Income Tax Return 2017: Which ITR Form to use for AY 2017-18?

ITR 2017 - Which ITR Form to use for AY 2017-18?

ITR 2017 – Which ITR Form to use for AY 2017-18?

The income tax return (ITR) forms were notified on April 1 this year. There have been several changes in the ITR forms which we had mentioned in an earlier post. The biggest change was the number of ITR Forms have been reduced from 9 to 7.

  • The previous ITR 2A, ITR 2 and ITR 3 forms have been rationalized to single ITR 2 Form.
  • The previous ITR 4 Form has been re-numbered as ITR 3.
  • ITR 4S (Sugam) is now ITR 4 (Sugam).

In this post we tell you which is the right ITR Form for you for AY 2017-18 (FY 2016-17). The choice of ITR Form mainly depends on the source and amount of income. Let’s first look at the classification of source of income as per Income Tax laws.

Types of Income as per Income Tax:

As per income tax laws there can be following 5 types of income:

1. Income from Salary/ Pension:

This is income that an employee receives from his employer. Pension to ex-employee is also treated as salary for Income tax. However family pension (after ex-employee death) is considered as income from other sources as NO employee-employer relationship exists between family and employer.

Download: Ultimate Tax Saving ebook with tax calculator FY 2017-18

2. Income from Home/Real Estate:

This is the income from any property – residential or commercial by renting/leasing it out.

3. Income from Capital Gains:

The profits on selling of an asset like equity, mutual funds, gold, NCDs, Bonds or real estate. The capital gains are further classified as Short Term or Long Term depending on the time frame of transactions and asset under consideration.

Also Read: 9 key changes in the ITR forms 2017

4. Income from Business/ Profession:

This is income for professional such as lawyers, doctors etc which they generate through freelancing or private practice. Income from running a business is profits that the business generates after deduction of expenses such as rent, salary to staff, etc.

5. Income from Other Sources:

All other income other than the above falls under this category. This might cover interest received on fixed deposits, gifts, winning of prize or lottery, etc

Also Read: 25 Tax Free Incomes & Investments in India

Based on the type of income above we can choose the right ITR Form.

Which ITR Form to use?

The table below gives a summary of which ITR Form to use with detailed explanation after that.

ITR Forms -> ITR 1 (Sahaj) ITR 2 ITR 3 ITR 4 (Sugam)
Applicable to Individual, HUF Individual, HUF, Partner in a Firm Individual, HUF, Partner in a Firm Individual, HUF
Income/Turnover Limit Income Less than Rs 50 Lakhs No Limit No Limit Income Less than Rs 50 Lakhs / Turnover less than Rs 2 crore
Salary Yes Yes Yes Yes
House Property Only One House/Property One or More House/Property One or More House/Property Only One House/Property
Business Income No No Yes Only Presumptive Business Income
Capital Gains No Yes Yes No
Other Sources All except Income from Lottery/Race Horse Yes Yes All except Income from Lottery/Race Horse
Exempt Income Yes if Agriculture Income less than Rs 5,000 Yes Yes Yes if Agriculture Income less than Rs 5,000
Foreign Assets/Foreign Income No Yes Yes No
Carry Forward Loss No Yes Yes No

Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used only if the income being clubbed falls into the above income categories.

Also Read: 21 changes in Income Tax laws from April 1, 2017

Who can use ITR 1?

ITR 1 can be used by individuals who fulfill following conditions in FY 2016-17 (AY 2017-18):

  • Total income from all sources is less than Rs 50 Lakhs
  • Have income from Salary/ Pension or
  • Income from only ONE House Property (excluding cases where loss is brought forward from previous years) or
  • Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)

Who cannot use ITR 1?

Following conditions make you ineligible for ITR 1 (Sahaj)

  • Income is more than Rs 50 Lakhs
  • Have foreign assets
  • Have capital gains
  • Have income from business or profession
  • Have agriculture income more than Rs 5,000
  • Have income from more than one house property
  • If you have income from winning from Lottery or Race Horses

ITR 1 Form covers almost 90% of tax payers.

Also Read: How to Claim Tax Exemptions while filing ITR?

Who can use ITR 2?

ITR 2 can be used by individuals who fulfill following conditions in FY 2016-17 (AY 2017-18):

  • Have income from Salary/ Pension or
  • Income from one or more House Property or
  • Income from Capital Gains or
  • Income from Other Sources or
  • Income of a person as a partner in the firm
  • Foreign Assets/Foreign income

Who cannot use ITR 2?

  • You cannot use ITR 2 only if you have income from business or profession.

Also Read: 13 Tax Free Components You Must have in Salary

Who can use ITR 3?

The old ITR 4 has been classified as ITR 3 for this year. It can be used by individuals who fulfill following conditions in FY 2016-17 (AY 2017-18):

  • Have income from Business or Profession or
  • Have income from Salary/ Pension or
  • Income from one or more House Property or
  • Income from Capital Gains or
  • Income from Other Sources or
  • Income of a person as a partner in the firm
  • Foreign Assets/Foreign income

Also Read: How to Pay 0 Income Tax on Rs 11 Lakh Salary?

Who can use ITR 4 or Sugam?

ITR 4S has been renamed as ITR 4. This is similar to ITR 1 with the additional condition that people with income from business & profession (opted for the presumptive income scheme as per Section 44AD ,Sec 44ADA and Section 44AE) can use this form.

ITR 4 can be used by individuals who fulfill following conditions in FY 2016-17 (AY 2017-18):

  • Total income from all sources is less than Rs 50 Lakhs
  • Have income from business & profession and opted for the presumptive income scheme as per Section 44AD ,Sec 44ADA and Section 44AE of Income tax Act. However if the turnover exceeds Rs 2 crore, ITR 3 has to be filed.
  • Have income from Salary/ Pension or
  • Income from only ONE House Property (excluding cases where loss is brought forward from previous years) or
  • Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)

Also Read: Calculate Tax on Arrears in 7 Easy Steps

Who cannot use ITR 4?

Following conditions make you ineligible for ITR 4

  • Income is more than Rs 50 Lakhs
  • Business turnover exceeds Rs 2 crore
  • Have foreign assets
  • Have capital gains
  • Have agriculture income more than Rs 5,000
  • Have income from more than one house property
  • If you have income from winning from Lottery or Race Horses

ITR 5

This Form can be used by a person being a firm, LLP, AOP, BOI, artificial juridical person referred to in section 2(31)(vii), co-operative society and local authority.

Also Read: 4 Reasons to File ITR even if your Income is not Taxable

ITR 6

It is applicable to a company, other than a company claiming exemption under section 11 (by charitable/religious trust)

ITR 7

It is applicable for trusts, political parties, institutions, colleges, etc. covered under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)

ITR – V

It is the acknowledgement of filing the return of income

The above comparison of ITR Forms would help you to choose the right form to use for AY 2017-18 (FY 2016-17).

7 thoughts on “Income Tax Return 2017: Which ITR Form to use for AY 2017-18?

  1. Hi, a caretaker of a pg gets a salary of about 12000 rs per month from the pg owner for services provided.for the person to file taxreturns should he mention the amount received in salary or income from other sources(as there is no form 16 or other supporting documents}?can he file in itr 1 or any other form is recommeded? to get tax refund for tds deducted on fd in bank?your reply will be appreciated.thanks

    • He can mention the 12,000 as salary income or other income. He should file ITR 1 in case there are no capital gains etc to get tax refunds.

  2. Hello, I received royalty income for a book I wrote in last financial year. This book is on computer programming and is not a text book. The book’s nature qualifies for a deduction under section 80QQB. Could you please help with the following:

    1. I have a regular SALARY income from the employer (India)
    2. I have book royalty income (15% of which is tax decuctible)
    — NOTE: I have already obtained duly filled forms 10CCD from the publisher and form 10H from my bank where the royalty was credited.

    Question:
    A) Under which section should I DECLARE my royalty income ? (is it income from other sources) .
    B) Which ITR form should I use for this purpose? (AY 2017-18)

    NOTE: Writing is not my ‘full time’ job, but I happen to write a book of programming/scientific nature and receive a royalty this year. So I am not sure how this translates in to the tax consideration (ITR to fill)

    I already know details of 80QQB, so the question I have are only A and B as noted above

    Thank you in advance!

  3. Selar Vijendra Rao says:

    very lucid and clear. can NRIs drawing pension in India use ITR 1 form for FY 2016-2017 and submit the form online without linking Aadhar card? I am 85 years old. kindly clarify.

  4. Professional having income less than Rs.50 Lac. Can he not eligible to opt for presumptive tax if he has income from CG? As per table given, he cannot use ITR-4 Sugam. Does ITR-3 allow him to pay tax on presumptive basis?

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