If as a director of a company, you are thinking of filing the income tax return form SAHAJ (ITR-1) for your salary income, then read this article before filing.
Many taxpayers are confused while selecting the right form for their annual income tax filing.
We have 7 different types of income tax return forms (ITRs) prescribed by the government of india for filing annual tax returns for the financial year 2023-24 (AY 2024-25).
Income tax return forms for the financial year 2024-25 (Assessment year 2025-26) has not yet been notified. Most probably, same forms will be applicable with some changes.
Out of these, four ITR forms are applicable to individuals and 3 ITR forms are specifically applicable to entities such as partnership firms, companies and charitable institutions.
ITR-1 to ITR-4 can be used by individual taxpayers.
However, based on source of income and other parameters, these income tax return forms are specifically designed and created for different individuals.
As a taxpayer you are required to choose the right income tax return form for filing. In this article, you will know which income tax return form a director should choose for his or her filing.
Can a director file an income tax return form SAHAJ (ITR-1)?
Income tax return form (ITR-1), which is also known as SAHAJ, can be filed by an individual whose total income from salary is up to Rs 50 lakhs, has one house property, interest income, and agricultural income is up to Rs 5,000.
As the name “Sahaj” indicates, ITR-1 is a very simple tax return form which does not require much information to be filled in as compared to other ITR forms.
However, the income tax department has specifically barred company directors as well as those individuals who are holding unlisted equity shares of companies from filing income tax return form SAHAJ (ITR-1).
Therefore, a director can not file ITR-1 for the assessment year 2024-25 (previous year 2023-24) even if he or she has less than Rs 50 lakhs salary income.
Also Read: Who can file ITR-1 in India
Is income tax return form SUGAM (ITR-4) applicable to directors?
Income tax return form SUGAM (ITR-4) which is applicable to individuals, HUFs and partnership firms if they opted for presumptive taxation scheme for their business or profession under section 44AD, Section 44ADA or Section 44AE.
However, the government has clearly stated that income tax return form SUGAM (ITR-4) is not applicable to a director or a person holding unlisted equity shares of a company.
As an individual, if you are a director of a company, then SUGAM (ITR-4) can not be filed for the financial year 2022-23 (assessment year 2023-24).
Don’t get confused between previous year and financial year, both are same.
If you have held any unlisted equity shares of a company at any time during the previous year, then you are not eligible to file SUGAM (ITR-4).
Which income tax return form a director should file?
Directors of both listed and unlisted companies are required to file their income tax return in form ITR-2. They are required to disclose their personal Permanent account number (PAN), Director Identification number (DIN), name of the company and details of equity holdings.
If you have income from business or profession in addition to salary, then ITR-2 is not for you. In this case, you have to go for ITR-3.
In the income tax return form ITR-2 or ITR-3, you can fill in your salary, income from business or profession, capital gain and all other incomes. In addition to all these, you need to remember to fill in the following details in both ITR-2 or ITR-3.
- Name of the company where you are a director
- PAN of the company
- Type of the company: select domestic or foreign
- Whether the company’s shares are listed or unlisted: select listed or unlisted
- Name and PAN of Company where you are holding unlisted equity shares
- Type of Company: select domestic or foreign
- Opening balance in numbers and cost of acquisition
- Number of shares, face value per share, date of purchase, issue price per share and purchase price per share acquired during the previous year
- Number of shares transferred during the year and sale consideration
- Number of shares and cost of acquisition at the end of the year
You will find these details in the General Information page of both ITR-2 and ITR-3 form.
In case you have directorship in more than one company, then you need to add one by one all the companies details in your income tax return.
Similarly, you are required to add all the companies details in case you are holding unlisted shares in more than one company.
In income tax return form ITR-6, a company is required to provide particulars of managing director, directors, secretary and principal officer(s) who have held the office during the previous year and the details of eligible person who is verifying the return.
The company in its return of income, has to submit the name, designation, residential address, PAN / Aadhaar Number and Director identification number (DIN) of all these people.
In addition to that, the company is also required to provide particulars of persons who were beneficial owners of shares holding not less than 10% of the voting power at any time of the previous year.
If as a director you have not disclosed your directorship in your personal income tax return, then there are chances of getting notice from the tax department as the company is filing about your directorship and shareholdings in form ITR-6.
Therefore, you are suggested to disclose your directorship and unlisted equity share holdings in your personal income tax return.
