Which ITR Should I File? Understanding Types For FY 2024-25 (AY 2025-26)
Taxation plays a crucial role in every individual's financial journey, influencing income management and long-term wealth planning. From calculating taxable income to determining tax liability and filing returns, understanding the process is essential. Among these, filing Income Tax Returns (ITR) is often seen as one of the most technical and complex steps.
In this blog, we simplify the tax filing process by exploring different types of ITR forms, their eligibility criteria, key components, and step-by-step filing procedures. Whether you're a first-time filer or looking to refine your tax planning strategy, this guide will help you navigate the process with confidence.
What Is ITR (Income Tax Return)? Purpose, Meaning and Components
An Income Tax Return (ITR) is a formal declaration of a taxpayer's financial transactions, assets, and tax payments for a specific financial year. It is filed during the tax payment process.
This return provides a comprehensive record of a taxpayer's financial transactions for the relevant financial year. With the advent of digitalization, taxpayers can now file ITRs online, making the process more efficient. The ITR serves as an important financial document, reflecting a taxpayer's income, tax liability, and overall financial standing.
For every financial year, the eligible taxpayers calculate their liability and file income tax return in the following year (assessment year). ITR or Income Tax Return is a form filled with comprehensive details to report the tax liability, components and payment of the taxpayer.
Components Of An Income Tax Return
An Income Tax Return (ITR) form consists of several key components that help determine a taxpayer's tax liability, eligible deductions, and overall financial planning. Understanding these elements is crucial for accurate tax filing. Here are the main components of an ITR:
1. Taxpayer Details: Permanent Account Number (PAN) Card, name, opted tax regime, type of the taxpayer and type of return.
2. Gross Total Income: Calculation under different income tax heads and exemptions like agriculture income.
3. Total Deductions: It will differ based on the regime. Aspects like deduction under different sections and their proofs are considered here.
4. Tax Paid During the Financial Year: It usually includes the tax deducted at source statements, self-assessment tax, advance tax, and more.
5. Total Tax Liability: It will be calculated based on the tax regime and applicable tax rates on the final taxable income. A surcharge will also be charged on the tax liability.
Apart from these regular components, the required details for income tax forms may differ based on the type of ITR.
Also Read: TDS Rate Chart FY 2024-25
Why Should You File An ITR?
Filing an Income Tax Return (ITR) is more than just a legal requirement—it is a crucial step in maintaining financial transparency and discipline. It serves as an official record of your income and tax payments, offering several benefits beyond compliance.
Here’s why filing an ITR is important:
1. Proof of Income
An ITR serves as documented proof of income, which is often required when applying for:
- Bank loans (home loans, car loans, personal loans, etc.)
- Credit cards and financial investments
- Visa applications for international travel
2. Legal Compliance & Avoiding Penalties
Filing an ITR ensures compliance with tax laws and helps avoid penalties for non-filing. Failure to file a return on time can lead to fines and legal consequences.
3. Claiming Income Tax Refunds
If you have paid excess tax, either through TDS (Tax Deducted at Source), advance tax, or self-assessment tax, filing an ITR is necessary to claim a refund from the Income Tax Department.
4. Carrying Forward Losses
Filing an ITR allows you to carry forward capital losses (e.g., from stock market investments or property sales) to offset future gains, reducing tax liability in subsequent years.
5. Maintaining a Strong Financial History
A consistent ITR filing record builds financial credibility, making it easier to:
- Secure higher loan approvals
- Establish financial discipline
- Show a trackable financial history for future investments
ITR Filing Deadlines
To ensure timely tax compliance, taxpayers must adhere to the ITR filing deadlines1:
- July 31 – For individuals and taxpayers not requiring an audit
- October 31 – For businesses requiring an audit2
However, the government may extend these deadlines if necessary. For instance, for FY 2023-24, the original ITR filing deadline was July 31, 2024, but it was later extended to January 15, 2025.
Filing your ITR on time ensures a smooth tax filing process and helps you avoid last-minute hassles.
When Is Income Tax Return (ITR) Filing Mandatory In India?
Some of the basic criteria for compulsory to file ITR are as follows:
Criteria | Income Limit | |||||||||
The total income is above the no-tax limit. |
| |||||||||
Foreign investment or income in the portfolio. | Taxable based on the type of the taxpayer. | |||||||||
Foreign travel expenditure. | INR 2 lakhs | |||||||||
Deposited in one or more current accounts in a bank or co-operative bank. | INR 1 crore | |||||||||
Electricity bill expenditure. | INR 1 crore | |||||||||
Business income. | INR 60 lakhs | |||||||||
Professional income. | INR 10 lakhs |
Source: Income Tax Department3
Which ITR To File?
There are mainly 7 types of ITR forms, which are discussed below for a better understanding of their suitability:
1. ITR-1 (Sahaj)
It is an income tax return that is suitable for individuals earning income up to INR 50 lakhs from only 3 sources: through salary/pension, one house property and other source (excluding horse race or lottery winning)4.
2. ITR-2
Individuals or HUFs not categorised under the ITR-1 can file income tax with this type of return. However, they should not have incomes like interest, salary, bonus, commission or remuneration under the heading ‘Profit and Gains from Business and Profession’.
3. ITR-3
Individual or HUF earning under the income tax head of ‘Profit and Gains from Business and Profession’ in nature of interest, salary, bonus, commission or remuneration.
4. ITR-4 (Sugam)
It is a unique return enabling individuals/HUFs earning income from business or profession on the presumptive basis to file an income tax return online. In this, the taxpayer may also have income from one house property and other sources.
5. ITR-5
This type of income tax return is suitable for a firm, local authority, limited liability partnership, artificial judicial person, representative assessee, business trusts, investment funds, and so on, specifically mentioned entities or persons.
6. ITR-6
Particularly, the companies, except charitable and religious trusts, who can claim exemption, are eligible to file this type of ITR.
7. ITR-7
The companies, trusts, political parties or similar entities required to fill the ITR under specific sections 139 (4A), 139 (4B), 139 (4C), and 139 (4D) are eligible for this type of return.
Who Is Exempt From Filing ITR In India?
Exemption from filing an ITR depends on various factors, including the taxpayer's status, type of income, and applicable tax laws. However, some of the common criteria for exemption based on the income tax return type are as follows:
ITR Type | Exemption Criteria |
ITR-1 |
|
ITR-2 | Individuals or Hindu Undivided Families having income from business/ profession, in nature of interest, salary, bonus, commission or remuneration, cannot file the ITR-2 form. |
ITR-3 |
|
ITR-4 |
|
ITR-5 | Individual/person/entity filing returns under section 139 clauses A, B, C and D. |
ITR-6 | Company claiming exemption under section 11 |
ITR-7 | No companies/entities than those under section 139 clause A, B, C, D. |
Source: Income Tax Department5
Procedure For Downloading Income Tax Return Form For FY 2024-25
Taxpayers can check their eligibility, tax details, and ITR filing deadlines before downloading the necessary ITR forms6. For offline payment via cheque, demand draft, or cash, payments can be made at authorized bank branches.
The e-filing procedure for income tax returns has simplified the crucial annual task. Taxpayers can follow these steps for paying income tax online:
Step 1. Navigate to the income tax department website to e-file the ITR: Income Tax Return
Step 2. Select ‘e-pay tax’ and start the ITR login with a Permanent Aadhar Number (PAN) card and mobile number.
Step 3. Enter the one-time password, check the details and enter the assessment year, tax amount, cess and other details.
Step 4. Verify the challan and continue the tax payment.
Step 5. After a successful process, taxpayers can proceed with the ITR download on the same website.
Conclusion
An Income Tax Return (ITR) is more than just a tax payment statement—it serves as a comprehensive financial document that reflects a taxpayer’s income, assets, and tax liabilities. It acts as proof of income, making it essential for various financial transactions, including loan approvals, tax refunds, and investment planning. With seven types of ITR forms, taxpayers must choose the appropriate one based on their income sources and tax status.
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Frequently Asked Questions On Which ITR Should I File?
1. Who cannot use the ITR-1 form?
The following individuals are not eligible for filing the ITR-1 Sahaj form:
- Non-resident or Non ordinary resident
- Director of a company
- Total income exceeding INR 50 lakhs
- Owning more than 1 house property
- Held unlisted shares in the previous year
- Claiming a deduction for royalty from patents or books
- Investment, assets or income from abroad
- Earning income from business/profession, capital gains, dividend more than INR 10 lakhs, agricultural income more than INR 5,000 and taxable income under ‘Other Sources’ head.
2. Who cannot use the ITR-2 form?
Individuals or Hindu Undivided Family having income from business/ profession, in nature of interest, salary, bonus, commission or remuneration, cannot file the ITR-2 form.
3. Who cannot use the ITR-4 form?
The following individuals are not eligible for filing the ITR-2 Sugam form:
- Non-resident or Non ordinary resident
- Director of a company
- Total income exceeding INR 50 lakhs
- Owning more than 1 house property
- Held unlisted shares in the previous year
- Claiming a deduction for royalty from patents or books
- Investment, assets or income from abroad
- Earning income from business/profession, capital gains, dividends more than INR 10 lakhs, agricultural income more than INR 5,000, taxable income under ‘Other Sources’ head, speculative business, and that from agency, commission or brokerage.
References
1. Income Tax Department, accessed from: https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+filing+the+return+of+income
2. Economic Times, accessed from: https://economictimes.indiatimes.com/wealth/tax/income-tax-department-extends-deadline-to-file-revised-and-belated-itr-to-january-15-2025/articleshow/116821027.cms?from=mdr
3. Income Tax Department, accessed from: https://incometaxindia.gov.in/tutorials/4.%20return%20of%20income.pdf?utm_source=chatgpt.com
4. Income Tax Department, accessed from: https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+filing+the+return+of+income
5. Income Tax Department, accessed from: https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+filing+the+return+of+income
6. Income Tax Department, accessed from: https://www.incometax.gov.in/iec/foportal/downloads
7. Income Tax Department, accessed from: https://eportal.incometax.gov.in/iec/foservices/#/e-pay-tax-prelogin/user-details
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