All you want to know about ITR-1 and ITR-4 forms

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Income Tax Department has issued two out of 7 forms, ITR-1 and ITR-4. Both forms are for resident Indians. Returns can be filed for assessment year 2023-24 on e-filing portal. Who has to file ITR-1 and who has to file ITR-4?

In the old tax regime, it is necessary for those individuals who are up to 60 years of age and have a gross income of more than Rs 2.5 lakh, to file ITR. At the same time, senior citizens i.e. people above 60 years have to file returns if they earn more than Rs 3 lakh and super senior citizens (above 80 years) have to earn more than Rs 5 lakh. From the financial year 2023-24, the limit of income tax exemption in the new tax system has been increased to Rs 3 lakh. This means, on choosing the new system, there will be no need to file returns on annual income up to Rs 3 lakh.

Assessees paying electricity bill of more than 1 lakh rupees during the financial year, spending more than 2 lakh on traveling abroad or depositing more than one crore in current account will also have to file the return, even if the income is less than the income tax exemption limit. ITR will have to be filed if business sales exceed Rs 60 lakh and income from any profession exceeds Rs 10 lakh. Returns have to be filed even on deduction of more than Rs 25,000 ie TDS/TCS. In the case of senior citizens, this limit is more than Rs 50,000.

Now let’s see who has to file ITR-1 and 4. ITR-1 is called Sahaj form. This form is for those taxpayers whose total income is up to Rs 50 lakh. This income should be from salary or pension, from a residential property or from other sources like interest. Income from lottery or horse racing is not included in this. ITR-1 is also used for agricultural income up to Rs 5000. However, if you are a director in a company, holding shares in an unlisted company, then ITR-1 cannot be filed. Salaried individuals, whose income is less than 50 lakhs, can file ITR-1.

Similarly, ITR-4 form is called Sugam form. This form is applicable for individuals, families and firms other than LLPs, whose total income is up to Rs 50 lakh and income from business and profession, as well as which is computed under section 44AD, 44AE and 44ADA.

After knowing who the ITR-1 and 4 are for, now it is time to know what should be done while filing the return? After logging in to the e-filing portal (eportal.incometax.gov.in) and selecting the assessment year 2023-24, you will see the pre-filled data i.e. pre-filled information. You will have to match the information already given in the online form with Form-16, Annual Information Statement ie AIS or Form-26AS.

Salaried person gets Form-16 from the employer. It contains information about salary and tax deducted on it i.e. TDS. Form-16 is a TDS certificate. Similarly, other than the employer, if any organization or person deducts tax, then TDS certificate is received from there.

To make the process of return filing easier, the Income Tax Department has provided the facility of Annual Information Statement i.e. AIS. In this, the taxpayer will get information about every transaction done during the year. This includes 46 types of transactions including income, investment, TDS, shares, mutual funds, rent, interest, purchase and sale of property. You can download AIS from the Income Tax Department’s website. AIS app is also present on the Play Store.

Now lets get to know what precautions should be taken while filing the return and what problem can be faced if there is a mistake. It is important to choose the right ITR form to avoid any problem. Choose the ITR form according to your source of income. Apart from salary, if there is rent, interest, capital gain or any other income, then definitely show it in the return. If your income comes under the purview of tax, then definitely file the return. Match the pre-filled details carefully. There can be trouble if there is a difference in TDS already filed and newly deposited.

The last date for filing income tax return is 31st July 2023. There is scope for mistake in filing ITR in the last minute. In such a situation, it is better to take help of a CA than to make mistake while filling ITR. Also file the return on time. Not only this, penalty will also be imposed for filing the return after the last date. After filing the ITR, verify it as well, otherwise the refund may get stuck.