How to Choose ITR Form Based on Income FY25: A Comprehensive Guide

by

Confused about selecting the right ITR form for FY 2024-25 based on your income in 2025? Our comprehensive guide explains how to choose ITR form based on income FY25, breaking down each form (ITR 1, 2, 3, 4, 5, 6, 7) with the latest updates and provides a step-by-step process. File your taxes accurately and avoid errors! #How to Choose ITR Form Based on Income FY25, #How to select ITR form FY25, #Choosing right ITR form FY25, #Guide to ITR forms FY25, #How to select ITR form FY25, #Which ITR form to file FY25, #ITR form selection FY25,#Which ITR Should I File

#How to Choose ITR Form Based on Income FY25, #How to select ITR form FY25, #Choosing right ITR form FY25, #Guide to ITR forms FY25, #How to select ITR form FY25, #Which ITR form to file FY25, #ITR form selection FY25, #Which ITR Should I File

Table of Contents

Introduction

Every year, you must file your income tax return (ITR), which requires accuracy and knowledge. While navigating the tax environment for the 2024–2025 fiscal year (also known as the 2025–2026 assessment year), the pivotal first step remains understanding how to choose ITR form based on income FY25. With a variety of forms designed to accommodate various revenue sources and taxpayer types, choosing wisely is essential to guaranteeing a timely, easy, and legal tax filing process. Selecting the incorrect ITR form may result in needless hassles, hold up the processing of your return, incur penalties, or even have your return rejected by the Income Tax Department. This thorough tutorial attempts to demystify the process and give you a clear path to determine the proper ITR form based on your income sources for FY 2024–2025. A thorough understanding of the nuances of your income streams is the bedrock upon which understanding how to choose ITR form based on income FY25 is built.

Unravelling the Spectrum of ITR Forms

Unravelling the Spectrum of ITR Forms Applicable for FY 2024-25 (AY 2025-26) and How to Choose ITR Form Based on Income FY25:

To accommodate taxpayers’ diverse income profiles, the Income Tax Department of India has carefully designed a number of ITR forms. The qualifying requirements for each ITR form are based on the type and amount of income received during the fiscal year that ran from April 1, 2024, to March 31, 2025. Let’s examine the specifics of each well-known ITR form that applies to FY 2024–2025 and understand how to choose ITR form based on income FY25:

ITR-1 (Sahaj) – The Simplified Gateway-Understanding How to Choose ITR Form Based on Income FY25

ITR form 1 streamlines the filing process for people with specified income sources and is intended for resident individuals (not including non-residents) with a total income under ₹50 lakh. When considering how to choose ITR form based on income FY25, note that ITR-1 is for:

  • Earnings from pensions or salaries.
  • Income from a single-family home (not including situations where losses are carried forward or brought forward under this heading).
  • Other sources of income include interest and dividends (where the total amount of dividends is ₹5,000 or less and is excluded).
  • Income from agriculture up to ₹5,000.
  • The capacity to report long-term capital gains under Section 112A (from the sale of equity shares or equity-oriented mutual funds) up to ₹ 1.25 lakh is now included in ITR-1 for FY 2024–2025, assuming there are no brought forward or carry forward losses under this heading. However, when thinking about how to choose ITR form based on income FY25, keep in mind that it is still inappropriate for those who have a business or professional source of income, capital gains that are greater than this amount or that come with losses, multiple residential properties, foreign income or assets, directorship in a company, or investments in unlisted equity shares.

Who Cannot Use ITR-1 Form?

  • Over Rs 50 lakh in total income
  • Income from agriculture exceeds Rs 5000.
  • If your capital gains are taxable.
  • If you make money from your job or business.
  • Earning money from multiple residential properties.
  • If you serve as a director for a business.
  • If, at any point throughout the fiscal year, you made investments in unlisted stock shares.
  • Possessing property outside of India, including financial stakes in any organisation, and having the ability to sign documents in any account that is situated outside of India.
  • If you are both a non-resident and a resident not ordinarily resident (RNOR).
  • Possessing any overseas earnings.
  • If you are subject to assessment in relation to another person’s income, from which tax is withheld.
  • If Section 194N has been used to deduct taxes.
  • If, on ESOP, tax payment or deduction has been postponed.
  • If any losses need to be carried forward under any income head, or if you have any brought forward losses.

ITR-2 – For Individuals and HUFs Beyond Basic Income: Knowing How to Choose ITR Form Based on Income FY25:

Individuals and Hindu Undivided Families (HUFs) who do not meet the requirements for ITR form 1 and do not have a business or professional source of income are served by this ITR form. Understanding how to choose ITR form based on income FY25 reveals that ITR-2 accommodates a broader spectrum of income, including:

  • Earnings from pensions or salaries.
  • Revenue from many residential properties.
  • Income from capital gains from the sale of different assets, both short-term and long-term. Legislative amendments require that capital gains realised before and after July 23, 2024, be split on this form for FY 2024–2025. Under some circumstances, it also permits the reporting of capital losses from share buybacks.
  • Income from Other Sources (such as dividends over ₹5,000, lottery or horse race prizes, etc.).
  • Overseas assets and/or income.
  • Income received as a partner in a business (where the business files ITR form 3).
  • Income from agriculture that exceeds ₹5,000.
  • If any part of your income stems from a business or profession, ITR-2 is not the correct form when considering how to choose ITR form based on income FY25.

Who Cannot Use ITR-2?

A person whose total income for the fiscal year 2025–2026 includes income from business or a profession should not utilise this return form. You might need to utilise ITR-3 or ITR-4 to declare certain kinds of income. To understand how to complete the ITR-2 form, read our in-depth explanation.

ITR-3 – The Realm of Business and Professional Income: Understanding How to Choose ITR Form Based on Income FY25:

This more complex ITR form, which requires thorough reporting of business financials, is intended especially for individuals and HUFs who get income from a business or profession. When you need to know how to choose ITR form based on income FY25 and you have business income, ITR-3 is applicable for:

  • Revenue from operating a business or pursuing a career, whether or whether one is a sole proprietor.
  • This ITR form can also be used to declare income from capital gains, house property, salaries, and other sources. Like ITR-2, it permits reporting of capital losses on share buybacks and requires a split of capital gains made prior to and following July 23, 2024.
  • Earnings as a business partner (even if the business files ITR form 3).
  • Examine ITR-1 or ITR-2 if your income comes entirely from a salary, pension, or other sources with no business or professional component instead when thinking about how to choose ITR form based on income FY25. Confirmation of opting out of the new tax regime and if Form 10-IEA was filed in prior years are also necessary for FY 2024–2025, a crucial aspect of how to choose ITR form based on income FY25.

ITR-3 should be filed by individuals or HUFs who are ineligible to file ITR-1, ITR-2, or ITR-4.

ITR-4 (Sugam) – Presumptive Taxation Made Easier: Guidance on How to Choose ITR Form Based on Income FY25:

For resident persons, HUFs, and businesses (except from Limited Liability Partnerships, or LLPs) who have chosen the presumptive taxation plan under sections 44AD, 44ADA, or 44AE of the Income Tax Act, this streamlined ITR form is designed. Key eligibility criteria for how to choose ITR form based on income FY25 and ITR-4 include:

  • Total earnings of up to 50 lakh rupees.
  • Revenue from a firm with a turnover of up to ₹2 crore (under section 44AD).
  • Professional income (under section 44ADA) up to ₹50 lakh in gross receipts.
  • Rrevenue from the operation, rental, or leasing of goods carriages (under section 44AE), subject to certain vehicle-specific limitations.
  • ITR-4 now permits reporting long-term capital gains under Section 112A for FY 2024–2025, similar to ITR-1 (up to ₹ 1.25 lakh without brought forward/carry forward loss). However, when considering how to choose ITR form based on income FY25, recall that it is still inappropriate if you have income from foreign sources, income from more than one home property, or income from capital gains that exceed this maximum or are accompanied by losses. Verification of opting out of the new tax regime and whether Form 10-IEA was submitted in prior years are also necessary for this form, an important factor in how to choose ITR form based on income FY25.

Please take note that anyone who works as a freelancer and receives income from the aforementioned sources may also choose to use a presumptive scheme provided that their gross revenues do not exceed Rs 50 lakhs.

When a person or organisation chooses to derive their income on a presumptive basis—that is, when the income is assumed at a minimum rate based on a percentage of gross receipts / gross turnover or based on ownership of commercial vehicles—they are engaging in a presumptive income scheme under sections 44AD, 44AE, and 44ADA. However, the taxpayer will be required to file an ITR-3 if the firm turnover above Rs 2 crore.

Who Cannot Use ITR-4 Form?

  • If you make more than Rs 50 lakh in total.
  • Earning money from multiple residential properties.
  • Possessing any assets abroad.
  • If you are able to sign any account that is not in India.
  • Having any source of income outside of India.
  • If you have ever invested in unlisted equity shares during the fiscal year and you are a director of the company.
  • Being both a non-resident and a resident not ordinarily resident (RNOR).
  • Possessing assets or income from overseas.
  • If you are liable for the income of another individual from which that individual’s taxes are withheld.
  • If, on ESOP, tax payment or deduction has been postponed.
  • If any losses need to be carried forward under any income head, or if you have any brought forward losses.

ITR-5 – The Umbrella for Other Entities: Understanding How to Choose ITR Form Based on Income FY25:

For people who are not HUFs, corporations, or those filing ITR form 7, this is the designated ITR form. Understanding how to choose ITR form based on income FY25 for these entities reveals it encompasses:

  • companies (LLPs included).
  • People’s Association (AOPs).
  • Individuals’ bodies (BOIs).
  • AJPs, or artificial juridical persons.
  • cooperative groups.
  • Local Governments.
  • This form also permits reporting of capital loss on share buybacks for FY 2024–2025 and stipulates that capital gains must be split before and after July 23, 2024. key considerations for how to choose ITR form based on income FY25 for these taxpayers.

ITR-6 – The Corporate Filing Form: How to Choose ITR Form Based on Income FY25 for Companies:

In particular, for businesses—apart from those asserting an exemption under section 11 (pertaining to revenue from assets held for religious or charitable reasons), the procedure of how to choose ITR form based on income FY25 leads to ITR-6.  

ITR-7 – For Trusts and Specified Entities: Determining How to Choose ITR Form Based on Income FY25:

People, including businesses, who are required to file returns under sections 139(4A), 139(4B), 139(4C), 139(4D), 139(4E), and 139(4F) must use this ITR form. Knowing how to select an ITR form for these organisations based on their FY25 income reveals that it mostly pertains to:

  • Trusts.
  • Political parties.
  • Charitable organisations.
  • Associations for scientific research.
  • Educational establishments.
  • Medical facilities.

A Step-by-Step Guide to Strategically Understanding How to Choose ITR Form Based on Income FY25:

You must carefully consider your revenue sources and taxpayer classification in order to choose the appropriate ITR form for FY 2024–2025. Adhere to these steps to make a well-informed decision on how to choose ITR form based on income FY25:

Comprehensive Inventory of Income Sources: The First Step in How to Choose ITR Form Based on Income FY25:1.

Start by carefully recording each source of revenue received from April 1, 2024, to March 31, 2025, which is the Financial Year 2024–25. Salary, pension, income from real estate (rental income, etc.), business or profession profits, capital gains from the sale of real estate or investments, interest income, dividend income, agricultural income, and any other sporadic incomes are all included in this. This is fundamental to understanding how to choose ITR form based on income FY25.

Detailed Analysis of Income Characteristics: Essential for How to Choose ITR Form Based on Income FY25:

Make careful notes on particular characteristics for every source of income that has been found. If you earn money from real estate, for example, figure out how many properties you own and whether you have any related brought forward or carry forward losses. To determine whether your capital gains are short-term or long-term, determine the kind of asset that was sold (shares, real estate, mutual funds, etc.) and the length of time that it was held. Determine the total amount received in dividend income. This detailed analysis is key to knowing how to choose ITR form based on income FY25.

Determination of Residential Status: A Key Factor in How to Choose ITR Form Based on Income FY25:

A crucial consideration is whether you are a resident, non-resident, or not ordinarily resident. This is especially true if you have assets or income that comes from sources outside of India. While non-residents are often solely taxed on income earned within India, residents are taxed on their worldwide income. There are particular rules regarding the taxation of foreign income for those who fall under the “Not Ordinarily Resident” category. The application of several ITR forms, particularly ITR form 2, which includes specific schedules for reporting foreign assets and income, might be greatly impacted by this status. Understanding this is vital for how to choose ITR form based on income FY25.

Evaluation of Presumptive Taxation Eligibility: Simplifying How to Choose ITR Form Based on Income FY25:

Check if you qualify to participate in the presumptive taxation plan under sections 44AD, 44ADA, or 44AE if you own a small business or work in one of the designated professions. ITR form 4 (Sugam) can be a straightforward and beneficial choice, simplifying your tax reporting responsibilities, provided that your total income stays within the designated limit of ₹50 lakh. However, while deciding which ITR form to use based on your FY25 income, make sure you are well informed of the terms and restrictions related to this plan.

Thorough Review of ITR Form Eligibility Criteria: The Core of How to Choose ITR Form Based on Income FY25:

After you have a thorough understanding of your income sources and residency status, carefully compare this information to the previously listed qualifying requirements for each ITR form. Take special note of the inclusions and exclusions listed on each form. For instance, ITR forms 1 or 2 are not appropriate if any part of your income comes from a business. Instead, you must file either ITR form 3 or ITR form 4 (if you choose presumptive taxation and are eligible). Accordingly, depending on the particulars of your income and taxpayer category, you will only be able to file ITR forms 2, 3, 5, 6, or 7 if your total income exceeds ₹50 lakh. The foundation for knowing how to select an ITR form depending on income for FY25 is this comprehensive review.

Strategic Utilization of Official Online Resources: Aiding You in How to Choose ITR Form Based on Income FY25:

An important source of information is the Income Tax Department’s official website, www.incometax.gov.in. Detailed explanations of every ITR form are provided, along with easily downloadable instructions, frequently asked questions (FAQs), and even interactive online tools that will help you choose the right form depending on how you answer particular questions about your income and taxpayer status. When learning how to select an ITR form based on income for FY2024–2025 (AY 2025–26), make sure you always consult the most recent data available.

Seeking Expert Professional Guidance: The Ultimate Assistance in How to Choose ITR Form Based on Income FY25:

Seeking advice from an experienced tax advisor or a chartered accountant is highly recommended in situations when your income sources are complex, your financial situation presents unique complexity, or you are wondering which ITR form to use. These experts have the precise knowledge and experience to carefully examine your unique situation and offer customised advice, guaranteeing that you submit the right form and continue to be completely compliant with all relevant tax rules and regulations. Getting expert assistance might ultimately save you a lot of time, effort, and the potential for costly errors down the line when determining how to choose ITR form based on income FY25.

You can choose the best ITR form for filing your income tax return for FY 2024–2025 and confidently navigate the complexities of tax filing by carefully following these steps and taking into account your unique income profile. This will guarantee a smooth and legal tax filing experience in 2025. understanding precisely how to choose ITR form based on income FY25.

Conclusion

Navigating the selection of the correct ITR form for FY 2024-25 (AY 2025-26) is a critical first step towards successful tax filing in 2025. By carefully analyzing your income sources, understanding the eligibility criteria for each form, and leveraging available resources, you can confidently choose the ITR form that aligns with your financial situation. Remember that accuracy in this initial step is paramount to ensuring a smooth and compliant tax filing process. When in doubt about how to choose ITR form based on income FY25, seeking professional advice is always a prudent decision.

FAQ (Frequently Asked Questions)

Q1. What is the assessment year for the Financial Year 2024-25?

The Assessment Year 2025-26 is the one that aligns with the Financial Year 2024-25, which spans from April 1, 2024, to March 31, 2025. Your income from FY 2024–2025 is evaluated and subject to taxes in this year. The first stage in this approach is to comprehend how to select an ITR form depending on income for FY25.

Q2. My primary source of income is my salary, and my total income for FY 2024-25 is below ₹ 50 lakh. Which ITR form should I utilize in 2025?

You are most likely eligible to file your return using ITR form 1 (Sahaj) in 2025 if your total income for FY 2024–2025 does not exceed ₹50 lakh and consists only of salary or pension income, income from a single house property (without any brought forward or carry forward losses), income from other sources (such as bank interest), and agricultural income up to ₹5,000. Importantly, ITR-1 now permits the reporting of long-term capital gains under Section 112A for FY 2024–2025 (up to ₹ 1.25 lakh without matching losses). However, when considering how to choose ITR form based on income FY25, remember it remains unsuitable for those with other income sources like business income or significant capital gains.

Q3. I earn income from my salary and also from short-term capital gains on the sale of shares. Which ITR form is applicable to me for FY 2024-25?

You must file ITR form 2 if you have both short-term and long-term capital gains and salary income. Since ITR-1 is not applicable in situations involving capital gains that exceed the designated limit, the method for selecting an ITR form based on income for FY25 in this scenario points immediately to ITR-2.

Q4. I operate a small business as a sole proprietor. Which ITR form should I use for filing my taxes for FY 2024-25?

You will probably need to file ITR form 3 if you are a sole owner who receives income from your firm and you choose not to use the presumptive taxation system. ITR-3 is frequently the result of business owners knowing how to select an ITR form depending on their FY25 income. You may be able to use ITR form 4 (Sugam) if you are eligible and choose presumptive taxation under sections 44AD, 44ADA, or 44AE and your total income is less than ₹50 lakh.

Q5. I have income from renting out two different house properties, in addition to my salary. Which ITR form should I use for FY 2024-25?

You will not be able to file ITR form 1 since you have revenue from many residential properties. In this case, filing ITR form 2 is required in order to understand how to choose ITR form based on income FY25.

Q6. Where can I find the most accurate and up-to-date information about the various ITR forms applicable for FY 2024-25?

The official website of the Income Tax Department of India, www.incometax.gov.in, is the most trustworthy source of information about ITR forms, including their qualifying requirements, guidelines, and any latest updates. Always check the most recent alerts and guidelines issued by the department when considering how to choose ITR form based on income FY25.

Q7. What happens if I choose the wrong ITR form to file my return?

Using the wrong ITR form while filing your return can result in a number of problems. If the Income Tax Department determines that your return is flawed, they may send you a notice requesting that you submit a corrected return on the appropriate form within a certain amount of time. If you don’t, there may be fines and delays in the processing of your refund. In more severe situations, it can even result in your tax affairs being examined, highlighting the importance of knowing how to choose ITR form based on income FY25.

Q8. I am a partner in a firm. Which ITR form should I use for FY 2024-25?

You would normally file ITR form 2 if you are a partner in a business and do not earn any money from your own business or profession. However, knowing how to select an ITR form based on income for FY25 indicates that you would need to file ITR form 3 if you additionally earn money from your own business or profession. ITR form 5 would probably be filed by the company itself (assuming it’s not a company or trust, etc.).

Q9. I have earned some interest income from foreign bank accounts. Which ITR form should I use for FY 2024-25?

You must file ITR form 2 if you have foreign assets or income because ITR form 1 does not permit the reporting of overseas assets or income. This is a key consideration when learning how to choose ITR form based on income FY25.

Q10. Are there any online tools available to help me choose the correct ITR form for FY 2024-25?

Based on your answers to particular questions on your income and taxpayer status, the Income Tax Department’s website frequently offers interactive tools or questionnaires that can assist you in determining the correct ITR form. These tools can be valuable in understanding how to choose ITR form based on income FY25.

Disclaimer

This blog post provides general guidance on how to choose ITR form based on income FY25. Regulations and legislation pertaining to taxes are subject to change. It is advised to consult the Income Tax Department of India’s official notices and instructions.

Also Read:

Leave a Comment