and maximum tax benefits under Section 80C. Enquire for a quote today!
Hello friends, I am Prince Doshi. I am a qualified and practicing chartered account for over 9 years and provide advisory services in the field of direct and indirect access audits, GST Implementation, MIS and More. In the previous video we discussed the need for understanding the ITR filling process and explained broadly the process of filing your income tax return. In this video which is a part of tax video series initiative by Canara HSBC Life Insurance Company, and I am going to talk about the pre-requisites to file ITR.
As per the income tax rules difference forms are notified for different types of taxpayers, each year government makes some modifications to the prescribed forms. The taxpayer has to first determine which IT return is applicable to him or her and accordingly proceed with the return filing, the preliminary step is to determine which IT forms is applicable on the taxpayer for different sources of income earned by him her.
There are 5 major heads of income for which different IT forms are prescribed and used to file by the taxpayer.
I. Income from Salary II. Income from House Property III. Income from capital gain IV. Income from business & profession V. Income from other sources
What are the pre-requisites for filling income tax return mandatory, Pan Card, Aadhar Card which needs to be linked with pan card for e-verifying the return, mobile number and email ID, bank account number and IFSC Code and what are the optional documents Form-16 issued by the employer for salaried employees, bank statement for saving bank interest, interest income statement on fixed deposits, TDS certificates Issued by bank and others? Form 26 AS which can be downloaded from TDS traces website. Other documents for claiming deductions such has investments, life insurance premium, tuition fees etc.
I hope this video helped in understanding the pre-requisites for filling ITR, thank you