Understanding Different ITR Forms and Their Applicability

Filing an Income Tax Return (ITR) is one of the most crucial responsibilities of every taxpayer in India. Whether you are a salaried employee, business owner, freelancer, or investor, selecting the right ITR form is the first step towards accurate compliance. Choosing an incorrect form can lead to rejection, penalties, or notices from the Income Tax Department.

In this article, we’ll provide a clear breakdown of different ITR forms and their applicability for Assessment Year 2025–26. Along the way, we’ll also highlight how professional courses such as Certified Corporate Accounting, SAP FICO (Finance & Controlling), and training in Taxation (Income Tax & GST) can help individuals and professionals gain expertise in handling these complexities.

What Are ITR Forms?

An Income Tax Return (ITR) form is a prescribed format issued by the Income Tax Department of India that taxpayers use to report income, deductions, and taxes paid during a financial year.

The form you choose depends on factors like:

• Type of income (salary, business, capital gains, etc.)

• Residential status (Resident, NRI, RNOR)

• Category of taxpayer (Individual, HUF, Firm, Company)

• Total income during the year

List of ITR Forms for AY 2025–26

Let’s now explore the different ITR forms and their applicability:

1. ITR-1 (Sahaj)

• Applicable for: Resident individuals with income up to ₹50 lakh.

• Sources of income:

  • Salary or pension

  • One house property (except brought forward loss)

  • Other income (like bank interest, family pension, etc.)

• Not for: Business owners, NRIs, individuals with capital gains, or agricultural income above ₹5,000.

???? Example: A salaried professional earning ₹12 lakh with FD interest can file ITR-1.

2. ITR-2

• Applicable for: Individuals and HUFs with income from multiple sources other than business or profession.

• Sources of income:

  • Salary and pension

  • Multiple house properties

  • Capital gains (sale of shares, property, mutual funds)

  • Foreign income and assets

• Not for: Individuals earning income from a business or profession.

Example: An NRI selling property in India or an investor earning capital gains must file ITR-2.

3. ITR-3

• Applicable for: Individuals and HUFs having income from business or profession.

• Sources of income:

  • Business or professional income

  • Salary, house property, capital gains, and other sources

• Not for: Companies, firms, or LLPs.

 Example: A freelance consultant or a small business owner with GST registration must use ITR-3.

4. ITR-4 (Sugam)

• Applicable for: Resident Individuals, HUFs, and Firms (other than LLPs) opting for presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE.

• Sources of income:

  • Presumptive business income (turnover up to ₹2 crore)

  • Presumptive professional income (gross receipts up to ₹50 lakh)

• Not for: Non-residents, directors in a company, or those owning foreign assets.

 Example: A shopkeeper declaring income under Section 44AD can file ITR-4.

5. ITR-5

• Applicable for: Partnership firms, LLPs, AOPs (Association of Persons), BOIs (Body of Individuals), cooperative societies, and local authorities.

• Sources of income: Business, professional income, capital gains, and other income.

• Not for: Individuals and companies.

 Example: An LLP providing accounting services must file ITR-5.

6. ITR-6

• Applicable for: Companies other than those claiming exemption under Section 11 (charitable or religious trusts).

• Sources of income: Business, capital gains, and other sources.

• Mandatory: To file electronically with digital signature.

 Example: A private limited company offering IT services must file ITR-6.

7. ITR-7

• Applicable for: Persons and institutions including trusts, political parties, colleges, and charitable organizations required to file returns under Sections 139(4A) to 139(4F).

• Sources of income: Contributions, voluntary donations, or income applied towards charitable purposes.

 Example: A Section 8 non-profit company must file ITR-7.

Why Choosing the Right ITR Form Matters

Selecting the correct ITR form ensures:

• Error-free filing → Reduces chances of rejection.

• Faster refunds → If excess TDS or advance tax is paid.

• Legal compliance → Avoids penalties and notices.

• Accurate reporting → Ensures transparency in taxation.

How Accounting and Taxation Training Helps

Many students and professionals find ITR filing complicated due to frequent tax law updates and form changes. This is where specialized training programs come into play:

• Certified Corporate Accounting (CCA): Equips learners with practical knowledge in financial accounting, auditing, and corporate taxation, preparing them for professional roles.

• SAP FICO (Finance & Controlling): Provides expertise in managing business finances, integrating taxation, and automating compliance processes.

• Taxation (Income Tax & GST): Offers in-depth training on tax laws, ITR filing, GST returns, and TDS compliance.

By pursuing these courses from reputed institutes, aspiring accountants and finance professionals can build strong careers in taxation, corporate finance, and auditing.

Conclusion

Understanding different ITR forms and their applicability is crucial for hassle-free income tax filing. From ITR-1 for salaried individuals to ITR-7 for trusts, each form serves a unique purpose based on income type and taxpayer category.

Whether you’re an individual, business owner, or part of a larger entity, filing the correct ITR form ensures compliance, reduces errors, and improves your financial credibility. For those aspiring to build a career in this domain, learning through Certified Corporate Accounting, SAP FICO (Finance & Controlling), and Taxation (Income Tax & GST) courses can provide the professional edge required to excel.