After we mentioned as to who can use ITR 1 within the article final week, let now see who can use ITR 2, ITR 3 and ITR 4. The dialogue is with restricted to Individual and HUF solely.
Also Read: Income tax return: Who can use ITR 1, who can’t?
Who can use ITR 2
So ITR 2 is subsequent to ITR 1 in simplicity and ease of filling up. Since HUF can’t use ITR 1 they’ll use ITR 2 in all of the instances the place people are eligible to make use of ITR 1. ITR 2 can be utilized by all these individuals who should not eligible to make use of ITR 1 and their supply of revenue doesn’t have any enterprise or skilled revenue. So you should use ITR 1 if you’re a director or have unlisted shares and even in case you personal a couple of home or have agricultural revenue over Rs. 5,000/- so long as you should not have any revenue whether or not taxable underneath whether or not revenue or loss underneath the pinnacle “Profits and Gains of Business or occupation. You can use ITR 2 if you’re a non-resident or being a resident have any asset or curiosity in asset exterior India and even have an authority to signal any checking account exterior India if there isn’t a enterprise revenue. All those that have revenue from different sources and who want to declare any expenditure underneath the pinnacle “Income from different Sources” can use ITR 2. Those who’ve dividend revenue and have borrowed cash to make such investments can use ITR 2 in the event that they want to declare expenditure in respect of curiosity paid on cash borrowed for buying such shares. Please word you’re allowed to say curiosity upto 20% of the quantity as dividends even when precise curiosity price incurred for the yr is increased than 20% of the mixture of dividends acquired by you.
For all those that both have introduced ahead losses which they want to set off in opposition to present yr’s revenue or those that have losses underneath these head for the present yr and want to carry ahead the identical for set off throughout subsequent years may also use ITR 1 as they can not use ITR 1.
So to say it in a single line all of the people and HUFs who should not have any revenue underneath the pinnacle “Business or occupation” and who cannot use ITR 1 are eligible to use ITR 2. Since incomes includes loss also you cannot use ITR 2 if you have incurred any loss in your business howsoever small the amount. Majority of people are under the impression that profits made by them on trading of shares and commodities can be offered under the head “Income from other Sources” as they don’t seem to be engaged in enterprise as they don’t have correct enterprise arrange. In my opinion this isn’t right and such transactions quantity to enterprise exercise and one has to make use of both ITR 3 or ITR 4.
Eligibility to make use of ITR 3
This is probably the most sophisticated ITR type for people and HUFs. In my opinion it’s troublesome for a layman to replenish this manner by himself with out committing any mistake. As far as eligibility to make use of ITR 3 is worried, it’s easy. You have to make use of ITR 3 if you’re a person or an HUF engaged in any enterprise or occupation, revenue and who’re disqualified from utilizing ITR 4. Moreover even if you’re providing your online business or skilled revenue on presumptive foundation and your taxable revenue exceeds Rs. 50 lakhs or you might have revenue underneath the pinnacle “Capital Gains”, you need to use ITR 3 solely.
Form ITR 4
ITR 4, referred to as Sugam, can be utilized by any particular person, HUF or a partnership agency which needs is eligible to supply its revenue on presumptive foundation. Under presumptive scheme of taxation a taxpayer is presumed to have earned a minimal revenue expressed as proportion of gross receipts of enterprise or occupation or as a hard and fast quantity based mostly on variety of business autos owned. Please word that although a partnership can use ITR 4 whether it is eligible for presumptive taxation however an LLP will not be eligible to make use of ITR 4. This type can solely be utilized by an individual who’s resident for revenue tax functions. So a non resident can’t use it even when his revenue is under 50 lakhs and has revenue taxable on presumptive foundation. In case you’re director in any firm or personal shares in any unlisted firms you can not use ITR 4.
Likewise, if in case you have any revenue underneath the pinnacle “Capital positive factors” or “Income from other sources” aside from curiosity and household pension or have revenue from supply exterior India, you can not use ITR 4 and you need to use ITR 3 the place you might have choice to supply your revenue on presumptive foundation.
In case your precise enterprise or skilled revenue is decrease than that was is presumed by legislation, you can not use ITR 4 and you need to use ITR 3 and by which case you need to get your accounts audited and get the report it submitted to the revenue tax division earlier than submission of the ITR.
I’m positive with each these articles, you might have truthful thought of which ITR type is for use by you.
Balwant Jain is a tax and funding knowledgeable and will be reached on [email protected] and @jainbalwant on Twitter
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