The forms
| Form | Broadly applies to |
|---|---|
| ITR-1 (Sahaj) | Resident individuals with salary, one house property and limited other income, within the prescribed ceiling |
| ITR-2 | Individuals and HUFs without business or professional income — includes capital gains and multiple house properties |
| ITR-3 | Individuals and HUFs with business or professional income |
| ITR-4 (Sugam) | Presumptive income under 44AD, 44ADA or 44AE, within the prescribed limits |
| ITR-5 | Firms, LLPs, AOPs and BOIs |
| ITR-6 | Companies other than those claiming exemption under section 11 |
| ITR-7 | Trusts and entities filing under 139(4A) to 139(4D) |
Conditions that disqualify ITR-1
Any one of these moves the taxpayer to ITR-2 at least, and to ITR-3 where business income is involved.
- Total income above the prescribed ceiling
- More than one house property
- Any capital gains
- Business or professional income
- Director in a company, or holder of unlisted equity shares
- Foreign assets or foreign income
- Being a non-resident or resident but not ordinarily resident
- Agricultural income above the prescribed limit
Presumptive taxation and ITR-4
ITR-4 is available where income is declared on a presumptive basis — section 44AD for eligible businesses, 44ADA for specified professions, 44AE for goods carriages — and turnover or receipts remain within the applicable limit. Once the limit is crossed, or the taxpayer declares income below the presumptive rate and is required to maintain books, ITR-3 applies instead.
What triggers a defective return
- Wrong form for the income profile — the most frequent cause.
- Capital gains declared without the corresponding schedule completed.
- Presumptive scheme claimed after turnover crossed the limit.
- Books-of-account details omitted where they were required.
- AIS and Form 26AS entries left unreconciled with the return.
- Foreign asset disclosure omitted by a resident taxpayer.
Reconcile before you file, not after
AIS and Form 26AS should be checked against the client's own records before the return is prepared. Interest income the client forgot, a property transaction reported by the registrar, or TDS credited by a payer the client did not mention are all easier to deal with at preparation than in response to a notice.