Finance Minister P Chidambaram on May 16, 2007 unveiled the new Income Tax Return forms (ITR) for the assessment year 2007-08. The Central Board of Direct Taxes [CBDT] has now notified new return forms for Assessment year 2008-09.
The new return forms continue to be termed as ITR and are known to be for Return of Income/Fringe Benefits. However, on 28-3-2008 the earlier ITR forms were amended through a notification and relevant changes were made in Rule 12 of Income Tax.
The new forms designed with the intent of being tax friendly, are actually more complex and require assistance of a tax consultant.
It is, hence, necessary for the taxpayer to understand which of these ITR forms is applicable to him. Here is a detailed description of each form and its application criteria, to help you understand the categories better and choose the one applicable to you.
ITR Forms for 2008-09 AY:
ITR forms starts from ITR 1 to ITR 8. For individuals, the four forms, ITR-1, ITR-2, ITR-3 and ITR-4, will continue to remain. ITR–5 is reserved for AOPs and BOIs. Companies also have the same two forms ITR 6 and 7. ITR-8 has been kept exclusively for the Return on Fringe Benefits.
n the form, individuals/Hindu Undivided Family (HUF) will be required to furnish information with regard to transactions that are reported through Annual Information Returns (AIR). Large transactions like investment in real estate and mutual funds running into lakhs is automatically reported to the department by banks and other authorities using the investor's permanent account number (PAN).
This form is applicable only to Individuals (and not HUFs), with the below-mentioned source of income:
• Salary;
• Interest received (taxable / exempt);
• Family pension;
• Agricultural activities.
This is an exhaustive list, and the form is not applicable in following situations:
• Any additional source of income (taxable / exempt) other than those mentioned above. Thus, if the taxpayer has dividend income (which is exempt from tax), ITR-1 will not be applicable;
• Brought-forward losses from earlier years are to be adjusted;
• Clubbing of income (even though such income is only on account of Interest) is applicable.
TR 1 is, thus, applicable to a limited group of taxpayers. For example, a taxpayer earning salary, with no other income, but paying interest on home loan will not be able to use ITR-1, and will have to use ITR-2.
This form is applicable to both Individuals & HUFs who have one or more of the following sources of income. In addition, they may have one of the sources of income specified for ITR-1.
• Income / loss from house property;
• Capital gain / loss on sale of investments / property, etc;
• Dividend income (taxable / exempt);
• Gifts (taxable / exempt);
• Any other income (taxable / exempt), except from business or profession or share of profit from partnership firm;
• Income of other person to be included (i.e. clubbing of income);
• Brought forward loss of earlier years from house property and/or capital gains.
This form is applicable to those Individuals and HUFs, who are partners in a partnership firm, in addition to having sources of income applicable to ITR-2. Whether or not income is generated from the partnership is irrelevant.
However, in addition, to being a partner, if the taxpayer is carrying out any business / professional (including speculation) activity, then this form is not applicable.
Download ITR-4
This form is applicable, both, to Individuals and HUFs who carry out any business or professional activity in addition to having sources of income applicable to ITR-3.
Download ITR-5
This form is applicable to any Association Of Persons and Body Of Individuals. AOP: Association of persons implies a combination of persons in which they associate themselves in an income-producing activity. They must combine to engage in such an activity; the engagement must be an association, there must be a meeting of minds, so to speak. In a nutshell, there must be a common design to produce income, failing which, there is no association.
The expression BoI includes a combination of individuals who have a unity of interest but who are not actuated by a common design and one or more of whose members produce or help to produce income for the benefit of all.
This form is for companies other than the companies claiming exemption under section 11. It was earlier termed as Form 1.
This form deals with persons including companies which are required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D). This form is for those non corporate assessees who are –
• Not claiming exemption under section 11
• Not having income from business or profession.
This form is exclusively for filing of returns related to fringe benefits. It caters to the assessees those who-
• Are required to file the return of income and fringe benefits both but opt to file the return on income through Form No. 2D.
• Are required to file the return of fringe benefits and not that of their income.
This form is applicable where the data of the Return of Income/Fringe Benefits in Form ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-8 has been transmitted electronically without digital signature.
Download Acknowledgement
Acknowledgement Form Where the data of the Return of Income/Fringe Benefits has not been transmitted electronically
Not to forget -
The most important point that has to be kept in mind while selecting a form is that if one form is applicable, the taxpayer cannot use any other form. To simplify: If ITR-1 is applicable to the taxpayer, he cannot opt to file the same using ITR-2.
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