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WHICH INCOME TAX FORM SHOULD I USE FOR FILING ITR?

Introduction to Choosing the Right Income Tax Form for Filing ITR

Filing income tax returns (ITR) is a fundamental obligation for every eligible taxpayer in India. It is a process through which individuals, businesses, and other entities report their financial transactions and income to the government, ensuring transparency and compliance with tax laws. Choosing the correct ITR form is the first crucial step in the tax-filing process, and it is essential to select the one that best matches your financial situation and income sources.

This introductory guide will help you understand the various income tax return forms available in India and provide insights into the factors that determine which form is most suitable for your needs. While it won’t be 3000 words long, it will provide you with a comprehensive overview to make an informed decision when filing your income tax return.Visitofficialwebsite 

Determine Your Eligibility for ITR

  • Income from Salary or Pension
  • Income from One House Property (excluding cases where loss is brought forward from previous years)
  • Income from Other Sources (like interest)
  • Total Income up to ₹50 lakhs

Check Eligibility for Other Forms

  • ITR-2: Use this form if you have income from sources other than those listed in ITR-1. This includes capital gains, foreign income, more than one house property, or income from business/profession.

  • ITR-3: If you are an individual or HUF with income from a business or profession and not opting for the presumptive taxation scheme, use ITR-3.

  • ITR-4 : For individuals, HUFs, and firms opting for the presumptive taxation scheme under sections 44AD, 44ADA, or 44AE.

  • ITR-5, ITR-6, and ITR-7: These are for entities like firms, LLPs, companies, or individuals who need to file under specific sections of the Income Tax Act.

Gather Required Documents

Before starting the filing process, gather all the necessary documents, including:

  • PAN (Permanent Account Number) Card
  • Aadhaar Card
  • Bank Statements
  • Form 16 (for salaried individuals)
  • TDS certificates
  • Details of all bank accounts
  • Details of investments and expenses (for deductions)
  • Any other relevant financial documents

What are the Benefits of Filing Income Tax Online

  • Time-Saving

The first thing anyone wants to save is time. Filing your taxes online can drastically reduce the time spent on the entire process.

The digital medium removes the need for tedious paperwork and manual submission, saving time. The moment you click the submit button, your forms are digitally processed.

  • Automated Acknowledgments

The system automatically generates confirmations and receipts upon successful submission of income tax payment. This automated feature ensures you do not need to keep checking for your Income Tax Deposit status.

Online portals operate around the clock, allowing you to file your taxes even during non-business hours, adding an extra layer of convenience.

  • User-Friendly Interface

User experience is paramount for any online service. Online tax filing systems are designed to be intuitive and easy to use. The interface is designed to be intuitive. Menus and options are marked, simplifying the task for people of all ages.

Additionally, online tax portals, including the government’s website, provide a guided procedure. Each step comes with instructions, so you are never left guessing.

  • Accessibility and Convenience

When you encounter any difficulties, there are quick tips, FAQs, and even chat support in some cases. These resources are embedded directly within the portal to provide real-time assistance.

Being able to file your taxes from any location is a big win. For various reasons, the digital platform offers unmatched convenience, especially for location-bound people.

With online portals, geographical limitations are also eradicated. You can file your returns from the comfort of your home or while on vacation.

  • Ideal for NRIs

Non-resident Indians often face hurdles in filing taxes while overseas. Online portals eliminate this issue, providing a one-stop solution for NRIs to make their Income Tax Deposit.

Even if you reside in a rural or distant region, online portals bring the tax office to your fingertips. All you need is a stable internet connection.

  • Cost-Effective

Financial considerations also play a role when deciding how to file your taxes. Online filing has proven to be a cost-effective alternative.

Online platforms often offer services at a competitive rate, which usually undercuts the cost of manual filing by professionals.

  • Data Security

Security concerns are valid when handling sensitive financial information. Rest assured, online tax filing platforms use state-of-the-art security measures. The technology to secure online transactions and data transfer is robust, usually employing end-to-end encryption.

Your personal and financial data is securely stored in data centres with high-security protocols, giving you peace of mind. Moreover, multiple authentication steps, such as OTPs and security questions, ensure that only authorized individuals access the data.

  • Save on Travel

Online tax filing negates the need to travel to a tax office, saving you money on fuel and public transport.

  • Enhanced Accuracy

Errors in tax filing can lead to penalties or even legal repercussions. Online filing offers tools that can help minimize or even eliminate human errors.

  • Pre-filled Forms

Your personal details and past tax data can be auto-filled, which speeds up the process and reduces errors.

  • Built-in Calculators

These digital helpers assist you in computing your taxable income, applying the appropriate tax rates, and calculating deductions, making it virtually foolproof.

  • Error Checks

Automated alerts and prompts flag inconsistencies or omissions, helping you correct errors before final submission, thus reducing the likelihood of receiving a tax notice.

Can I switch from ITR 4 to ITR-1

Ofcourse you can change ITR form from ITR-4 to ITR-1. ITR forms is to be choose as per your income heads. If you have income from salary upto 50 lakh, Rental income from one House Property, income from other sources and not having business income or capital gain income then you have to fill ITR-1

Can I file an income tax return through online mode

Yes, you can file an income tax return through online mode in India.In India, the online mode of filing income tax returns is commonly known as e-filing. The Income Tax Department of India has developed an online platform called the Income Tax e-Filing Portal to facilitate electronic filing of tax returns.

To file your income tax return online, you can follow these general steps:

  1. Register on the Income Tax e-Filing Portal: Visit the official website of the Income Tax Department of India and register yourself as a taxpayer. Create a user ID and password to access the e-Filing Portal.
  2. Gather the necessary documents and information: Collect all the relevant documents, such as Form 16 (provided by your employer), Form 26AS (tax credit statement), bank statements, investment details, and any other supporting documents required for your tax return.
  3. Choose the appropriate income tax return form: Select the correct income tax return (ITR) form based on your income sources, residential status, and other applicable criteria. The Income Tax e-Filing Portal provides different ITR forms for different types of taxpayers.
  4. Fill in the details: Enter your personal information, income details, deductions, and tax calculations accurately in the designated sections of the online form.
  5. Verify the return: Review all the information provided, make any necessary corrections, and ensure the accuracy of your return. After verifying the details, submit the return electronically.
  6. Generate and submit the ITR-V: Upon successful submission of your return, you will receive an acknowledgement called the ITR-V (Income Tax Return-Verification). Download and save the ITR-V. You may be required to sign it physically and send it to the Centralized Processing Centre (CPC) within a specified time, as mentioned in the instructions.

Can I shift from ITR 3 to ITR 4

Selection of form is dependent on the facts of your case. Suppose you are adopting presumptive taxation, you will normally use ITR 4. However, say you have presumptive income as well as capital gains, you will have to use ITR 3 because ITR 4 doesn’t have the relevant fields for capitals gains/ loss transactions.

Register and Log In

Visit the official Income Tax Department website (https://www.incometaxindiaefiling.gov.in) and register for an account if you haven’t already. You’ll need to provide your PAN, name, date of birth, and other details.

Enter Income Details

This step involves entering details about your income sources, which may include:

  • Salary income
  • House property income
  • Income from other sources
  • Capital gains (if applicable)
  • Foreign income (if applicable)
  • Business or profession income (if applicable)

Is balance sheet compulsory for ITR-1

Whether or not a balance sheet is necessary for ITR filing depends on the type of ITR form you are filing and your income. For example, if you are filing ITR-1, you do not need to attach a balance sheet. However, if you are filing ITR-2 or ITR-3, you will need to attach a balance sheet.

Some commonly searched salaries

Annual Salary (LPA – lakh per annum)Monthly Salary Range
3 LPA in hand salary23,300 to 25,000
3.8 LPA in hand salary29,500 to 31,400
3.9 LPA in hand salary30,350 to 32,300
4 LPA in hand salary31,100 to 33,133

Claim Deductions and Exemptions

In this section, you can claim deductions under various sections of the Income Tax Act, such as:

  • Section 80C (deductions for investments like EPF, PPF, life insurance, etc.)
  • Section 80D (health insurance premiums)
  • Section 10 (exemptions like HRA, LTA)
  • Other relevant deductions

Conclusion: Choosing the Right Income Tax Form for Filing ITR

In summary, choosing the right income tax form for filing ITR is not just a matter of preference; it is a legal and financial necessity. By understanding your income sources, eligibility criteria, and the available ITR forms, you can ensure that you comply with tax laws and make the filing process as smooth as possible. If you have a complex financial situation or require expert advice, consider consulting a tax professional for guidance. Filing your taxes accurately and on time is not only a legal obligation but also a responsible financial practice that contributes to the smooth functioning of the nation’s economy.

how auriga accounting help you to choosing right ITR form

Auriga Accounting, as a professional accounting and financial advisory firm, can play a significant role in helping individuals and businesses choose the right Income Tax Return (ITR) form for filing their taxes. Here’s how Auriga Accounting can assist you in this process:

  1. Expertise and Knowledge:

    • Auriga Accounting has a team of experienced tax professionals who stay up to date with the latest changes in tax laws and regulations. Their expertise allows them to provide informed guidance on selecting the appropriate ITR form based on your financial situation.
  2. Personalized Tax Assessment:

    • Auriga Accounting can conduct a comprehensive assessment of your financial situation. This includes analyzing your various sources of income, deductions, exemptions, and investments. This personalized evaluation helps in identifying the most suitable ITR form for you.
  3. Complex Financial Situations:

    • If you have a complex financial situation, such as income from multiple sources, capital gains, foreign income, or business income, Auriga Accounting can guide you through the intricacies of tax compliance. They can help you navigate the complexities and select the right ITR form that accurately reflects your financial transactions.
  4. Presumptive Taxation:

    • For businesses and professionals opting for presumptive taxation schemes like section 44AD, 44ADA, or 44AE, Auriga Accounting can assist in understanding the benefits and requirements of these schemes and choosing the appropriate ITR form (e.g., ITR-4).
  5. Tax Planning and Optimization:

    • Auriga Accounting can help you make informed decisions to optimize your tax liability legally. This may involve advising on which deductions and exemptions to claim or suggesting tax-saving investments to reduce your tax burden.
  6. Document Preparation:

    • The professionals at Auriga Accounting can assist you in gathering and organizing the required documents, such as Form 16, bank statements, investment proofs, and other financial records necessary for the tax filing process.
  7. E-Filing Assistance:

    • They can guide you through the online tax filing process, from creating an account on the official Income Tax Department website to uploading the relevant documents and verifying the ITR. They ensure that all information is accurately entered and that the correct ITR form is used.
  8. Review and Quality Assurance:

    • Auriga Accounting can conduct a thorough review of your tax return to minimize the risk of errors and discrepancies. This ensures that your return complies with current tax laws and regulations.
  9. Timely Filing:

    • With the support of Auriga Accounting, you can meet the deadline for filing your tax return, avoiding late filing penalties and potential legal issues.
  10. Future Tax Planning:

    • Beyond helping you choose the right ITR form for the current year, Auriga Accounting can provide ongoing tax planning and advisory services to help you make informed financial decisions that align with your long-term financial goals.