ITR Filing: Which income tax return form is applicable to you for FY 2020-21

Synopsis

Even if your total income does not exceed Rs 2.5 lakh but the payer of income has deducted taxes and you need to claim a refund from the tax authorities, you will need to file an ITR.

If the ITR is not filed by the due date, i.e., September 30, 2021, penalty ranging from Rs 1,000 up to Rs 5,000 is levied.
If you are an individual taxpayer (say, a salaried individual) and your total income during the financial year (FY) exceeds Rs 2.5 lakh before taking into account common deductions such as Section 80C, Section 80D etc. available under the Income-tax Act, 1961, you are required to file ITR for the financial year 2020-21.

Even if your total income does not exceed Rs 2.5 lakh but the payer of income has deducted taxes and you need to claim a refund from the tax authorities, you will need to file an ITR without which you will not receive the refund due to you. Therefore, it’s necessary to analyse the facts which are applicable in your specific case to conclude whether you have to file ITR or not.

On March 31, 2021, the Central Board of Direct Taxes (CBDT) notified ITR forms for FY 2020-21. Having due regard to the pandemic situation, CBDT has kept ITR forms largely unchanged from last year and only changes necessary to incorporate new provisions have been made in the forms. So, if you are not a first-time ITR filer, you will not get any unpleasant surprises when it comes to reporting and disclosure requirements in the ITR forms. Also, due to the pandemic, CBDT has extended the due date to file ITR for individuals to December 31, 2021 from previous deadline of September 30, 2021.

Are you required to file ITR?
To answer the question of whether you should file ITR, the below illustrative situations may necessitate ITR filing for an individual:

  • Total income exceeds the maximum amount not chargeable to tax. The basic exemption limit for FY 2020-21 is Rs 3 lakh for senior citizens (aged 60 years or more but less than 80 years), Rs 5 lakh for super senior citizens (aged 80 years or more), and Rs 2.5 lakh for others under the old tax regime. However, in the case of an individual opting for the new concessional tax regime under Section115BAC, the maximum amount not chargeable to tax is Rs 2.5 lakh for all categories of individual taxpayers;
  • The individual needs to claim a refund of excess taxes deducted on his income or excess tax payments made;
  • The individual qualifies as an ordinarily resident of India during FY 2020-21 and holds foreign assets which need to be specifically reported in the ITR. These assets include foreign bank accounts, foreign properties, financial assets etc.;
  • The individual has undertaken specific transactions viz (a) payment of electricity bill in excess of Rs 1 lakh during the FY (b) deposited more than Rs 1 crore in one or more current accounts during the FY or (c) spent more than Rs 2 lakh on overseas travel for self or any other person during the FY;
  • The individual has incurred a loss under the head ‘capital gains’ or ‘profits and gains of business and profession’ and the same needs to be carried forward for set-off in future FY.

ITR may also be filed for other administrative requirements such as obtaining a loan, visa for overseas travel etc.

Which ITR is applicable to you for FY 2020-21?
The next important question is which ITR form should be used and by whom. The details of the ITR forms are summarised below:

ITR 1 (Sahaj)
  • Individuals qualifying as Ordinarily Resident
  • Having a total income of up to Rs 50 lakh
  • Having income from salaries, one house property, income from other sources (interest etc.) and agricultural income up to Rs 5,000
  • In case of clubbing of income, an individual can file ITR-1 form if the income of the other person (whose income the individual is reporting in his ITR) is from sources as mentioned above. For example, Mr. A will file his ITR after clubbing of income earned by his spouse. In such a case, Mr. A would be able to file the ITR-1 form only if the income of the spouse is from the sources specified above.
Non-residents/ Resident but Not Ordinarily Residents
Hindu Undivided Family (HUF)
Ordinarily Residents having a total income of more than Rs 50 lakh
Director in a company
Holding investments in unlisted equity shares
Having brought forward losses or losses to be carried forward under the head ‘income from house property
Having income from any other source, eg. more than one house property, capital gains, profits or gains of business or profession, winning from lottery
Holding assets outside India
Having 2% TDS deducted for cash withdrawal exceeding INR 1 crore (reduced to INR 20 lakh in some cases)
Having deferred tax deduction/ payment in respect of perquisite due to ESOPs allotted/ transferred by employer being an eligible start-up
ITR 2
  • Non-residents / Resident but Not Ordinarily Residents and Ordinarily Residents
  • Hindu Undivided Family (‘HUF’)
  • Having a total income of more than Rs 50 lakh
  • Director in a company
  • Holding investments in unlisted equity shares
  • Having income from the following sources – salaries, more than one house property, capital gains and income from other sources
  • Having income from sources outside India and holding assets outside India
  • Individuals/ HUF having business income/ income from profession
ITR 3
  • Individuals/ HUF having business income/ income from profession
  • Partner of a Firm
Persons other than individuals/ HUF having business income/ income from profession

ITR 4 (Sugam)
  • Resident Individuals/ HUF/ Firm (other than LLP) having total income up to INR 50 lakh
  • Having business income/ income from profession computed on ‘presumptive basis’
Having profits or gains from business or profession which are not computed on a presumptive basis
Other restrictions similar to the ITR-1 form.
ITR 5
  • Any person except individual or HUF
  • E.g. Firms/ LLPs/ Association of Persons (AOPs)/ business trusts/ investment funds
Individual or HUF
Any other person required to file form ITR-7
ITR 6
  • Companies other than those filing ITR-7
Companies required to file form ITR-7
ITR 7
  • Persons including companies which are a charitable or religious trust, political party, research association, news agency or similar organizations specified in the Act
Other categories of taxpayers

Consequences of late filing/ non-filing
If the ITR is not filed by the due date, i.e., December 31, 2021, penalty ranging from Rs 1,000 up to Rs 5,000 is levied and needs to be remitted before the ITR can be filed. This fee or a penalty has to be paid in case of belated ITRs even if the tax liability is nil. Further, in case of belated filing, taxpayers will also not be able to carry forward the losses which can be set-off with eligible incomes in the future years.

Where an individual has taxable income and unpaid taxes but does not pay the taxes or file the ITR, tax authorities may issue notice to the individual. Tax authorities may also levy a penalty on the amount of taxes not paid and this penalty would be in addition to tax that needs to be paid and interest applicable for late payment.

From FY 2020-21, one must also keep in mind that a new concessional tax regime under Section 115BAC of the Act can be opted at the time of ITR filing where such option is exercised within the due date for filing the ITR. If ITR is filed after the due date, then income tax rates and slabs under old tax regime will be applicable.

Therefore, it is not only important to file the annual ITR but also select the correct ITR form, pay the taxes on time and complete the filing of ITR within the due date to avoid consequences.