Income Tax Returns: Which Form Should You Select?

The Income Tax Department has notified the income tax return forms 1, 2, 3, 4 and 5 for the financial year 2024–25 (Assessment Year 2025–26). These forms are meant for different categories of taxpayers. 

The taxpayers need to choose the right form as per their income levels. The ITR-1 and ITR-4 are designed for taxpayers with an annual income of up to Rs 50 lakh.

The ITR-2 form is meant for individuals who are not eligible to file ITR-1 and don't have income from business or profession. The forms also have a new section for long-term capital gains that is tax-exempt.

Here's a look at different ITR forms for FY 2024–25 (AY 2025–26), which can help you to pick the appropriate form as per your income level and category.

This form applies to resident individuals with a total income of up to Rs 50 lakh. The sources of income for such a taxpayer can include salary, pension, income from one house property (but this does not cover situations where loss is brought forward from previous years) and income from other sources. 

Income can also include long-term capital gains of up to Rs 1.25 lakh and agricultural income up to Rs 5,000.

Individuals and Hindu Undivided Families who are not eligible to file ITR-1 can file ITR-2. This form cannot be used by taxpayers whose total income includes income from business or professions. In such a case, they can file ITR-3 or ITR-4. Salaried taxpayers with incomes above Rs 50 lakh and receipts from other sources like house property and capital gains from equity investments need to use ITR-2.  

This form can be used if the income of another person, such as a spouse or a minor child, is to be clubbed with the income of the assessee, if the income falls under the categories applicable for ITR-2.

The ITR-3 has been designed for individuals and HUFs whose income is derived from a proprietary business or via a profession. It can include income from a business or profession where the maintenance of books of accounts is required. In simple terms, the ITR-3 is applicable to those who are not eligible to file ITR-1, ITR-2 and ITR-4.

It is meant for individuals and HUFs whose annual income is up to Rs 50 lakh. If you have Income from a business or profession that is calculated on a presumptive basis under sections 44AD, 44ADA, or 44AE, you need to opt for this form.

ITR-5 is designed for firms, Limited Liability Partnerships, Associations of Persons, Bodies of Individuals and Artificial Juridical Person. It is not meant for individuals.

Taxpayers need to select the right form when it comes to filing ITR. This will ensure that the process is hassle-free and you successfully file your returns. It is important to know about the different forms notified by the I-T Department and select the appropriate form to avoid errors or receiving an income tax notice later.