TAXAJ

ITR – Income Tax Returns e-filing – Which ITR Should I File?

Let’s dive deep into ITR’s definition, importance and types of ITR forms, in this article:

  1. What is an ITR?
  2. Why you should file ITR?
  3. Which ITR to file?
    1. ITR 1
    2. ITR 2
    3. ITR 3
    4. ITR 4
    5. ITR 5
    6. ITR 6
    7. ITR 7
  4. Guide to Income Tax

1. ​What is ITR?

Income Tax Return (ITR) is a form in which the taxpayers file information about his income earned and tax applicable to the income tax department. The department has notified 7 various forms i.e. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7 till date. Every taxpayer should file his ITR on or before the specified due date. The applicability of ITR forms varies depending on the sources of income of the taxpayer, the amount of the income earned and the category the taxpayer belongs to like individuals, HUF, company, etc.ITR) is a form in which the taxpayers file information about his income earned and tax applicable to the income tax department. The department has notified 7 various forms i.e. ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7 till date. Every taxpayer should file his ITR on or before the specified due date. The applicability of ITR forms varies depending on the sources of income of the taxpayer, the amount of the income earned and the category the taxpayer belongs to like individuals, HUF, company, etc.

2. ​Why you should file ITR?

It is mandatory to file income tax returns (ITR) in India if any of the conditions mentioned below are applicable to you:

1. If your gross annual income is more than-

ParticularsAmount
For individuals below 60 yearsRs 2.5 Lakh
For individuals above 60 years but below 80 yearsRs 3.0 Lakh
For individuals above 80 yearsRs 5.0 Lakh

2. If you have more than one source of income like house property, capital gains etc.

3. If you want to claim an income tax refund from the department.

4. If you have earned from or have invested in foreign assets during the FY.

5. If you wish to apply for visa or a loan

6. If the taxpayer is a company or a firm, irrespective of profit or loss.

3. ​Which ITR to file?

The following infographic will help you find out which type of income tax return is applicable to you for FY 2018-19. Once you figure out which ITR you need, click on the links below to learn more about them.

​ITR-1 OR SAHAJ for Resident Individuals


This Return Form is for a resident individual whose total income for the assessment year 2018-19 includes:

  • Income from Salary/ Pension; or
  • Income from 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)
  • Agricultural income up to Rs.5000.


Who cannot use ITR 1 Form?

  • Total income exceeding Rs 50 lakh
  • Agricultural income exceeding Rs 5000
  • If you have taxable capital gains
  • If you have income from business or profession
  • Having income from more than one house property
  •  If you are a Director in a company
  • If you have had investments in unlisted equity shares at any time during the financial year
  • Owning assets (including financial interest in any entity) outside India) if you are a resident, including signing authority in any account located outside India
  • If you are a resident not ordinarily resident (RNOR) and non-resident
  • Having foreign assets or foreign income
  • If you are assessable in respect of income of another person in respect of which tax is deducted in the hands of the other person.

​ITR-2 for an individual or a Hindu Undivided Family (HUF)


ITR 2 is for the use of an individual or a Hindu Undivided Family (HUF) whose total income for the AY 2018-19 includes:

  • Income from Salary/Pension; or
  • Income from House Property; or
  • Income from Other Sources (including Winnings from Lottery and Income from Race Horses).

(Total income from the above should be more than Rs 50 Lakhs)

  • If you are an Individual Director in a company
  • If you have had investments in unlisted equity shares at any time during the financial year
  • Being a resident not ordinarily resident (RNOR) and non-resident
  • Income from Capital Gains; or
  • Foreign Assets/Foreign income
  • Agricultural income more than Rs 5,000


Further, in a case where the income of another person like one’s spouse, child etc. is to be clubbed with the income of the assessee, this Return Form can be used where such income falls in any of the above categories.

Who cannot use this Return Form

This Return Form should not be used by an individual whose total income for the AY 2018-19 includes Income from Business or Profession.

For declaring these types of Income, you may have to use ITR-3 or ITR-4 .types of Income, you may have to use ITR-3 or ITR-4 .

​ITR-3 individual or a Hindu Undivided Family having Business Income


The Current ITR3 Form is to be used by an individual or a Hindu Undivided Family who have income from proprietary business or are carrying on profession. The persons having income from following sources are eligible to file ITR 3 :

  • Carrying on a business or profession
  • If you are an Individual Director in a company
  • If you have had investments in unlisted equity shares at any time during the financial year
  • Return may include income from House property, Salary/Pension and Income from other sources
  • Income of a person as a partner in the firm

1. What is the ITR-3 Form?

The ITR 3 is applicable for individual and HUF who have income from profits and gains from business or profession. The persons having income from following sources are eligible to file ITR 3 :

a. Carrying on a business or profession (both tax audit and non-audit cases)

b. The return may include income from House property, Salary/Pension and Income from other sources

NOTE: (1) The due date for filing ITR-3 in case of a taxpayer subject to tax audit has been changed to 31 October from AY 2020-21 (FY 2019-20). The due date for filing tax audit report is 30 September.(2) The threshold limit of Rs 1 crore for a tax audit is proposed to be increased to Rs 5 crore with effect from AY 2021-22 (FY 2020-21) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or turnover, and if the taxpayer’s cash payments are limited to 5% of the aggregate payments.

2. What is the structure of the ITR-3 Form for AY 2019-20?

ITR-3 is divided into:

  • Part A
    • Part A-GEN: General information and Nature of Business
    • Part A-BS: Balance Sheet as of March 31, 2019, of the Proprietary Business or Profession
    • Part A- Manufacturing Account: Manufacturing Account for the financial year 2018-19
    • Part A- Trading Account: Trading Account for the financial year 2018-19
    • Part A-P&L: Profit and Loss for the Financial Year 2018-19
    • Part A-OI: Other Information (optional in a case not liable for audit under Section 44AB)
    • Part A-QD: Quantitative Details (optional in a case not liable for audit under Section 44AB)

After this, there are the following schedules.

  • Schedule-S: Computation of income under the head Salaries.
  • Schedule-HP: Computation of income under the head Income from House Property
  • Schedule BP: Computation of income from business or profession
  • Schedule-DPM: Computation of depreciation on plant and machinery under the Income-tax Act
  • Schedule DOA: Computation of depreciation on other assets under the Income-tax Act
  • Schedule DEP: Summary of depreciation on all the assets under the Income-tax Act
  • Schedule DCG: Computation of deemed capital gains on the sale of depreciable assets
  • Schedule ESR: Deduction under section 35 (expenditure on scientific research)
  • Schedule-CG: Computation of income under the head Capital gains.
  • Schedule-OS: Computation of income under the head Income from other sources.
  • Schedule-CYLA: Statement of income after set off of current year’s losses
  • Schedule BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years.
  • Schedule CFL: Statement of losses to be carried forward to future years.
  • Schedule- UD: Statement of unabsorbed depreciation.
  • Schedule ICDS – Effect of Income Computation Disclosure Standards on Profit
  • Schedule- 10AA: Computation of deduction under section 10AA.
  • Schedule 80G: Statement of donations entitled for deduction under section 80G.
  • Schedule RA: Statement of donations to research associations etc. entitled for deduction under section 35(1)(ii) or 35(1)(iia) or 35(1)(iii) or 35(2AA)
  • Schedule- 80IA: Computation of deduction under section 80IA.
  • Schedule- 80IB: Computation of deduction under section 80IB.
  • Schedule- 80IC/ 80-IE: Computation of deduction under section 80IC/ 80-IE.
  • Schedule VIA: Statement of deductions (from total income) under Chapter VIA.
  • Schedule AMT: Computation of Alternate Minimum Tax Payable under Section 115JC
  • Schedule AMTC: Computation of tax credit under section 115JD
  • Schedule SPI: Statement of income arising to spouse/ minor child/ son’s wife or any other person or association of persons to be included in the income of the assessee in Schedules-HP, BP, CG and OS.
  • Schedule SI: Statement of income which is chargeable to tax at special rates
  • Schedule-IF: Information regarding partnership firms in which assessee is a partner.
  • Schedule EI: Statement of Income not included in total income (exempt incomes)
  • Schedule PTI: Pass through income details from a business trust or investment fund as per section 115UA, 115UB
  • Schedule FSI: Details of income from outside India and tax relief
  • Schedule TR: Statement of tax relief claimed under section 90 or section 90A or section 91.
  • Schedule FA: Statement of Foreign Assets and income from any source outside India.
  • Schedule 5A: Information regarding apportionment of income between spouses governed by Portuguese Civil Code
  • Schedule AL: Asset and Liability at the end of the year(applicable where the total income exceeds Rs 50 lakhs)
  • Schedule GST: Information regarding turnover/ Gross receipt reported for GST
  • Part B: Outline of the total income and tax computation in respect of income chargeable total tax.
  • Tax Payments: Details of advance tax, TDS, self-assessment tax
  • Verification

3. How do I file my ITR-3 Form?


A taxpayer has to compulsorily file ITR-3 online.The ITR-3 can be filed Online/Electronically:

  1. By furnishing the return electronically under digital signature
  2. By transmitting the data electronically and then submitting the verification of the return in Return Form ITR-V

If you submit your ITR-3 Form electronically under digital signature, the acknowledgement will be sent to your registered email id. You can also choose to download it manually from the income tax website. You are then required to sign it and send it to the Income Tax Department’s CPC office in Bangalore within 120 days of e-filing. Remember that ITR-3 is an annexure-less form i.e. you do not have to attach any documents when you send it.

4. Major Changes in ITR form 3 for AY 2019-20

  1. The field for residential status has been categorised into “Residential status in India (for Individuals)” and “Residential status in India (for HUF)”.In case of “Residential status in India (for Individuals)”, the 3 sub-categories – “Resident”, “Resident but not Ordinarily Resident’ and “Non-resident”, have been mentioned requiring the individual to tick the specific category to which they belong. Taxpayers have to mention the number of days of residency in India.

    Further, in the case of non-resident, an individual is also required to specify the jurisdiction(s) of residence during the previous year providing the Taxpayer Identification Number(s) of the relevant jurisdictions. Also, in case the individual is a Citizen of India or a Person of Indian Origin (PIO), the duration of stay in India during the previous year (in days) and the duration of stay in India during the 4 preceding years (in days).
  2. In a case where the ITR is filed by a representative assessee, additional information about the capacity of the representative assessee (by way of choice in a drop down provided) has to be given.
  3. An individual taxpayer has to give information about the Directorship held in any company during the previous year, also mentioning whether the shares are listed or unlisted.
  4. An individual taxpayer has to give information about the investment in unlisted equity shares and the movement in such investment throughout the year.
  5. An individual taxpayer who is a partner in a Firm has to disclose details of name and PAN of the Partnership firm.
  6. Partners of partnership firms as against ITR 2 will have to file their returns in ITR 3.
  7. Details of computation of presumptive income under section 44AD, 44ADA and 44AE.
  8. Under Part A-OI, disclose amount of expenditure disallowed u/s 14A.
  9. The break-up of all exempt allowances and deductions under Schedule S – Details of income from salary.
  10. In Schedule HP, under details of income from house property, the PAN of the tenant in case TDS credit is claimed.
  11. In Schedule OS, under any other income chargeable at special rate, taxpayer has to provide the details for each income mentioned therein e.g., interest income, income from units etc.

    Also, Information has to be provided about accrual/ receipt of income from other sources e.g., winnings from lotteries, crossword puzzles, betting etc for the purpose of calculation of interest under section 234C.
  12. In Schedule 80G, bifurcation of donation qualifying for deduction under section 80G into cash and other mode. Similar disclosure to be made under Schedule RA for donations made to research associations under section 35.
  13. In Schedule VI-A, introduction of section 80TTB deduction for senior citizen.
  14. In Schedule FA, below details, if held during the year:

    Foreign Depository Accounts (including beneficial interest) Foreign Custodial Accounts (including beneficial interest) Foreign Equity and Debt Interest (including beneficial interest) Foreign cash value insurance contract or Annuity Contract held (including beneficial interest)
  15. In Schedule GST, Information regarding turnover / Gross receipt reported for GST

6. What is the structure of the ITR-3 Form for AY 2018-19?

1.Quoting of Aadhaar Number

Now, it is mandatory to mention the Aadhaar number in the return of income or Aadhaar Enrolment ID if applied for.

2. Declaration of the value of assets and liabilities by Individuals/HUF earning above Rs 50 lakhs in Schedule ‘AL’

Taxpayers are required to disclose the value of assets and liabilities if their total income exceeds Rs. 50 lakhs and mention the cost of immovable property with details of address, jewellery, bullion, vehicles with details of movable assets, shares, bank and cash balance, etc.

3. Disclosure of unexplained income and Dividend Income

New fields have been inserted in schedule ‘OS’ to declare unexplained credit or investment and dividend received from domestic companies above Rs 10 lakhs. Such persons cannot opt for ITR 1 Sahaj.

4. Disclosure of GST related details

In the Profit and Loss schedule, the GST related details have to be disclosed.

5. Limitation on claim for depreciation

A limitation of maximum 40% is placed on depreciation in all depreciation related Schedules.

6. Partners filing of income tax return

Partners of partnership firms have to file returns in ITR 3 as against ITR 2

7. Option to select section 115H

In the general information tab, an option to select section 115H (who is a non-resident Indian in any previous year, becomes assessable as a resident in India in respect of the total income of any subsequent year) has been added.

7. Major Changes in ITR form 3 for AY 2018-19

1.In the general information tab, an option to select section 115H (who is a non-resident Indian in any previous year, becomes assessable as a resident in India in respect of the total income of any subsequent year) has been added.2.In the Profit and Loss schedule, the GST related details have been addedLimitation of maximum 40% depreciation in all depreciation related Schedules4.Partners of partnership firms as against ITR 2 will have to file their returns in ITR 3.

8. How to fill out the verification document?

While filling up the data in the income tax return, a taxpayer should also fill up the verification. Please note that any person making a false statement in the return or in any of the accompanying schedules shall be liable to be prosecuted under section 277 of the Income-tax Act, 1961 and on conviction be punishable under that section with rigorous imprisonment and with fine.

​ITR-4 or Sugam individuals and HUFs, Partnership having Business Income


The current ITR 4 is applicable to individuals and HUFs, Partnership firms (other than LLPs) which are residents having income from a business or profession. It also include those who have opted for the presumptive income scheme as per Section 44AD, Section 44ADA and Section 44AE of the Income Tax Act. However, if the turnover of the business exceeds Rs 2 crore, the taxpayer will have to file ITR-3.

Who can use ITR 4 Form

ITR 4 is to be filed by the individuals/HUF/ partnership firm whose total income of AY 2019-20 includes :

a. Business income under section 44AD or 44AB

B. Income from profession calculated under section 44ADA

c. Salary/pension having income up to Rs 50 lakh

d. Income from One House Property having income up to Rs 50 lakh (excluding the brought forward loss or loss to be carried forward cases under this head);

e. Income from Other Sources having income up to Rs 50 lakh (Excluding winning from lottery and income from horse races).

Note :1. Freelancers engaged in the above profession can also opt for this scheme if their gross receipts don’t exceed Rs 50 lakhs.

Who cannot use ITR 4 Form?

  • If your total income exceeds Rs 50 lakh
  • Having income from more than one house property
  • If you have any brought forward loss or loss to be carried forward under any head of income
  • Owning any foreign asset
  • If you have signing authority in any account located outside India
  •  Having income from any source outside India
  • If you are a Director in a company
  • If you have had investments in unlisted equity shares at any time during the financial year
  • Being a resident not ordinarily resident (RNOR) and non-resident
  • Having foreign assets or foreign income
  • If you are assessable in respect of income of another person in respect of which tax is deducted in the hands of the other person.

Major Changes made in ITR-4 for AY 2019-20

  1. ITR 4 form for FY 2018-19 is not applicable to an individual who is either a director of a company or has invested in unlisted equity shares.
  2. Under Part A, ‘Pensioners’ checkbox has been introduced under the ‘Nature of employment’ section.
  3. Return filed under section has been segregated between normal filing and filed in response to notices.
  4. Deductions under salary will be bifurcated into standard deduction, entertainment allowance and professional tax.
  5. 80G Deduction: Amount of Donation is bifurcated into cash and other mode.
  6. Separate Business details like Name of business, business code, description for section 44AD, 44ADA & 44AE.
  7. New fields under section 44AE has been introduced like Registration No. of goods carriage, Whether owned/leased/hired, Tonnage Capacity of goods carriage (in MT), No. of months for which goods carriage was owned/leased/hired by assessee etc.
  8. Under GST  details the turnover text has been replaced by “Annual value of outward supplies as per the GST returns filed”. 
  9. ‘Deemed to be let out property’ option now available under ‘Income from house property’.
  10. The taxpayers will be required to provide income wise detailed information under the ‘Income from other sources’.
  11. A separate column is introduced under ‘Income from other sources’ for deduction u/s 57(iia) – in case of family pension income.
  12. Section 80TTB column has been included for senior citizens

Presumptive Income & its Taxation – under section 44AD


When you are running a small business, you may not have enough resources to maintain proper accounting information and calculate your profit or loss. This makes it difficult to keep track of your income and taxes from such a business. With this in mind, the Income Tax Department has laid out some simple provisions, where your income is assumed based on the gross receipts of your business. This method is called the presumptive method, where tax is paid on an estimated basis.


Features of this Scheme

a. Your Net Income is estimated to be 8% of the gross receipts of your business. But From FY 2016-17 onwards, if gross receipts are received through a digital mode of payment, then Net Income is estimated at 6% of such gross receipts and for cash receipts. However, the rate is the same at 8% of such cash receipts.

b. You don’t have to maintain books of accounts of this business.

c. You have to pay 100% Advance Tax by 15th March for such a business. No need to comply with the requirement of quarterly instalments due dates (June, sep, Dec) of advance tax.

d. You are not allowed to deduct any business expenses against the income.


If you are running more than 1 business, the scheme has to be chosen for each business.

For example, if you run 3 businesses where only 1 is assessed under section 44AD. The relief of not maintaining accounting records & no requirement of an audit is only applicable to the business to which this scheme applies. For other 2 businesses which are not covered under this section – the accounting records have to be maintained and audit is also required.


Similarly, in case of Advance Tax, the benefit of paying the advance tax in one instalment by 15th March is only granted for the business for which this scheme has been opted for. If the taxpayer has income which is other than from such business, where his tax liability exceeds Rs 10,000 in a year, he has to pay advance tax on such other income.


Eligibility Criteria for this Scheme

a. Your gross receipts or turnover of the business for which you want to avail this scheme should be less than Rs 2 crore.

b. You must be a Resident in India.

c.  This scheme is allowed to an individual, a HUF or a partnership firm. It is not available to a Company.

d. The scheme cannot be adopted by the taxpayer, if he has claimed deduction under section 10, 10A, 10B, Section 10BA, or Section 80HH to 80RRB in the relevant year.


Eligible Businesses


The taxpayer may be in any business – retail trading or wholesale trading or civil construction or any other business to avail this scheme. But this method of income computation is NOT applicable to:

a. Income from commission or brokerage

b. Agency business

c. Business of plying, hiring or leasing goods carriage (see section 44AE)

d. Professionals – who are carrying on a profession of legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, an authorized representative, film artist, company secretary and information technology.


Authorized representative means – any person, who represents someone, for a fee or remuneration, before any Tribunal or authority under any law. Film Artist includes a producer, actor, cameraman, director, music director, art director, dance director, editor, singer, lyricist, story writer, screenplay writer, dialogue writer, dress designer – basically any person who is involved in his professional capacity in the production of a film.(see Sec 44ADA). These are the professions listed under section 44AA(1).


Devesh runs a medical shop in his colony. The receipts of his business are Rs 1,50,00,000 in the financial year 2018-19. Can Devesh take benefit of the scheme under section 44AD?Devesh is a resident and his receipts from this business are less than Rs 2 crore. His business is not listed under the non-eligible businesses list and therefore he can avail this scheme under section 44AD.


Deduction for Business Expenses

No business expenses are allowed to be deducted from the net income. Depreciation is also not deductible. However, in case of a partnership firm, a separate deduction for remuneration of partners and interest paid to partners is allowed. This must be within the limit specified under section 40(b). Even though depreciation is not allowed as a deduction, written down value (WDV) of the assets shall be considered as if depreciation has been allowed.


For example, Rohit runs a Kirana shop and his gross receipts are Rs 75,12,260 from this business. He decided to opt for the scheme under section 44AD. He also wants to claim depreciation for 1 large refrigerator and a computer with billing system he purchased for Rs 2,50,500. He also spent Rs 1,50,000 buying new racks for displaying his goods.Since Rohit has opted for the presumptive scheme under section 44AD, his net income is computed as 8%(assuming all cash receipts) of Rs 75,12,260 = Rs 6,00,981. Under this scheme, no deductions are allowed from income. Rohit will not be allowed to deduct depreciation from this income. He cannot deduct expenses for the purchase of the new rack.


Can the taxpayer declare higher or lower income than 8% of gross receipts?

The taxpayer can voluntarily declare a higher income and pay tax on it. In case the taxpayer chooses to declare lower income than 8% of gross receipts – he shall have to maintain books of accounts and get them audited.


For example, Ritesh runs a stationary shop and his turnover from this business are Rs 85,20,000. He wants to opt for the scheme under section 44AD and therefore his income shall be Rs 6,81,600 (at 8% of gross receipts, assuming all cash receipts). However, Ritesh’s actual income from the business works out to Rs 5,74,000. Ritesh decides to not opt for the scheme under section 44AD and pay tax on the actual income of his business. However, since he’s not opting for this scheme he has to maintain proper accounting records and also get his records audited.


Computing Turnover or Gross Receipts : Gross receipts or Turnover mean the total collections of the business. The receipts shall be inclusive of GST. The receipts shall also include delivery charges as well as receipts from the sale of scrap.


Discounts given, advances received and money received on sale of assets should be excluded.

Presumptive taxation under Section 44AE

For those who are in the business of plying, leasing or hiring of trucks a scheme similar to presumptive income scheme under section 44AD is available.


Eligibility Criteria:

  • You should be in the business of plying, leasing or hiring goods carriages.
  • You should not own more than 10 goods carriages at any time during the year. Include carriages taken on hire purchase or on instalments.
  • You may be an individual, HUF, Company or partnership firm – scheme is allowed to all taxpayers.


Features of this scheme:

  • Net taxable income from a goods vehicle (including any goods carriage) will be calculated as Rs 7,500 per month for each vehicle per month or part thereof during the FY in which vehicle is owned by the assessee.
  • The above calculation will be irrespective of heavy goods vehicle (more than 12000 kgs) and light goods vehicle(less than or equal to 12000 kgs).
  • The assessee is not required to maintain books of accounts under this business
  • The advance tax has to be paid 100% by 15th March for such businesses.
  • No need to comply with the requirement of quarterly instalments due dates (June, Sep, Dec) of advance tax.
  • You are not allowed to deduct any business expenses against the income.

Part of a month shall be rounded off to the next month. For example, if a goods carriage is owned for 9 months and 3 days, the net income shall be calculated as if the carriage was owned for 10 months.


Deduction for Business Expenses:


No business expenses are allowed to be deducted from the net income. Depreciation is also not deductible. However, in case of a partnership firm, a separate deduction for remuneration of partners and interest paid to partners is allowed. This must be within the limit specified under section 40(b).


Even though depreciation is not allowed as a deduction written down value (WDV) of the assets shall be considered as if depreciation has been allowed.


Let’s see the calculation with an example, Rohan is engaged in the business of plying, hiring or leasing goods carriages, and owns 5 trucks and another 2 trucks which have been taken on instalments. Rohan wants to know what will be his income from this business. Rohan can opt for the scheme under section 44AE since he earns less than 10 trucks. He owns 7 trucks in total, include trucks which have been purchased on instalments even if some instalments are unpaid. Rohan’s income from this business shall be Rs 7 trucks x Rs 7,500 x 12 months = Rs 6,30,000 shall be Rohan’s net income from this business. No business expenses can be claimed from this income.


Can the taxpayer declare higher or lower income?

The taxpayer can voluntarily declare a higher income and pay tax on it. In case the taxpayer chooses to declare lower income than as mentioned above – he shall have to maintain books of accounts under section 44AA and get them audited.

Presumptive taxation under Section 44ADA

The benefit of Presumptive tax rates was only available to businesses. But now this benefit has been extended to professionals also. It will be applicable to the professionals, whose total gross receipts does not exceed Rs 50 lakhs in a financial year.


Presumptive Tax Rate: The income of the professionals opting for this scheme would be assumed at 50% of the total gross receipts for the year.


Applicability of the scheme:

The persons engaged in the following profession can opt for this presumptive Income scheme:

a. Medical

b. Engineering

c. Legal

d. Architectural Profession

e. Accountancy Profession

f. Technical Consultancy

g. Interior DecorationThe scheme is applicable only to a resident assessee, who is an individual, HUF or Partnership and not LLP (Limited Liability Partnership Firm).


No requirement of Maintenance of books of Account:

Professionals opting for this scheme need not maintain books of account required under section 44AA. They also need not get the books of account get audited under section 44AB.


Deduction for Business Expenses: No business expense is allowed to be deducted from the net income. Depreciation is also not deductible. Even though depreciation is not allowed as a deduction. Written down value (WDV) of the assets shall be considered as if depreciation has been allowed.


Can the taxpayer declare higher or lower income?

The taxpayer can voluntarily declare a higher income and pay tax on it. In case the taxpayer chooses to declare lower income than 50 % of the total gross receipts- he shall have to maintain books of accounts under 44AA and get them audited.

ITR 5 for firm, LLPs, AOP, BOI, Artificial Juridical Person


This form can be used a person being a firm, LLPs, AOP, BOI, artificial juridical person referred to in section 2(31)(vii),estate of deceased, estate of insolvent, business trust and investment fund, cooperative society and local authority.

However, a person who is required to file the return of income under section 139(4A) or 139(4B) or 139(4C) or 139(4D) shall not use this form.

    What is the structure of the ITR-5 Form?

    The Form has been divided into two parts and several schedules:

    • Part A: General information
    • Part A-BS: Balance Sheet as on 31st March 2019
    • Part A-Manufacturing Account for the financial year 2018-19
    • Part A-Trading Account for the financial year 2018-19
    • Part A-P&L: Profit and Loss Account for the financial year 2018-19
    • Part A-OI: Other information
    • Part A-QD: Quantitative details

    There are 31 schedules details of which are as under:

    • Schedule-HP: Computation of income under the head Income from House Property
    • Schedule-BP: Computation of income under the head “profit and gains from business or profession”
    • Schedule-DPM: Computation of depreciation on plant and machinery under the Income Tax Act
    • Schedule DOA: Computation of depreciation on other assets under the Income Tax Act
    • Schedule DEP: Summary of depreciation on all the assets under the Income-tax Act
    • Schedule DCG: Computation of deemed capital gains on sale of depreciable assets
    • Schedule ESR: Deduction under section 35 (expenditure on scientific research)
    • Schedule-CG: Computation of income under the head Capital gains.
    • Schedule-OS: Computation of income under the head Income from other sources.
    • Schedule-CYLA: Statement of income after set off of current year’s losses
    • Schedule-BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years.
    • Schedule- CFL: Statement of losses to be carried forward to future years.
    • Schedule –UD: Unabsorbed Depreciation
    • Schedule ICDS: Effect of income computation disclosure standards on profit
    • Schedule- 10AA: Computation of deduction under section 10AA
    • Schedule- 80G: Details of donation entitled for deduction under section 80G
    • Schedule- 80GGA: Details of donation for scientific research or rural development
    • Schedule- RA: Details of donations to research associations etc.
    • Schedule- 80IA: Computation of deduction under section 80IA
    • Schedule- 80IB: Computation of deduction under section 80IB
    • Schedule- 80IC/ 80-IE: Computation of deduction under section 80IC/ 80-IE.
    • Schedule 80P: Deductions under section 80P
    • Schedule-VIA: Statement of deductions (from total income) under Chapter VIA.
    • Schedule –AMT: Computation of Alternate Minimum Tax payable under section 115JC
    • Schedule AMTC: Computation of tax credit under section 115JD
    • Schedule-SI: Statement of income which is chargeable to tax at special rates
    • Schedule IF: Information regarding partnership firms in which you are partner
    • Schedule-EI: Statement of Income not included in total income (exempt incomes)
    • Schedule PTI: Pass Through Income details from business trust or investment fund as per section 115UA, 115UB
    • Schedule ESI: Details of Income from outside India and tax relief
    • Schedule TR: Details Summary of tax relief claimed for taxes paid outside India
    • Schedule FA: Details of Foreign Assets and Income from any source outside India
    • Schedule GST: Information regarding turnover/gross receipt reported for GST
    • Part B – TI: Computation of total income
    • Part B – TTI: Computation of tax liability on total income
    • Tax payments:
    • 1.Details of payment of advance-tax and tax on self-assessment tax

      2.Details of tax deducted at source on income other than salary (16A, 16B, 16C)

      3.Details of collected at source


How do I file my ITR-5 Form?


This return form has to be filed online with the Income Tax Department in the following ways:

  • by furnishing the return electronically under digital signature
  • by transmitting the data in the return electronically and thereafter submitting the verification of the return in Return Form ITR-V
  • When the return is filed online, the assessee should print out two copies of ITR-V Form. One copy of ITR-V, duly signed by the assessee, has to be sent by ordinary post to Post Bag No. 1, Electronic City Office, Bengaluru–560500 (Karnataka). The other copy may be retained by the assessee for his record.

    A firm whose accounts are liable to audit under section 44AB must compulsorily furnish the return electronically under digital signature.

    No annexures required

    No document (including TDS certificate) should be attached with this return form while filing ITR-5. All such documents enclosed with this Return Form will be detached and returned to the person filing the return. Taxpayers are advised to match the taxes deducted/collected/paid by or on behalf of them with their Tax Credit Statement Form 26AS.

    How to fill out the verification document?

    Fill up the required information in the verification document. Strike out whatever is not applicable. Please ensure that the verification has been signed before furnishing the return. Choose the designation/capacity of the person signing the return.

    Please note that any person making a false statement in the return or the accompanying schedules shall be liable to be prosecuted under section 277 of the Income-tax Act, 1961 and on conviction be punishable under that section with rigorous imprisonment and with fine.

    ​ITR-6 for Companies not claiming exemption under section 11


    Companies other than companies claiming exemption under section 11 must furnish their income tax return in ITR-6 Form.

    What are the companies claiming exemptions under section 11?

    Companies claiming exemption under section 11 are those whose income from property is held for charitable or religious purposes.

    What is the structure of the ITR-6 Form?

    The Form has been divided into two parts and several schedules:

    • Part A: General information
    • Part A-BS: Balance Sheet as on 31st March 2019
    • Part A-BS-Ind AS: Balance Sheet as on 31st March 2019 or as on the date of the business combination
    • Part A-Manufacturing Account for the financial year 2018-19
    • Part A-Trading Account for the financial year 2018-19
    • Part A-P&L: Profit and Loss Account for the financial year 2018-19
    • Part A-Manufacturing Account-Ind AS: Manufacturing Account for the financial year 2018-19
    • Part A-Trading Account Ind-AS: Trading Account for the financial year 2018-19
    • Part A-P&L Ind-AS: Profit and Loss Account for the financial year 2018-19
    • Part A-OI: Other information
    • Part A-QD: Quantitative details
    • Part A-OL: Receipt and payment account of company under liquidation
    • Schedules as mentioned below
    • Part B-TI: Computation of total income
    • Part B-TTI: Computation of tax liability on total income
    • Tax payments:
    • 1.Details of payments of Advance Tax and Self-Assessment Tax

      2.Details of Tax Deducted at Source (TDS) on Income (As per Form 16A/16B/16C)

      3.Details of Tax Collected at Source (TCS)

    The 42 schedules are:

    • Schedule-HP: Computation of income under the head Income from House Property
    • Schedule-BP: Computation of income under the head “profit and gains from business or profession”
    • Schedule-DPM: Computation of depreciation on plant and machinery under the Income-tax Act
    • Schedule DOA: Computation of depreciation on other assets under the Income-tax Act
    • Schedule DEP: Summary of depreciation on all the assets under the Income-tax Act
    • Schedule DCG: Computation of deemed capital gains on sale of depreciable assets
    • Schedule ESR: Deduction under section 35 (expenditure on scientific research)
    • Schedule-CG: Computation of income under the head Capital gains.
    • Schedule-OS: Computation of income under the head Income from other sources.
    • Schedule-CYLA: Statement of income after set off of current year’s losses
    • Schedule-BFLA: Statement of income after set off of unabsorbed loss brought forward from earlier years.
    • Schedule- CFL: Statement of losses to be carried forward to future years.
    • Schedule –UD: Details of unabsorbed depreciation and allowance under section 35(4)
    • Schedule ICDS: Effect of Income Computation Disclosure Standards on profit
    • Schedule- 10AA: Computation of deduction under section 10AA
    • Schedule- 80G: Details of donation entitled for deduction under section 80G
    • Schedule 80GGA: Details of donations for scientific research or rural development
    • Schedule RA: Details of donations to research associations etc.
    • Schedule- 80IA: Computation of deduction under section 80IA
    • Schedule- 80IB: Computation of deduction under section 80IB
    • Schedule- 80IC or 80IE: Computation of deduction under section 80IC or 80 IE
    • Schedule-VIA: Statement of deductions (from total income) under Chapter VIA.
    • Schedule-SI: Statement of income which is chargeable to tax at special rates
    • Schedule PTI: Pass through income details from business trust or investment fund
    • Schedule-EI: Statement of Income not included in total income (exempt incomes)
    • Schedule-MAT: Computation of Minimum Alternate Tax payable under section 115JB
    • Schedule-MATC: Computation of tax credit under section 115JAA
    • Schedule-DDT: Details of payment of Dividend Distribution Tax
    • Schedule BBS: Details of tax on distributed income of domestic company on buy back of shares, not listed on stock exchange
    • Schedule ESI: Details of income from outside India and tax relief
    • Schedule-IT: Statement of payment of advance-tax and tax on self-assessment.
    • Schedule-TDS: Statement of tax deducted at source on income other than salary.
    • Schedule-TCS: Statement of tax collected at source
    • Schedule FSI: Details of income accruing or arising outside India
    • Schedule TR:Summary of tax relief claimed for taxes paid outside India
    • Schedule FA: Details of Foreign Assets and income from any source outside India
    • Schedule SH-1: Shareholding of unlisted company
    • Schedule SH-2: Shareholding of Start-ups
    • Schedule AL-1: Assets and liabilities as at the end of the year
    • Schedule AL-2: Assets and liabilities as at the end of the year (applicable for start-ups only)
    • Schedule GST: Information regarding turnover/gross receipt reported for GST
    • Schedule FD: Break-up of payments/receipts in Foreign currency

    ​ITR-7 for claiming exemption u/s 11


    For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D) or section 139(4E) or section 139(4F).

    • Return under section 139(4A) is required to be filed by every person in receipt of income derived from property held under trust or other legal obligation wholly for charitable or religious purposes or in part only for such purposes.
    • Return under section 139(4B) is required to be filed by a political party if the total income without giving effect to the provisions of section 139A exceeds the maximum amount, not chargeable to income-tax.
    • Return under section 139(4C) is required to be filed by every –
      • Scientific research association;
      • News agency ;
      • Association or institution referred to in section 10(23A);
      • Institution referred to in section 10(23B);
      • Fund or institution or university or other educational institution or any hospital or other medical institution.
    • Return under section 139(4D) is required to be filed by every university, college or other institution, which is not required to furnish return of income or loss under any other provision of this section.
    • Return under section 139(4E) must be filed by every business trust which is not required to furnish return of income or loss under any other provisions of this section.
    • Return under section 139(4F) must be filed by any investment fund referred to in section 115UB. It is not required to furnish return of income or loss under any other provisions of this section.

    ​Income Tax in India : Guide, IT Returns, E-filing Process 2019


    New Income Tax Slabs for individuals under new tax regime. Applicable to FY 2020-21 (AY 2021-22)

    Income Tax in India: Taxes in India can be categorised as direct and indirect taxes. Direct tax is a tax you pay on your income directly to the government. Indirect tax is a tax that somebody else collects on your behalf and pays to the government eg restaurants, theatres and e-commerce websites recover taxes from you on goods you purchase or a service you avail. This tax is, in turn, passed down to the government. Direct Taxes are broadly classified as :

    • Income Tax – This is taxes an individual or a Hindu Undivided Family or any taxpayer other than companies, pay on the income received. The law prescribes the rate at which such income should be taxed
    • Corporate Tax – This is the tax that companies pay on the profits they make from their businesses. Here again, a specific rate of tax for corporates has been prescribed by the income tax laws of India

    Indirect taxes take many forms: service tax on restaurant bills and movie tickets, value-added tax or VAT on goods such as clothes and electronics. Goods and services tax, which has recently been introduced is a unified tax that has replaced all the indirect taxes that business owners have to deal with.

    31 January31 March31 JulyOct – Nov
    Deadline to submit your investment proofsDeadline to make investments under Section 80CLast date to file your tax returnTime to verify your tax return

    Income Tax Basics

    Everyone who earns or gets an income in India is subject to income tax. (Yes, be it a resident or a non-resident of India ). Also read our article on Income Tax for NRIs. Your income could be salary, pension or could be from a savings account that’s quietly accumulating a 4% interest. Even, winners of ‘Kaun Banega Crorepati’ have to pay tax on their prize money. For simpler classification, the Income Tax Department breaks down income into five heads:

    Head of IncomeNature of Income covered
    Income from SalaryIncome from salary and pension are covered under here
    Income from Other SourcesIncome from savings bank account interest, fixed deposits, winning KBC
    Income from House PropertyThis is rental income mostly
    Income from Capital GainsIncome from sale of a capital asset such as mutual funds, shares, house property
    Income from Business and ProfessionThis is when you are self-employed, work as a freelancer or contractor, or you run a business. Life insurance agents, chartered accountants, doctors and lawyers who have their own practice, tuition teachers

    Taxpayers and Income Tax Slabs

    Taxpayers in India, for the purpose of income tax includes:

    • Individuals, Hindu Undivided Family (HUF), Association of Persons(AOP) and Body of Individuals (BOI)
    • Firms
    • Companies

    Each of these taxpayers is taxed differently under the Indian income tax laws. While firms and Indian companies have a fixed rate of tax of 30% of profits, the individual,HUF, AOP and BOI taxpayers are taxed based on the income slab they fall under. People’s incomes are grouped into blocks called tax brackets or tax slabs. And each tax slab has a different tax rate. In India, we have four tax brackets each with an increasing tax rate.

    • Income earners of up to 2.5 lakhs
    • Income earners of between 2.5 lakhs and 5 lakhs
    • Income earners of between 5 lakhs and 10 lakhs
    • Those earning more than Rs 10 lakhs
    Income RangeTax rateTax to be paid
    Up to Rs.2,50,0000No tax
    Between Rs 2.5 lakhs and Rs 5 lakhs5%5% of your taxable income
    Between Rs 5 lakhs and Rs 10 lakhs20%Rs 12,500+ 20% of income above Rs 5 lakhs
    Above 10 lakhs30%Rs 1,12,500+ 30% of income above Rs 10 lakhs

    This is the income tax slab for FY 2017-18 for taxpayers under 60 years. There are two other tax slabs for two other age groups: those who are 60 and older and those who are above 80.A word of note: People often misunderstand that if they earn let’s say Rs.12 lakhs, they will be paying a 30% tax on Rs.12 lakhs i.e Rs.3,60,000. That’s incorrect. A person earning 12 lakhs in the progressive tax system, will pay Rs.1,12,500+ Rs.60,000 = Rs. 1,72,500. Check out the income tax slabs for previous years and other age brackets.

    Exceptions to the Tax Slab

    One must bear in mind that not all income can be taxed on slab basis. Capital gains income is an exception to this rule. Capital gains are taxed depending on the asset you own and how long you’ve had it. The holding period would determine if an asset is long term or short term. The holding period to determine nature of asset also differs for different assets. A quick glance of holding periods, nature of asset and the rate of tax for each of them is given below.

    Type of capital assetHolding periodTax rate
    House PropertyHolding more than 24 months – Long Term Holding less than 24 months – Short Term20% Depends on slab rate
    Debt mutual fundsHolding more than 36 months – Long Term Holding less than 36 months – Short Term20% Depends on slab rate
    Equity mutual fundsHolding more than 12 months – Long Term Holding less than 12 months – Short TermExempt (until 31 March 2018) Gains > Rs 1 lakh taxable @ 10% 15%
    Shares (STT paid)Holding more than 12 months – Long Term Holding less than 12 months – Short TermExempt (until 31 March 2018)Gains > Rs 1 lakh taxable @ 10% 15%
    Shares (STT unpaid)Holding more than 12 months – Long Term Holding less than 12 months – Short Term20% As per Slab Rates
    FMPsHolding more than 36 months – Long Term Holding less than 36 months – Short Term20% Depends on slab rate

    Residents and non residents:

    Levy of income tax in India is dependent on the residential status of a taxpayer. Individuals who qualify as a resident in India must pay tax on their global income in India i.e. income earned in India and abroad. Whereas, those who qualify as Non-residents need to pay taxes only on their Indian income. The residential status has to be determined separately for every financial year for which income and taxes are computed.