ITR Forms Comparison: Complete Guide to All 7 Forms

Filing your income tax return with the wrong form can lead to rejection, notices, and unnecessary hassle. With seven different ITR forms available, choosing the right one often confuses taxpayers. This comprehensive ITR forms comparison guide helps you understand each form and make the correct choice for your specific situation.

Understanding the difference between ITR forms is crucial for smooth tax compliance. From salaried individuals using ITR-1 to companies filing ITR-6, each form serves a distinct purpose. This article walks you through ITR 1 to ITR 7, explaining eligibility criteria, income types covered, and key features of each form.

Quick Overview: All ITR Forms at a Glance

Before diving into details, here's a snapshot to help you identify which ITR form to file. Access these forms through the Income Tax e-Filing Portal.

Detailed Breakdown: Understanding Each Form

Let's examine each form in the ITR 1 to ITR 7 range. For professional filing assistance across all forms, explore All ITR Filing Services.

ITR-1 (Sahaj): The Simplest Form

ITR-1 is designed for resident individuals with straightforward income sources. It covers salary or pension income, income from one house property, and other sources like interest or family pension. The total income ceiling is Rs. 50 lakh. You cannot use ITR-1 if you have capital gains, multiple house properties, foreign income, or are a company director.

ITR-2: For Capital Gains and Complex Income

ITR-2 accommodates individuals and HUFs with income beyond ITR-1's scope. Use this form if you have capital gains from shares, mutual funds, or property. It also covers multiple house properties, foreign income or assets, and income above Rs. 50 lakh. Company directors and those holding unlisted equity shares must use ITR-2 or higher.

ITR-3: Business and Professional Income

ITR-3 is the comprehensive form for individuals and HUFs earning business or professional income. It requires detailed profit and loss accounts, balance sheets, and depreciation schedules. Use ITR-3 when you can't opt for presumptive taxation, when turnover exceeds Section 44AD/44ADA limits, or when you want to declare losses for carry forward.

ITR-4 (Sugam): Presumptive Taxation Simplified

ITR-4 simplifies compliance for small businesses and professionals. It covers presumptive income under Section 44AD (business up to Rs. 2 crore turnover), Section 44ADA (professionals up to Rs. 50 lakh), and Section 44AE (transporters). The form eliminates the need for detailed books of accounts and audits for eligible taxpayers.

ITR-5: Firms, LLPs, and Associations

ITR-5 caters to non-individual, non-corporate entities. This includes partnership firms, LLPs, AOPs, BOIs, local authorities, and co-operative societies. The form captures partner-wise profit allocation, detailed financials, and compliance with entity-specific provisions under the Income Tax Act.

ITR-6: Corporate Tax Returns

ITR-6 is exclusively for companies registered under the Companies Act. It requires comprehensive financial disclosure, including audited accounts, MAT computation, and corporate governance details. Companies claiming exemption under Section 11 (charitable purposes) use ITR-7 instead.

ITR-7: Trusts and Exempt Entities

ITR-7 serves entities claiming exemption under various sections: charitable trusts under Section 11/12, educational institutions under Section 10(23C), political parties under Section 13A, and electoral trusts under Section 13B. It requires detailed reporting of income application and compliance with exemption conditions.

How to Choose: Decision Framework

Use this decision framework to determine which ITR form to file. Check CBDT guidelines for any updates.

Step 1: Identify Your Category

• Individual or HUF → Proceed to Step 2
• Firm, LLP, AOP, BOI → Use ITR-5
• Company → Use ITR-6
• Trust, Political Party, Exempt Institution → Use ITR-7

Step 2: Check for Business Income

• No business/professional income → Proceed to Step 3
• Business income with presumptive taxation → Use ITR-4
• Business income without presumptive option → Use ITR-3

Step 3: Check for Capital Gains or Complex Income

• Capital gains, foreign income, or multiple properties → Use ITR-2
• Income above Rs. 50 lakh → Use ITR-2
• Company director or unlisted shares holder → Use ITR-2
• None of the above, income under Rs. 50 lakh → Use ITR-1

Common Mistakes in Form Selection

• Using ITR-1 with capital gains: Even small mutual fund redemptions with gains require ITR-2
• ITR-4 with losses: Presumptive taxation doesn't allow loss declaration; use ITR-3 instead
• Directors filing ITR-1: Company directors must use ITR-2 minimum, regardless of income type
• LLPs using ITR-4: LLPs cannot use presumptive taxation; they must file ITR-5
• Ignoring foreign assets: Any foreign income or assets requires ITR-2 or higher

Conclusion: Making the Right Choice

This ITR forms comparison guide covers the essential difference between ITR forms and helps you determine which ITR form to file. Remember, choosing the correct form from ITR 1 to ITR 7 is the first step toward hassle-free tax compliance.

When in doubt, always opt for the more comprehensive form that covers all your income types. Filing a higher form than required doesn't attract penalties, but filing a lower form missing income types will result in rejection or notices. If you're unsure, consult a qualified chartered accountant to ensure accurate form selection and filing.