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Filing an Income Tax Return (ITR) is a mandatory requirement for individuals whose annual income exceeds the basic exemption limit. Choosing the correct ITR form is crucial for ensuring compliance with tax regulations.

Key Budget Update 2025: Increased Rebate and Tax-Free Income Limit

The government has increased the Section 87A rebate limit from ₹7 lakh to ₹12 lakh. Additionally, salaried individuals can now claim a ₹75,000 standard deduction, effectively making incomes up to ₹12.75 lakh tax-free.

Extended Time for Updated Returns (ITR-U)

Taxpayers now have 4 years (instead of 2) to submit updated ITRs. This change is effective from FY 2025-26.

What Are ITR Forms?

ITR forms are official documents used to report income details, deductions, and taxes paid in a financial year. They also enable taxpayers to carry forward losses and claim refunds. The correct form depends on factors such as income type, residential status, and taxpayer category.

Types of ITR Forms and Their Applicability

ITR-1 (Sahaj)

For: Resident individuals with income from salary, one house property, and other sources (excluding winnings from lottery or race horses). Total income must not exceed ₹50 lakh. Agricultural income up to ₹5,000 is permitted.

Not for:

• Non-residents
• Individuals earning capital gains, owning more than one house property, or having business income

ITR-2

For: Individuals and HUFs with income from salary, multiple house properties, capital gains, or foreign assets. This form is also for directors in a company or those holding unlisted equity shares.

Not for: Individuals earning income from business or profession.

ITR-3

For: Individuals or HUFs earning income from a business or profession. It is also applicable to partners in firms, those with foreign assets, or directors in companies.

Not for: Companies, trusts, or LLPs.

ITR-4 (Sugam)

For: Resident individuals, HUFs, and partnership firms (excluding LLPs) with income from business or profession under the presumptive taxation scheme (Sections 44AD, 44AE, and 44ADA). Total income should not exceed ₹50 lakh.

Not for:

• Those maintaining regular books of accounts
• Individuals earning income from capital gains

ITR-5

For: LLPs, partnership firms, AOPs, BOIs, and certain investment funds or trusts.

Not for: Individuals, HUFs, or companies.

ITR-6

For: Companies that do not claim exemptions under Section 11.

Not for: Charitable or religious trusts (eligible for ITR-7).

ITR-7

For: Entities required to file under Sections 139(4A), 139(4B), 139(4C), 139(4D), 139(4E), or 139(4F). These include political parties, educational institutions, and charitable trusts.

Consequences of Filing the Wrong ITR Form

Filing the incorrect ITR form may result in:

• Rejection of Return: The Income Tax Department may reject the submission, causing delays or penalties.
• Scrutiny or Assessment: Filing in the wrong form may attract additional scrutiny.

Corrective Measures

• Revised Return: If identified before the deadline, a revised ITR can be filed without restrictions.
• Defective Return Notice: If notified by the department, the mistake must be corrected within 15 days (extensions can be requested).

Who Must File an ITR?

Individuals must file an ITR if their total income exceeds the exemption limit:

• Below 60 years: ₹2.5 lakh
• 60 to 80 years: ₹3 lakh
• Above 80 years: ₹5 lakh

Under the new tax regime for FY 2024-25, the exemption limit is ₹4 lakh. Certain individuals must file an ITR regardless of income level, such as those with:

• Business or professional income
• Capital gains
• Foreign income or assets
• Refund claims
• Double taxation relief claims

Importance of Filing ITR

• Legal Record: Serves as official proof of income and identity.
• Deduction Claims: Enables access to tax-saving deductions and refunds.
• Loan Processing: Required for loan applications.
• Visa Applications: Often requested for international travel documentation.
• Avoid Penalties: Non-compliance may attract penalties.
• Loss Carry forward: Allows taxpayers to offset losses against future income.

How to Download ITR Form Utility

ITR forms can be accessed from the official Income Tax Department website:

1. Visit the Income Tax e-filing portal.
2. Navigate to the "Downloads" section.
3. Select the desired assessment year.
4. Click on "Common Offline Utility (ITR 1 to ITR 4)."
5. Download the Excel-based utility file for easy data entry.

Understanding Form 16

Form 16 is issued by employers to employees as proof of TDS deduction. It comprises:

• Part A: Details about employer, employee, PAN, TAN, and TDS paid.
• Part B: Salary breakup, exemptions, and deductions claimed.

Conclusion

Choosing the appropriate ITR form is essential for smooth tax filing. Staying informed about changes in tax slabs, deduction limits, and filing timelines helps ensure compliance while maximizing potential benefits. Individuals uncertain about which ITR form to file may consider consulting a tax professional for guidance.

If you have any further questions or need assistance, feel free to reach out to us at admin@ushmaassociates.com or info@nricaservices.com, or contact us via call/WhatsApp at +91 9910075924.

Stay Updated, Stay Compliant!

Disclaimer: Aim of this article is to give basic knowledge about the topic to people who are not in touch with Indian tax norms. When anybody is dealing with these kinds of cases practically, he shall consider all relevant provisions of all applicable Laws like FEMA/Income Tax/RBI /Companies Act etc.