Income tax filing: Know who can and can't file income tax returns using ITR-1 this year

The common ITR form was made public on November 1, 2022 seeking comments from stakeholders and the public at large.

Most salaried individuals use ITR-1, also called the Sahaj form, to file their tax returns. Also, ITR-1 does not seek much financial information as compared to other ITR forms.

However, not all salaried individuals can file their tax returns using ITR-1 form, as eligibility is determined by specific criteria. If one had done certain transactions in financial year 2022-23 (assessment year 2023-24), they might not be eligible to use ITR-1

Who is eligible to file ITR-1 this year?

ITR-1 can be filed by a resident individual whose:

Total income is not more than Rs 50 lakh during the financial year.

Also Read: Filing income tax return (ITR) for the first time? Here is how to get started

Income is from salary, one house property, family pension income, agricultural income (up to Rs 5,000), and other sources, including interest from savings accounts, interest from deposits (bank/post office/cooperative society), interest from income tax refund, and interest received on enhanced compensation.

Who is not eligible to file ITR-1 for FY 2022-23?

An individual cannot file tax returns using ITR-1 form if he/she has income from any of the following mentioned sources.

Also Read: ITR filing: Know how to file income tax returns without Form 16 in simple steps

Income from capital gains

If an individual has any capital gains income such as profit from the sale of mutual funds, gold, equity shares, house property, and other similar assets, then they are not eligible to file their tax return using ITR-1 form.

Also, it is important to mention in this context that even if an individual’s income is below Rs 50 lakh, they can’t ITR-1 if they have capital gains from the sale of assets such as equity shares, mutual funds, cryptocurrency and so on.

Income from more than one house property

If an individual has income from more than one house property, they cannot use Sahaj form to file tax returns. According to income tax laws, an exception, however, exists where if a taxpayer has two house properties with no income and no loan, Sahaj can be used.

Also Read: Annual Information Statement gets bigger, but crucial omissions give taxpayers a headache

Residency status

Residency statuses also affect eligibility. Individuals whose residency status is Resident Not Ordinarily Resident (RNOR) or Non-Resident Indian (NRI) cannot use ITR-1 form to file tax returns.

Long-term capital gains

If you claim exemption on long-term capital gains from the sale of a house property under Section 54, then you should use ITR-2 form instead of ITR-1.

As per the Income Tax Act, an individual can claim exemption on long-term capital gains from house property under different sections.

Hindu undivided family (HUF)

Hindu undivided family (HUF) taxpayers cannot file their tax returns using ITR-1.

Foreign Assets

People with financial assets located overseas or who are signatories in a foreign bank account cannot use ITR-1 as it lacks the mandatory annexure for disclosing such assets.

What if you filed ITR-1 mistakenly?

Filing your tax returns at the last moment or in a hurry to meet the deadline can easily result in mistakes. Such an ITR will be termed as a defective ITR by the income tax department. The simplest way to fix the error is by filing a revised ITR. The deadline for filing the revised ITR is December 31, 2023 for FY 2022-23.