Latest news with #FormITR-1
Mint
10-07-2025
- Business
- Mint
Income Tax: ITR-1 or ITR-2? Which one should you choose when filing returns? Eligibility, differences and more explained
Selecting the right ITR form is essential when filing income tax returns. Filing your return using the wrong form can lead to rejection by the Income Tax Department and even a delay in refunds. Among individual taxpayers, the most common confusion arises between ITR-1 (Sahaj) and ITR-2, both designed for taxpayers with specific income profiles. Here's a detailed guide to understand the key differences between these two forms – Form ITR-1, also referred to as ITR-1 (SAHAJ), is the most appropriate form for salaried individuals. This form should be selected by taxpayers with a total annual income of up to ₹ 50 lakh, owning one house property, agricultural income not exceeding ₹ 5,000, deriving income from other sources and long-term capital gains of up to ₹ 1.25 lakh under Section 112A. Individuals ineligible to file the ITR-1 form are — Resident Not Ordinarily Resident (RNOR), and Non-Resident Indian (NRI) Receive income from other sources such as lottery, racehorses, legal gambling, etc. Taxable capital gains. Director in a company. Tax deduction under section 194N of the Income Tax Act. Deferred income tax on ESOP received from the employer, being an eligible start-up. ITR-2 covers a wider range of income sources than ITR-1. Form ITR-2 is meant for individuals and Hindu Undivided Families (HUFs) with no business or professional income. Individuals and HUFs with a salaried income of more than ₹ 50 lakh, more than one house, all types of capital gains, foreign income, taxpayers owning unlisted shares, and agricultural income of more than ₹ 5,000 are eligible to file the ITR-2 form. Taxpayers ineligible for filing returns via ITR-2 are — Companies and trusts. ITR-2 cannot be filed by any individual or HUF if their total income for the year includes income from business or profession, as well as income from interest, salary, bonus, commission, or remuneration from a partnership firm Feature ITR-1 ITR-2 Income Up to ₹ 50 lakh Over ₹ 50 lakh Applicant Resident Individual Resident or non-resident indivduals and HUFs Capital gains Long-term capital gains under section 112A up to Rs.1.25 lakhs Both short-term and long-term gains Agricultural income Up to ₹ 5,000 Over ₹ 5,000 Income from property One house More than one house In conclusion, it is extremely important for every taxpayer to understand the eligibility criteria of every income tax return form before filing. In case of any doubts, a taxpayer must reach out to a professional or check the official guidelines on the Income Tax Department's website. Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Readers are advised to consult a qualified tax professional for guidance specific to their financial situation and compliance requirements.
New Indian Express
01-05-2025
- Business
- New Indian Express
Tax filing made easier for the salaried class
NEW DELHI: Good news for salaried tax payers! The government has made tax filing easier for those earning up to Rs 1.25 lakh through long-term capital gains from equities or equity mutual funds. Earlier, salaried individuals with income from capital gains were required to file Form ITR-2 even where the capital gains were non-taxable. From this year, the new Form ITR-1 has a small section for reporting long-term capital gains on which tax is not payable. Currently, ITR 1 is filed by individuals with income up to Rs 50 lakh from salary, one house property, interest and agriculture income. However, if they made capital gains in a particular year, they had to file ITR-2. To ease the compliance burden, the tax department has exempted salaried individuals with long-term capital gains up to Rs 1.25 lakh annually from filing ITR 2 form. It must be noted that the government enhanced the threshold for tax-free long-term capital gains from Rs 1 lakh to Rs 1.25 lakh in the Budget this year. However, the tax rate on long-term capital gains has been increased from 10% to 12.5%. 'This change streamlines the tax filing process, making it more accessible and less burdensome for small investors and salaried individuals, encouraging timely compliance,' says Sandeep Sehgal, partner, tax, AKM Global. However, if a taxpayer earns long-term capital gains in excess of Rs 1,25,000 or any other long term capital gains other than equities or units of business trust or earns short-term capital gains or has carried forward or brought forward capital losses or derived income, the salaried individual would have to fill Form ITR-2 for filing return of income. There is a similar change in the ITR-4, which applies to tax payers resorting to presumptive taxation for their business income.
