Frequently Asked Questions

The form follows the kind of income you have, not the amount. Salary or pension, one house property and ordinary other income such as bank interest fit ITR-1. Add capital gains, a second house property, foreign assets or unlisted shares and you move to ITR-2. Income from a business or profession on actual books means ITR-3. If you are declaring business or professional income on a presumptive basis instead, that is ITR-4.

Filing on the wrong form is not a small thing: the return can be treated as defective and you are asked to file again. If your situation is not obvious, the step-by-step guides walk through a worked case for each form.

They are two parallel rate structures. The old regime charges higher rates but lets you reduce taxable income through a wide set of deductions and exemptions. The new regime charges lower rates on a simpler structure with most of those deductions withdrawn.

Which one costs you less depends on how much you actually claim, not on what you earn. A taxpayer with a home loan, rent and full investment deductions can land in a different place from someone on the same salary who claims nothing. Compute both before choosing — see old vs new regime, compared.

It depends on whether you have business or professional income. If you do not — salary, pension, house property, capital gains, other sources — you may choose afresh each year when you file, and choosing one year does not bind you the next.

With business or professional income the choice is far more restricted. Moving out of the default regime is done through a prescribed form rather than in the return itself, and having moved out you cannot move back and forth freely year after year. Get this one wrong and the option can be lost for later years, so check the position for your own facts before you file.

You can still file a belated return for a limited window after the due date. It costs a late fee, interest runs on any unpaid tax, and some losses you would otherwise have carried forward are lost — so it is worse than filing on time, but far better than not filing.

Once even the belated window has closed, the remaining route is an updated return, ITR-U, which is available for a longer period but carries an additional tax on top of what you owe, rising the longer you leave it. How to file ITR-U sets out what each route costs.

Usually yes. TDS is a method of collecting tax during the year; it is not an assessment of what you finally owe. Filing is a separate obligation, triggered by your total income and in some cases by things unrelated to income at all, such as holding a foreign asset or certain high-value transactions.

It is also the only way to get money back. If the tax deducted exceeded your actual liability — common when you have deductions your employer did not account for — the excess is refunded only against a filed return.

Form 26AS is a tax credit statement. It shows tax attached to your PAN — TDS and TCS deducted by others, advance and self-assessment tax you paid, and refunds already issued. It answers one question: how much tax has reached the government in your name.

The Annual Information Statement is much wider. It reports financial transactions others have told the department about: interest, dividends, securities and mutual fund transactions, property dealings and more. Reconcile both before you file. A mismatch between the AIS and your return is one of the most common reasons a notice arrives.

Combine them and recompute from scratch. The trap is that each employer deducted tax as though it were your only job, so each is likely to have given you the basic exemption and the same deductions independently. Your real liability on the combined salary is usually higher than the two Form 16s add up to, and the shortfall is yours to pay before filing.

Check the tax credits against Form 26AS while you are at it, then follow the worked walkthrough for a mid-year job change.

ITR-1 is not available to a non-resident, so in most cases the answer is ITR-2 — or ITR-3 if you also have business or professional income in India.

The question that comes first, though, is residential status, because it decides what is taxable at all rather than merely which form carries it. That is determined by your physical presence in India over the year and preceding years, not by your citizenship or where you hold a passport. Filing ITR-2 as an NRI with India-source income works through a full case.

The gain is a capital gain, which takes you to ITR-2, or ITR-3 if you also have business income. How the gain is computed, and the rate it attracts, turn on how long you held the property.

Reinvestment reliefs can reduce or remove the tax, but they are conditional and time-bound — the reinvestment has to be of the right kind and made within a fixed period, and the exemption is withdrawn if you dispose of the new asset too soon. Selling a residential property with Section 54EC bonds shows the computation end to end.

Presumptive taxation lets a small business or professional declare income at a prescribed percentage of turnover or receipts, instead of maintaining full books and computing actual profit. Section 44AD covers eligible businesses, 44ADA covers specified professions, and 44AE covers goods carriage operators on a per-vehicle basis.

Eligibility is conditional — there are ceilings on turnover, restrictions on who may opt in, and consequences if you opt out again later. The ceilings also differ depending on how much of your turnover is received digitally. Check the current limits for your own case rather than working from memory; the ITR-4 guides cover a trader, a freelance professional and a transporter separately.