Frequently Asked Questions - Income Tax Forms

Who should use which income tax form?

There are various forms applicable depending on the sources of income. Use our ITR Selector link to check out which ITR form is applicable in your case.

Which form of return would be applicable to the persons who has income from salary only?

The relevant form would be ITR-1.

Is it mandatory for certain classes of assessees to submit the Income tax returns electronically?

Yes, it is mandatory for Companies and the Firms who have to get their accounts audited u/s 44 AB of the Act to file their return electronically for A.Y. 2006-07 onwards.

What is the Return of Fringe Benefits?

An employer who has paid or made provision for payment of fringe benefits to his employees during the previous year is required to furnish a return of fringe benefits in the prescribed form and manner to the Assessing Officer before the due date.

Whether the address given in the PAN card is to be quoted or the current address which may be different from the PAN card address can also be quoted?

The assessee has to quote the current address on the returns forms.

What will be the status of audit report under section 44AB as now it is not required to be furnished along with the return of income?

The new annexure less forms are not to be attached with any documents. Refer to Circular no. 9 dated 10.10.2006 issue by CBDT for more clarifications

In ITR-4, there is no separate requirement for mentioning the trade name of the proprietary firm; disclosure of trade name is essential as most of the proprietors carry their businesses in the proprietorships firm name only.

Under the heading “Nature of Business” in “Part A General”, column has been provided to disclose the trade name of the proprietorship.

In case the assessee desires to convey something by the way of separate note which may be essential, no separate space has been provided for that?

This is not allowed/ required in thenew annexure less forms. Refer Circular no. 9 dated 10.10.2006 issue by CBDT for more clarifications.

Which Form of returns would be applicable in case an assessee wants to file return for earlier years? In such a situation can he file the return in physical form?

For earlier years, paper returns could be submitted except for corporate. For the companies, filing of e-return is mandatory for A.Y. 2006-07 onwards. The facility to e- file returns for A.Y. 2006-07 in FORM No. 1, 2, 3, 2F & 3B is available.

Can the stand-alone form on Fringe Benefits be used by companies and firms as well?

If they are not required to file return of income tax.

If an individual has loss from house property, can he use ITR-1?

No, he has to use form no. ITR-2.

What is purpose and implication of ITR-V?

This is to simplify the filing of return electronically without digital signature. Last year, the taxpayer was required to take a printout of e- return and submit it in the Income Tax office after verification. To further simplify this procedure ITR-V form has been introduced. This is a single page acknowledgment cum verification form.

What form of return should be filled by a salaried class person having housing loan also?

ITR-2.

In case filing is done online with digital signatures, no stamped acknowledgement would be available. This would create problems for the assessee for obtaining visa, loan etc. Is there any system to verify online whether IT returns of a particular year has been filed?

The income tax department is planning to offer this facility shortly through web.

What would be the status of a person who is having more than one type of businesses? He would have to prepare a consolidated balance sheet and profit and loss, to quote figures in the new forms. This would unnecessarily increase the workload of the assessee who already has to prepare the financial statements in different format for different purposes i.e MCA-21,VAT return , bank loan purposes etc. ?

Every person carrying on the business or profession has to prepare a consolidated balance sheet and profit and loss account. This is a legal requirement under income tax act. The assessee may minimize his efforts by choosing to file the return electronically.

A situation where the property could be “deemed to be let out” has not been considered. Kindly clarify.

The deemed house property income is to be disclosed in schedule HP in column in 3(b) which deals with arrears of rent receipt u/s 25 B of the income tax act.

In ITR – 4 the requirement relating to statutory reserves in case of individual or HUFs carrying on proprietorship business or profession does not appear to be in place.?

No, it is not correct. In Part A – BS, under the column 1 (b) (iii), statutory reserves could be disclosed.

ITR-4 requires the assessee to mention the amounts debited to profit and loss account to the extent disallowable under section 40A(2)(b). Under this section the amount is disallowed only if the payment made is excessive in the opinion of the assessing officer. Now the question arises as to how can the assessee step into the shoes of the assessing officer and fill this information ?

The assessee may provide the figures as per his understanding.

Are the details required under Annual Information Report mandatory to be filled in by all assessee?

As provided in the Instructions for filling the forms that these are applicable who fulfill the criterion.

Which return form has to be used by a person who has only exempt share income from a firm?

FORM NO. ITR-3. For the assistance of taxpayer, a functionality is in the web site to select the appropriate type of form.

If AOP/BOI do not have taxable income, can they use ITR-8 instead of ITR-5? What about a firm? Can they also use ITR-8 instead of ITR-5?

If they are not required to file return of income tax.

What is the Status of Form 2F, which included cash flow statement?

It is no more applicable for a.y.2007-08 onwards.

Is it necessary to file these returns in duplicate for getting acknowledgement?

If it is filed electronically without digital signature , only ITR- V form is to be submitted. If the return is filed with digital signature , nothing needs to be submitted , not even form ITR-V.

ITR-1 is return for individual having income from salary/pension/ family pension and interest. An individual having only salary income and no interest income may use this form or he has to go for ITR-2?

He may use ITR-1 form.

ITR-2, 3 and 4 require detailed breakup of salary income like exempt allowances; perquisites etc, whereas ITR –1 requires only a single figure for salary. Is there any specific reason for such differential treatment?

This is for the convenience of small taxpayer.

Many schedules and notes to accounts form part of the financial statements of any entity. The return forms do not provide for this information. This deprives the assessing officer of the basic tool to understand the financial statements. Many items contained in the notes to accounts may have revenue implications. It would difficult for the department to pick up important cases for scrutiny on random basis and call for details?

This issue has been clarified in circular no. 9 dt 10/10/2006. The will have this opportunity if the case is selected under scrutiny. At the processing stage, the A.O. is not supposed to look into these matter. The selection of cases is an internal matter which is objective and risk based.

A person is proprietor of two different proprietary concerns having different business each having turnover more than 40 lacs and audited u/s 44AB by different chartered accountants which data he has to fill in form no.ITR 4, as the space provided for the profit & loss account and balance sheet is for only one proprietary concern. It is suggested that the separate sheet to be allowed to be inserted in the same format for the each proprietary concern ?

The taxpayer has to provide consolidated balance sheet / profit and loss account.

If a person wants to file the personal balance sheet where can he do so ?

It is not required under the Act. In ITR – 4, the Assessee has to give the balance sheet of his proprietory business and not of his personal assets and liabilities.

What is to be filled in part A – QD that is the quantitative details if the persons is under tax audit and not having quantitative details of the goods as he is in a business which is comprising of thousands of small commodities where none of the commodity is having a turnover of more than 10% of the total turnover e.g. Grocery shop, Hardware & Paint dealer, Stationery Shop, other retailers ?

He may not fill these columns.

The assessee who is under presumptive taxation scheme i.e. “no accounts case”, what he should write for sundry debtors, sundry creditors, stock in trade, cash balance, gross profit as he may not have all these details since he is not maintaining books of accounts ?

He has to give these figures from primary records.

If a persons is receiving as a partner interest, remuneration from a firm and is also proprietor of a concern can he show the share of interest and remuneration received from the firm in schedule BP (computation of income for Business or Profession) in item no. 23 as any other income not included in profit and loss account or in item no. 22 any other item or items of addition under section 28 to 44DA ?

Yes, he can show this in item no.23 of BP Schedule.

How the income from house property is to be shown if the property is partly self occupied and partly rented ?

It is to be shown on proportionate basis.

Income from self occupied property has loss after deduction of interest on borrowing in which column should if be mentioned ?

It should be mentioned in schedule in HP and set off up of the loss from the current years income should be carried out in schedule CYLA.

Many professionals have only one savings account and all professional income is in the same account. For him there may not be any balance sheet of his business. What should he fill up in the Balance Sheet part?

This is a legal requirement. One has to fill up the details in the balance sheet which may be worked out from the bank account or from other records maintained by the Assessee.

The profit and loss account contained in the forms require the assessee to furnish complete details of different types of duties paid or payable in respect of goods and services purchased. In majority of cases this may not be practically possible ?

It is provided in the instructions that in such situations one can show the purchases inclusive of duties and taxes.

In case the assessee desires to convey something by the way of separate note which may be essential, no separate space has been provided for that ?

This issue has been clarified by the Board in its Circular no. 5/2007 dtd 26-07-2007 and Circular no. 9 dtd 10.10.2006. As stated therein , one can make such disclosures in scrutiny assessment after the receipt of notice u/s 143(2) of the Act.

The structure of the profit and loss account is such that it suits manufacturing or trading business only. It does not suit the service providers like hotel, transport agents, professionals etc. It is likely that the assessees in the service industry will have to recast or reframe its profit and loss account. Please clarify as to how service sector requirements could be factored in ?

The balance sheet and profit and loss account are trade independent. These are the part of accounting systems. One has to follow these system which are standardized. Some amount of re-casting/re-framing may be required.

Are the details required under Annual Information Report mandatorily to be filled in by all assessee?

This is mandatory requirement for those to whom it is applicable. Please read instructions given with the return in this regard.

Can the stand-alone form on Fringe Benefits be used by companies and firms as well?

Form no. 8 is only for those assessees who are not supposed to file I.T. ve to file return of FBT.

If AOP/BOI do not have taxable income, can they use ITR-8 instead of ITR-5? What about a firm? Can they also use ITR-8 instead of ITR-5?.

It is the requirement of filing the return of income which would decide the issue and not the amount of taxable income. ITR-8 is to be used if the taxpayer is not required by the law to file income tax return but has FBT liability.

As per Section 50 the Income-tax Act, there is no need to disclose sale of fixed assets made during the year out of purchases for a period of 180 days or more, or purchases for a period less than 180 days. The details asked in the Schedule DPM are against the provisions of Section 50?

The form has been designed keeping in view the provision in the Act. The interpretation given above is not borne out by the Act. The details in schedule DPM are in conformity with section 50.

The Income-tax Act requires the following to be attached with return:(a) proof for interest for housing loan.(b) certified copy of the deed in the case of new firm or in the year of change in constitution. c) form 30 in the case of refund But the return is annexure less; How one can comply with the requirement under the Act ?

The Act has been amended and in view of S139C, 139D ,amended Rule12 and Circular no. 5/2007 dtd 26-07-2007, the requirement of documents with the return has been dispensed with.

Individuals/HUF who are self employed doing brokerage, commission, CA practice, doctors, architects, beauty parlour, etc. and does not maintain their accounts related to the business but maintains personal accounts in the form of profit & loss and balance sheet.Please let me know: Which ITR form to be used. If ITR 4 is to be used whether the personal accounts to be treated as accounts of proprietory business and accordingly to be loaded in the form ?

ITR-4 would be the applicable form. Personal accounts or assets/ liabilities are not required to be shown. Only business assets/ liabilities are to be mentioned.

In case of ITR-4 PART A BS under application of funds S. No. 3(b) captioned as loans and advances there is no column to show loans given to business associates or others. Please advice ?

They are to be shown in column 3b(i) of schedule PartA-BS.

In case of salaries how to incorporate details of more than one employer ?

In the software, facility exists to use dynamic rows to take care of more than one employer.

Whether all types of pension viz. under Superannuation scheme, Family pension Fund, Employees pension Scheme, pension from LIC under Jeevan Suraksha etc is to be shown under the head “Salary” or all/any of the above is to be shown under the head “Income from other sources” ?

NO, this has to be shown as income from other sources.

A partnership firm engaged in retail trade declares net profit @ 5% of gross turnover. As such it is not required to maintain books of accounts. It pays salary and interest to its partner in accordance with law. Consequently its net profit as well as taxable income is reduced to nil. How can the above be filled up in ITR 5 so as to reflect that the profit declared complies with the provisions of section 44AF and also the computational provisions of the I.T. Act?

If the assessee does not maintain books of accounts , he has to fill in column no. 51 of Part A- P&L. The business profit is to shown as per column 51d of schedule P&L. It is provided in schedule BP also in the same manner.

ITR form no. 8, why tax auditor details are required when income tax return is not required to be filed?

The audit is a mandatory requirement of the law. What has been relaxed is only its non submission at the time of filing of return. Therefore , the details are required as a check against misuse.

An assessee earns income from Salary + Interest + Dividend. Dividend is exempt u/s 10. Which form to be used? Form 1 or Form 2?

Form no ITR-2. Exemption of income is not the criterion.

In schedule of AIR of all ITRs relating to financial transactions whether the limit fixed is for aggregate or single in each category as shown in the following transactions.(a) saving account with more than on Bank. (b) credit card with more than one Bank. (c) purchase of units of mutual funds. (d) bonds or debenture of more than one company or institution. (e) equity shares issued by more than one company. (f) purchase or sale of more than one property ?

This limit is the aggregate value for all transactions except property value where it is the value of a single transaction.