Different Types of Income Tax Returns (ITR) Forms

Individuals and businesses must file Income Tax Returns (ITR) in India for either regulatory or financial purposes. It ensures compliance with tax laws and serves as a crucial financial document when applying for loans. Lenders assess ITR filings to gauge an applicant’s financial health, income stability, and repayment ability. For you to have better terms on your loan agreements, ensure that your income tax return file is kept well.

With multiple ITR forms available, choosing the correct one is important to avoid penalties and ensure smooth processing. This guide explains the different types of ITR forms in India, their applicability, and how they impact loan applications.

Also Read : Income Tax Return - New Tax Regime vs. Old Tax Regime

Why is it important to select the correct ITR form?

The Income Tax Department of India has prescribed different ITR forms for various types of taxpayers based on their income source, category, and financial complexity. Filing the incorrect form can lead to rejection, penalties, and legal consequences. Thus, it is important to select the filing type in ITR that is right for you.

Additionally, when applying for a home loan, personal loan, or business loan, institutions carefully review your ITR filings to determine your repayment capacity and creditworthiness. A well-documented ITR history increases loan approval chances, while inconsistent filings can raise red flags.

Now, let’s break down the types of ITR forms and their applicability.

Types of ITR forms in India

ITR-1 (Sahaj) – For salaried individuals

This form is meant for resident individuals with a total income of up to INR 50 lakh. It applies to those with:

• Income from salary or pension
• Income from one house property (excluding brought-forward losses)
• Income from other sources (except winnings from lottery or horse racing)
• Agricultural income up to INR 5,000

Not applicable for individuals with capital gains, business income, or foreign assets.

• Relevance to loans: Salaried individuals applying for loans must file ITR-1 to provide proof of steady income.

ITR-2 – For individuals and HUFs (without business income)

This form is suitable for:

• Individuals and Hindu Undivided Families (HUFs)
• Income from multiple house properties
• Capital gains from investments
• Foreign assets or foreign income
• Agricultural income above INR 5,000

Not applicable for individuals with business or professional income.

• Relevance to loans: Those applying for home loans or education loans need ITR-2 if they have multiple income sources or capital gains.

ITR-3 – For individuals and HUFs with business/professional income

This is for individuals and HUFs engaged in business or professional activities. It applies to those with:

• Business income (including freelancers and consultants)
• Income from partnerships in firms
• Income from trading (stocks, futures, options, or crypto assets)

Essential for self-employed individuals, traders, and professionals like doctors, lawyers, and consultants.

• Relevance to loans: Business owners applying for business loans or working capital loans must file ITR-3 to demonstrate business earnings and stability.

ITR-4 (Sugam) – For presumptive income taxpayers

ITR-4 is for:

• Individuals, HUFs, and firms (excluding LLPs)
• Total income up to INR 50 lakh
• Income from business/profession calculated under presumptive taxation scheme (PTS) – Sections 44AD, 44ADA, and 44AE

Not applicable for those with capital gains, foreign assets, or speculative income.

• Relevance to loans: Self-employed professionals and small business owners filing under PTS must submit ITR-4 for loan applications.

ITR-5, ITR

ITR-5, ITR-6, and ITR-7 are also essential forms for different entities in India. Since they primarily apply to businesses, companies, and trusts rather than individuals, they are often overlooked in personal finance discussions. However, they still play a crucial role in taxation and financial credibility, especially for organisations seeking loans.

Key changes in ITR filing for AY 2025-26

To ensure your tax return is up-to-date, take note of these changes:

Increased standard deduction:

• Raised to INR 75,000 for salaried individuals (previously INR 50,000)
• Raised to INR 25,000 for family pensioners (previously INR 15,000)

New tax regime as default:

• Taxpayers must actively opt-out if they prefer the old tax regime.

ITR filing deadline:

• The last date for non-audit taxpayers (salaried individuals) is July 31, 2025. (Source: Income Tax Department of India)

Also Read: Role of Financial Planning: ITR for a Business Loan

How ITR filing affects your loan applications

Your ITR history is a key factor in loan approvals. Lenders consider:

• Income proof: A steady ITR record for the last 2-3 years strengthens loan eligibility.
• Financial credibility: Higher declared income in ITR increases the chance of higher loan amounts.
• Repayment capacity: Consistent ITR filings indicate financial discipline.
• Tax compliance: A history of timely ITR filings assures lenders of financial responsibility.

Pro tip

If you’re planning to take a home loan, business loan, or personal loan, ensure your ITR filings are complete and error-free.

The Bottom Line

Filing the correct ITR form is not just a tax obligation—it impacts your financial credibility. Whether you’re salaried, self-employed, or a business owner, choosing the right ITR form ensures smooth tax compliance and enhances your chances of securing loans.

So, when you apply for a loan now, keep your ITR filings updated to improve your financial opportunities.

Moreover, if you’re struggling to calculate your loan costs instantly, use an APR calculator. This will help you make informed decisions for your secured business loan today.

FAQs

Q.1. What are the different types of ITR forms?

A. There are seven ITR forms for individuals, namely, ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 & ITR 7.

Q.2. How many types of income are there in ITR?

A. The department prescribes seven types of ITR forms based on the taxpayer category and income sources. ITR-1 is for resident individuals with a total income of up to INR 50 lakh. It applies to those earning from salary, one house property, and other sources. NRIs (Non-Resident Indians) are not eligible to file ITR-1.

Q.3. Who is eligible to file ITR 7?

A. ITR-7 is filed by entities such as firms, companies, local authorities, associations of persons (AOPs), and artificial juridical persons. It is used when these entities claim exemptions under specific sections of the Income Tax Act.

Q.4. How much income is tax free?

A. Income up to Rs.12.75 lakh qualifies for zero tax due to rebate. However, income above INR 12.75 lakh is fully taxable from INR 4 lakh onwards. This applies only under the new tax regime.

Q.5. What is TDS in income tax?

A. TDS stands for Tax Deducted at Source. It is the tax amount deducted by the employer from the taxpayer which is deposited to the IT Department on behalf of the taxpayer.

Disclaimer:

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