 "Income tax")
Is income tax returning filing stressing you out? Business Standard helps you decode everything about ITR-1.
ITR-1, also known as Sahaj Form, is for a person with an income of up to Rs 50 lakh.
What is ITR-1
What is ITR-1
“ITR-1, also known as Sahaj, is an income tax return form in India that offers a convenient filing option for salaried individuals. However, not all salaried individuals can use ITR-1, as eligibility is determined by specific criteria. According to the criteria for FY 2022-23The individual must be a resident with total income below Rs 50 lakh," said - Ankit Rajgarhia, Principal Associate, Karanjawala & Company, Advocates.
Moreover, the income should consist of salary, pension, or family pension, income from one house property, agricultural income up to Rs 5,000, and income from other sources like bank interest, dividends, etc. However, there are exceptions and conditions to consider.
"For instance, if an individual has a single self-occupied house property bought on loan, they may file ITR-1, but the maximum set-off amount allowed would be Rs 2 lakh from other incomes, and this loss cannot be carried forward," said Rajgarhia.
Moreover, the income should consist of salary, pension, or family pension, income from one house property, agricultural income up to Rs 5,000, and income from other sources like bank interest, dividends, etc. However, there are exceptions and conditions to consider.
"For instance, if an individual has a single self-occupied house property bought on loan, they may file ITR-1, but the maximum set-off amount allowed would be Rs 2 lakh from other incomes, and this loss cannot be carried forward," said Rajgarhia.
Who is eligible to file ITR-1 this year?
ITR-1 can be filed by a Resident Individual whose:
- Total income does not exceed Rs 50 lakh during the financial year
- Income is from salary, one house property, family pension income, agricultural income (up to Rs 5000/-), and other sources, which include:Interest from Savings Accounts, Interest from Deposits (Bank / Post Office / Cooperative Society), Interest from Income Tax Refund, Interest received on Enhanced Compensation, Any other Interest Income Family Pension, Income of Spouse (other than those covered under Portuguese Civil Code) or Minor is clubbed (only if the source of income is within the specified limits as mentioned above).
Who cannot file ITR 1
However, the under-mentioned assesse’ s cannot file ITR-1, according to Maneet Pal Singh, Partner, I.P. Pasricha & Co: -
However, the under-mentioned assesse’ s cannot file ITR-1, according to Maneet Pal Singh, Partner, I.P. Pasricha & Co: -
•Whose total income exceeds Rs 50 lakh
•Has income under head capital gains
•Hold directorship in any company
•Owns more than one house property
•Casual income
Even if one has income from lottery, racehorses, legal gambling etc, has taxable capital gains (short term and long term), has invested in unlisted equity shares, has income from business or profession, has tax deduction under section 194N of Income Tax Act, has deferred income tax on ESOP received from employer being an eligible start-up is not covered under the eligibility conditions for ITR-1.
Even if one has income from lottery, racehorses, legal gambling etc, has taxable capital gains (short term and long term), has invested in unlisted equity shares, has income from business or profession, has tax deduction under section 194N of Income Tax Act, has deferred income tax on ESOP received from employer being an eligible start-up is not covered under the eligibility conditions for ITR-1.
“Certain sources of income render individuals ineligible for filing ITR-1. Income from capital gains (including profits from the sale of mutual funds, gold, equity shares, house property, etc.), speculative gains, or gains from speculative assets or services disqualify individuals from using ITR-1. It's important to note that even if an individual's income is below Rs 50 lakh, they cannot use ITR-1 if they have capital gains from the sale of assets such as equity shares, mutual funds, cryptocurrency, etc," said Rajgarhia.
The exemption
The exemption
It an individual has income from more than one house property, they cannot file ITR using Sahaj form. However, an exception exists where "if they have two house properties with no income and no loan, ITR-1 can be used.
NRIs can't use ITR 1
Specific residency statuses also affect eligibility. Resident Not Ordinarily Resident (RNOR) individuals and Non-Resident Indians (NRIs) cannot use ITR-1."
Hindu undivided family (HUF) taxpayers cannot file their ITR using ITR-1
Moreover, “if an individual claims exemption on long-term capital gains from the sale of a house property under Section 54, they must use ITR-2 form instead of ITR-1. Hindu undivided family (HUF) taxpayers cannot file their ITR using ITR-1. Lastly, individuals with financial assets located outside India or who are signatories in a foreign bank account cannot utilize ITR-1 as it lacks the necessary annexure for disclosing such assets," said Rajgarhia.
NRIs can't use ITR 1
Specific residency statuses also affect eligibility. Resident Not Ordinarily Resident (RNOR) individuals and Non-Resident Indians (NRIs) cannot use ITR-1."
Hindu undivided family (HUF) taxpayers cannot file their ITR using ITR-1
Moreover, “if an individual claims exemption on long-term capital gains from the sale of a house property under Section 54, they must use ITR-2 form instead of ITR-1. Hindu undivided family (HUF) taxpayers cannot file their ITR using ITR-1. Lastly, individuals with financial assets located outside India or who are signatories in a foreign bank account cannot utilize ITR-1 as it lacks the necessary annexure for disclosing such assets," said Rajgarhia.
What are the types of income that shall not form part of ITR 1 form ?
Following are the types of income that shall not form part of ITR 1 form:-
(a) Profits and gains from business and professions
(b) Capital gains
(c) Income from more than one house property
(d) Income under the head other sources which is of following nature:-
(i) winnings from lottery
(ii) Activity of owning and maintaining race horses
(iii) Income taxable at special rates under section 115BBDA or section 115BBE
(e) Income to be apportioned in accordance with provisions of section 5A
What documents do I need to file ITR-1?
You would need Form 16, house rent receipt (if applicable), investment payment premium receipts (if applicable). However, ITRs are annexure-less forms, so you are not required to attach any document (like proof of investment, TDS certificates) along with your return (whether filed manually or electronically). However, you need to keep these documents for situations where they need to be produced before tax authorities such as assessment, inquiry, etc.
"In order to file ITR 1, an individual should have Form 16, Form 26AS, appropriate receipts, pan card and necessary bank investment certificates”," said Anant Singh Ubeja, Senior Associate, SKV Law Offices.
"In order to file ITR 1, an individual should have Form 16, Form 26AS, appropriate receipts, pan card and necessary bank investment certificates”," said Anant Singh Ubeja, Senior Associate, SKV Law Offices.
What precautions should I take while filing the return of income?
• Download AIS and Form 26AS and check the actual TDS / TCS / tax paid. If you see any discrepancy, you should reconcile it with the Employer / Tax Deductor / Bank.
• Compile and carefully study the documents to be referred to when filing your ITR, like bank statement / passbook, interest certificates, receipts to claim exemptions or deductions, Form 16, Form 26AS (Annual Information Statement), investment proofs, etc.
• Ensure details like PAN, permanent address, contact details, bank account details, etc. are correct in the pre-filled data.
• Identify the correct return for you (from ITR-1 to ITR-7). Provide all the details in the return such as total income, deductions (if any), interest (if any), taxes paid / collected (if any), etc. No documents are to be attached along with ITR-1.
• e-File the return of income on or before the due date. The consequences of delay in filing returns include late filing fees, losses not getting carried forward, deductions and exemptions not being available.
• After e-Filing the return, e-Verify it. If you want to manually verify your return, send the signed physical copy of ITR-V Acknowledgement (by speed post) within appropriate timelines of filing the return to Centralized Processing Center, Income Tax Department, Bengaluru 560500 (Karnataka).
What are the changes to to ITR-1 form
What are the changes to to ITR-1 form
There have been significant changes that have been made to the ITR-1 Form in the Annual Year (AY) 2022-23 wherein under the schedule ‘Salary’, one can disclose income from retirement benefit accounts maintained in the notified country at the time of withdrawal or redemption under Section 89A, and claim relief for the same.
"Also, as per the new changes, one must now provide details of all the savings and current accounts held at any time during the previous year. However, it is not mandatory to provide details of dormant accounts that haven’t been operational for more than three years. Further, dividend income from mutual funds is now taxable in the hands of investors. Hence, it is to be shown in ‘Other Income’," said Aditya Chopra, Managing Partner, Victoriam Legalis - Advocates & Solicitors.
What about crypto tradings?
What about crypto tradings?
As per the budget announced in the financial year (FY) 2022-23, Indian Investors who trade in crypto/NFTs are now mandated to declare their income from crypto/NFTs as capital gains if they are held as investments.
If crypto/NFTs are held for trading purposes, then the income is considered as business income. Income from transfer of virtual digital assets such as crypto, NFTs will be taxed at 30%.
If crypto/NFTs are held for trading purposes, then the income is considered as business income. Income from transfer of virtual digital assets such as crypto, NFTs will be taxed at 30%.
"The new Income Tax Return (ITR) forms for the financial year 2022-23 now have a dedicated section called Schedule - Virtual Digital Assets (VDA) for reporting gains from crypto/NFTs and other VDAs. Additionally, gifting of digital assets shall now attract tax in the hands of the receiver. Losses incurred from one virtual digital currency cannot be set-off against income from another digital currency," said Chopra.
Thus, individuals having income from taxable long term and short term capital gains, dividends and from cryptocurrency are not eligible to file an ITR-1 form.
What is the income threshold? What if person has capital gains from assets like stocks, mutual funds?
Income threshold for taxpayers filing ITR-1 is up to Rs.50 lakh. Further, if the taxpayer has income under head capital gains on sale of shares/mutual funds or crypto, then they are required to file ITR Form-2, according to Maneet Pal Singh, Partner, I.P. Pasricha & Co.
Can I file ITR for last 3 years now?
Yes, you can ITR-U, if you have missed to file your previous two ITRs. For current year you can file your normal ITR.
What happens if I file Income Tax Return after the due date u/s 139(1)?
In case you miss filing the ITR within the due date u/s 139(1), you can still file your Income Tax Return, but you may be required to pay a late filing fee of up to Rs 5000/-. Additionally, you will also be required to pay interest on the tax liability (if any).
Do I need to file returns if tax has been deducted by my employer / bank?
Yes, employers and banks deduct tax at source on salary and interest income respectively. You still need to disclose the income on which tax has been deducted and claim credit for TDS in the Income Tax Return.
Will I get a refund if I have paid excess tax?
Yes, any excess tax paid by you can be claimed as refund by filing your Income Tax Return. After your return is processed, ITD checks and accordingly accepts your refund claim, and then the amount is credited to your bank account. You will also get a message on your email ID registered on the e-Filing portal.
