How to choose between ITR-1 and ITR-2 when filing income tax
returns.
Find out more information inside.
When it comes to filing income tax returns in India,
choosing the correct form is essential. The form you need to use depends on
your sources of income, the nature of income, and certain other factors. Let’s
discuss the differences between ITR-1 and ITR-2 and how to determine which one
to use;
- ITR-1 (Sahaj):
ITR-1, also known as Sahaj, is a simple form used by
individuals who have income from the following sources:
- Salary or pension income
- Income from one house property (excluding cases with brought
forward loss or losses to be carried forward) - Income from other sources (excluding winning from lottery
and racehorses) - You can use ITR-1 if your total income is up to Rs. 50 lakh,
and you meet the above criteria.
ITR-2;
ITR-2 is a form for individuals and Hindu Undivided Families
(HUFs) who do not qualify to file ITR-1. You should use ITR-2 if you have
income from the following sources:
- Salary or pension income
- Income from more than one house property
- Income from capital gains (short-term and long-term)
- Income from foreign assets/foreign income
- Agricultural income exceeding Rs. 5,000
- Income from business or profession
- Any other source not mentioned in ITR-1
If you have income from the above sources, you are required
to file ITR-2. However, if you are an individual or HUF and have income from
business or profession and wish to opt for presumptive taxation under Section
44AD, 44ADA, or 44AE, you can file ITR-4 instead.
In summary, choose ITR-1 if you meet the eligibility
criteria mentioned earlier and have income from salary, pension, one house
property, and other sources. Use ITR-2 if you have income from multiple house
properties, capital gains, foreign assets, agricultural income exceeding Rs.
5,000, income from business or profession, or any other income not covered by
ITR-1.
It’s crucial to select the correct form to ensure accurate
reporting of your income and compliance with tax regulations. If you have any
doubts or complex situations, it’s advisable to consult a tax professional or
chartered accountant for personalized guidance based on your specific
circumstances.
