Which ITR form applies to you for the financial year 2017-18?

Which ITR form applies to you for the financial year 2017-18?

The income tax authorities notified the new ITR form applicable for the financial year 2017-18 in April (online utility tools for a couple of forms have been published). An individual who is required to file a return of income for the financial year 2017-18 needs to do so by July 31, 2018 (unless extended).

This deadline is not applicable to individuals / partner of a firm, whose books of accounts are required to be audited. Different tax return forms are applicable to different types of tax assesses. Choosing the right form is important as a wrong form will make your return defective. Various factors like the type of income, quantum of income, residential status of the taxpayer etc. need to be considered to select the right form.

The new forms incorporate the changes brought about by the Finance Act, 2017. This year forms have been notified well in advance, providing sufficient time for the taxpayers to collate information and keep it ready.

Who can use ITR 1 Sahaj?

An individual who is a Resident and Ordinarily Resident (ROR), having income from salaries, one house property, income from other sources (other than winnings from lottery, maintaining race horses, etc.), and having total income up to Rs 50 lakh is eligible to use ITR 1.

Unlike last year’s ITR 1 form, ITR 1 Sahaj can only be used by an individual who qualifies as ROR, which means that an individual who either qualifies as Not Ordinarily Resident (NOR) or a Non-resident (NR) cannot use this form.

Another major change in ITR 1 as compared to previous year’s form is that this year’s form has an additional requirement to furnish break-up of salary components along with the details of exemptions claimed.

Individuals may find this additional disclosure requirement a bit difficult, especially if the information is not appropriately captured in Form 16 issued by the employer. This year’s ITR 1 form also mandates to furnish a break up of income under the head income from house property which was earlier mandatory only in ITR 2 and other forms.

ITR 2 is applicable to individuals and Hindu Undivided Families (HUFs) who are not eligible to file ITR 1 Sahaj and who do not haveincome under the head “Profits and Gains from Business or Profession” (PGBP). The field “PGBP”, which was reflecting in Part B – section TI (computation of total income) in last year’s ITR 2 form, is no longer available in the current year’s ITR 2 Form.

Similarly, Schedule relating to details/income from partnership firms have also been removed in this year’s ITR 2 form. This means that anyone earning income from a partnership firm has to file ITR 3, and not ITR 2.

Given that ITR 1 is not applicable for NORs and NRs anymore, ITR 2 will become the first suitable option for filing their return of income. Details of applicability/non-applicability of ITR 1 and ITR 2 are mentioned in the below table.

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