By now, you would have received your Form-16 from your employer, which would enable you to start the process of filing income tax returns (ITR) for the financial year 2023-24 (assessment year 2024-25).
If you are a salaried individual, without any income from a business or profession, you have to choose between two forms – ITR-1 (Sahaj) and ITR-2.
It is critical that you pick the right form as making the wrong choice could render your ITR ‘defective.’ For example, if you choose ITR-1 when you should have used ITR-2, which mandates more financial disclosures, you would end up sharing less information than required. This could lead to notices from the income tax (I-T) department.
Who should use ITR-1?
ITR-1 (Sahaj) is a simple form that salaried tax-payers or pensioners without any complex financial dealings can use. The form is pre-filled with personal information, income details, and financial transactions data to enable quick and easy filing of returns. Individuals can verify the ITR data with their Form-16 and bank account statements, besides checking Form 26AS and the Annual Information Statement (AIS), and complete the process online.
However, not all salaried individuals can use this form. It can be used only by resident (and ordinarily resident) individuals with income of not more than Rs 50 lakh, including income from salary, pension, one house property, agriculture (up to Rs 5,000), and income from savings or fixed deposits, dividends, and family pension.
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ITR-1 not for salaries of over Rs 50 lakh
ITR-1 (Sahaj) is meant for simpler salary structures. If you are a salaried individual or pensioner – someone without any income from a business or profession – with income of over Rs 50 lakh, multiple sources of income, financial transactions, and so on, you cannot use ITR-1.
There are a host of other parameters that will eliminate the scope for using ITR-1. For example, a salaried individual cannot use ITR-1 if she is a non-resident, or resident but not ordinarily resident (RNOR). She will have to file her returns using ITR-2. Likewise, ITR-2 is the relevant form if you have made capital gains or losses during the relevant financial year (2023-24, at present).
Similarly, if you are a director in a company, own unlisted shares or ESOPs, maintain a foreign bank account or any other assets outside India, you will have to use ITR-2 and not ITR-1.
Calculate your income tax for FY 2024-25
How to file returns using ITR-1
To start with, you must register yourself on the official e-filing portal (www.incometax.gov.in) if you haven’t done so already, with your Permanent Account Number (PAN) serving as your user ID. Make sure that your PAN and Aadhaar are linked to enable quick e-verification of returns post submission. You can complete the return-filing process for ITR-1 through the website.
On the portal's main menu, go to e-file > income tax returns > file income tax return > select 2024-25 as the assessment year > select your status (individual) > select ITR-1 and proceed to answer the questions, follow instructions, pay taxes if due, and submit the return.
Sahaj has five pre-filled sections that you need to verify before submitting the returns. That is, personal information, gross total income, total deductions claimed, taxes paid, and total tax liability (payable). If you have received your Form-16, ensure that you verify the information with data reflected in the ITR-1’s gross total income section.
Also read: Your one-stop guide to filing income tax returns for FY 2023-24
You can claim tax deductions that you might have missed while submitting your investment declaration to your employer. If you had overlooked selecting the old, with-exemptions tax regime you need to exercise caution, enter all the information accurately, and maintain proof of having made all the deductions.
This will help you tackle IT queries that may arise due to a mismatch between your Form-16 and ITR data in such cases. Likewise, compare the pre-filled data on interest income from fixed and saving deposits with your bank’s TDS certificates.
Once you have tallied the data and paid taxes, you can submit your return. However, your task does not end here. You will need to e-verify your return using modes such as Aadhaar-OTP or net banking to complete the process.
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