Which ITR Form Applies to Whom? | Complete Guide to ITR 1 to ITR 7 | SONASIS Business Solution

Income tax returns (ITR) is one of the most important responsibilities of every taxpayer in India. However, many people get confused about which ITR form applies to them. With seven different ITR forms — ITR 1 to ITR 7 — each catering to different categories of taxpayers, it is essential to understand which form is relevant for your income type and source.

In this complete guide, we will break down each ITR form, explain who should use
it, and highlight the key differences to help you file your return accurately.

Why Choosing the Right ITR Form
Matters

Choosing the correct ITR form is crucial because: – Avoiding Rejection: If you file
using the wrong form, your return will be considered defective or invalid. – Compliance:
Filing correctly ensures smooth processing by the Income Tax Department. – Refund
Processing: The right form ensures timely credit of refunds and avoids
unnecessary scrutiny. – Legal Obligation: Filing incorrectly may attract
penalties or additional notices.

Now, let’s dive
into each ITR form.

ITR 1 (Sahaj)

Who Can File ITR 1?

ITR 1 is the simplest form, meant for individual taxpayers with relatively straightforward
income sources. You can file ITR 1 if: – You are a resident individual
(not for NRIs or HUFs). – Total income does not exceed ₹50 lakh. –
Sources of income include: – Salary or pension – One house property (excluding
cases of brought forward losses) – Other sources like interest income
(excluding lottery, horse racing, etc.)

Who Cannot File ITR 1? 

If your income exceeds ₹50 lakh. – If you have capital gains. – If you own foreign assets or
earn foreign income. – If you have income from more than one house property. –
If you are a Director in a company or hold unlisted shares.

Best For: Salaried employees or
pensioners with no complex income sources.

ITR 2

Who Can File ITR 2?

ITR 2 is applicable to individuals and Hindu Undivided Families (HUFs) not having income from business
or profession. Use this form if: – Your total income includes: – Salary or
pension – Income from more than one house property – Capital gains (short-term
or long-term) – Foreign assets or income from abroad – Agricultural income
above ₹5,000

Who Cannot File ITR 2? – If you have income
from business or profession.

Best For: Professionals, investors, NRIs, or
individuals with multiple income sources other than business.

ITR 3

Who Can File ITR 3?

This form is designed for individuals and HUFs earning income from business or profession. You can file ITR 3 if: – You earn income from proprietary business or profession. – You
have income from salary, house property, capital gains, or other sources in
addition to business. – You are a partner in a firm (not receiving salary as an
employee).

Who Cannot File ITR 3? – If you do not have
income from business or profession (in that case, use ITR 2).

Best For: Business owners, freelancers, and
professionals like doctors, lawyers, or consultants.

ITR 4 (Sugam)

Who Can File ITR 4?

ITR 4 is for individuals, HUFs, and partnership firms (other than LLPs) who opt for presumptive
taxation scheme under sections 44AD, 44ADA, or 44AE. Conditions: – Total
income does not exceed ₹50 lakh. – Presumptive income from: – Business
(44AD) – Profession (44ADA) – Business of plying, hiring, or leasing goods
carriages (44AE) – Income from salary, pension, one house property, or other
sources.

Who Cannot File ITR 4? – If income
exceeds ₹50 lakh. – If you have foreign assets or foreign income. – If you are
a Director in a company or hold unlisted equity shares.

Best For: Small businesses,
shopkeepers, and professionals opting for presumptive taxation.

ITR 5

Who Can File ITR 5?

ITR 5 is meant for entities other than individuals, HUFs, and companies. Eligible taxpayers
include: – Partnership firms (including LLPs) – Association of Persons (AOP) –
Body of Individuals (BOI) – Societies – Local authorities – Estate of deceased
or insolvent persons

Who Cannot File ITR 5? – Individuals and HUFs
(they must use ITR 1–4) – Companies (they must use ITR 6)

Best For: LLPs, partnership firms, and other
non-individual entities.

ITR 6

Who Can File ITR 6?

This form is exclusively for companies not claiming exemption under Section 11 (income from property held for charitable or religious purposes). Applicable for: – Private
limited companies – Public limited companies – Other companies not claiming
religious/charitable exemptions

Who Cannot File ITR 6?

Companies claiming
exemption under Section 11.

Best For:

All types of companies except those
registered for charitable or religious purposes.

ITR 7

Who Can File ITR 7? ITR 7 is for persons including companies required to furnish returns under: – Section 139(4A):
Income from property held for charitable/religious purposes – Section 139(4B):
Political parties – Section 139(4C): Scientific research associations, news
agencies, etc. – Section 139(4D): Institutions like universities, colleges,
etc. – Section 139(4E)/(4F): Investment funds, trusts, etc.

Who Cannot File ITR 7? – Regular taxpayers
with personal or business income.

Best For: Trusts, political parties, NGOs,
and research institutions.

Comparison Table: ITR 1 to ITR 7

ITR Form	Applicable To	Key Features
ITR 1	Resident individuals (income up to ₹50 lakh, salary/1 house property/other sources)	Simplest form (Sahaj)
ITR 2	Individuals/HUFs (no business income, multiple sources, capital gains, foreign income)	For investors & NRIs
ITR 3	Individuals/HUFs with business/profession income	Business owners/professionals
ITR 4	Individuals/HUFs/Firms under presumptive taxation (income up to ₹50 lakh)	Simplified for small businesses
ITR 5	Firms, LLPs, AOP, BOI, etc.	Non-individual entities
ITR 6	Companies (except charitable/religious ones)	Mandatory electronic filing
ITR 7	Trusts, political parties, NGOs, research bodies	For entities under Sec 139(4A–F)

Key Tips for Choosing the Right
ITR Form

1.   
Check Your Income Sources: Salary, house
property, capital gains, business, or foreign assets.

2.   
Assess Your Category: Individual, HUF,
partnership firm, company, or trust.

3.   
Income Threshold: Check if your income is
below or above ₹50 lakh.

4.   
Special Conditions: Foreign income,
agricultural income, or exemptions.

5.   
Use E-filing Portal: The Income Tax
e-filing portal suggests eligible forms based on entered data.

Final Thoughts

Choosing the correct ITR form is the first
and most crucial step in filing your income tax return. Whether you are a
salaried individual, a business owner, an NRI, or a trust, there is a
designated ITR form for your situation. Filing with the right form not only
ensures compliance but also helps in quicker refunds and smoother processing.

For most salaried individuals, ITR 1
or ITR 2 will apply. Business owners and professionals should look at ITR
3 or ITR 4 depending on whether they opt for presumptive taxation.
Firms and companies have their own designated forms — ITR 5 and ITR 6.
Trusts and charitable institutions must use ITR 7.

If you are unsure, consulting a tax
professional can save you from filing errors and notices. With this guide, you
now have a complete overview of which ITR form applies to whom.

Pro Tip: Filing before the due
date using the correct ITR form helps avoid penalties and ensures a stress-free
tax season!