Last some days left to file ITR. Here’s a few help for those who are still to file their taxes. In addition to ITR 1 (Sahaj), ITR 2, ITR3, and ITR 4 can also be used by a Person as per the agreement. Here we will examine the terms and suitability of ITR2, ITR3, and ITR 4.
ITR 2
As far as simplicity and ease of filling up an ITR are concerned, next to ITR 1 comes ITR 2. ITR 1 cannot be used by a HUF but ITR 1 and ITR 2 both can be used both by Individual and HUFs. The ITR 2 can be used by all the individuals who are not suitable to use ITR 1 and do not have any company or professional income.
So you can use it even if you have more than one property or have rural income over ₹5,000 or are a non-resident or are resident and have any asset of income outside India. You can further use ITR 2 for furnishing your income from other references against which you wish to claim specific expenses.
All those citizens who have the authorization to sign in respect of any account located outside India can also use ITR 2. In case you have any brought forwards losses to be set off on current year’s income or have some losses through the current years and which cannot be set off against current year’s income and hence have to be carried forward for set-off in consequent years.
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Briefly declared ITR 2 cannot be used by a person or a HUF who has any business or professional income. The income here includes loss also and in case you have encouraged any loss in your business howsoever little the amount is, you cannot use ITR 2 and have to constantly use ITR 3 or ITR 4.
This form can also be used by the people who are a partner in a firm but are not carrying on any business or profession in your own name.
People who do day trading in shares or assets are under the impact that this income can be given under the residual head “Income from other sources” as they are not involved in the business as they do not have a decent business set up. In my view, such transactions amount to a business venture and one has to use ITR 3 or ITR 4.
ITR 3
This is the most confused ITR form for People and HUFs and is hard for a layman to fill up by himself without performing any mistakes. As far as eligibility to use ITR 3 is bothered, it is simple. You have to use ITR if you are a person or a HUF engaged in any business or profession, income whereof is not being offered for taxation under possible taxation. However in case you are extending your business or professional income on a possible basis but your total income exceeds 50 lakhs, you have to use ITR 3 only.
ITR 4
ITR 4, known as Sugam, can be used by any person, HUF, or a partnership firm that wants to offer their income on an assumptive basis, where income is assumed at the least rate based on ownership of commercial vehicles or as a portion of your gross receipts. Please note an LLP is not eligible to use ITR 4. This information can only be used by a person who is resident for income tax purposes and thus a non-resident cannot use it even if his income is below 50 lakhs and has income taxable on an assumptive basis.
In case of your present business or professional income is lower than what was is assumed by law, you cannot use this form and have to use ITR 3. Further, you have to get your accounts examined and get the report submitted before the submission of the ITR.
