Importance of Choosing the Right ITR Form for Salaried Person

Importance of Choosing the Right ITR Form

Selecting the appropriate ITR form is essential for several reasons:

1. Accurate Reporting: The correct form ensures all income sources and deductions are accurately reported.
2. Avoid Penalties: Filing the wrong ITR form can lead to rejection of your return, penalties, and additional scrutiny from the Income Tax Department.
3. Ease of Filing: Using the correct form simplifies the filing process and reduces the chances of errors.

Overview of ITR Forms for Salaried Individuals

ITR 1 (Sahaj)

Who Should Use ITR 1?

ITR 1, also known as Sahaj, is primarily designed for resident individuals with income from:

• Salary or pension
• One house property (excluding cases where there is brought forward loss or loss to be carried forward)
• Other sources (excluding winnings from lottery and income from racehorses)
• Agricultural income up to Rs. 5,000

Who Should Not Use ITR 1?

ITR 1 should not be used if:

• Total income exceeds Rs. 50 lakh
• Income includes capital gains
• Income includes more than one house property
• Income includes foreign assets or foreign income
• Income includes agricultural income exceeding Rs. 5,000

ITR 2

Who Should Use ITR 2?

ITR 2 is suitable for individuals and Hindu Undivided Families (HUFs) with income from:

• Salary or pension
• More than one house property
• Capital gains
• Other sources (including winnings from lottery and income from racehorses)
• Foreign assets or foreign income

Who Should Not Use ITR 2?

ITR 2 should not be used if:

• Income includes business or professional income

ITR 3

Who Should Use ITR 3?

ITR 3 is meant for individuals and HUFs having income from:

• Business or profession
• Salary or pension
• More than one house property
• Capital gains
• Other sources (including winnings from lottery and income from racehorses)
• Foreign assets or foreign income

Who Should Not Use ITR 3?

ITR 3 should not be used if:

• Income does not include business or professional income

ITR 4 (Sugam)

Who Should Use ITR 4?

ITR 4, also known as Sugam, is designed for individuals, HUFs, and firms (other than LLPs) who are:

• Resident individuals with income up to Rs. 50 lakh
• Having income from business and profession which is computed under Sections 44AD, 44ADA, or 44AE
• Having income from salary or pension
• Having income from one house property
• Having income from other sources (excluding winnings from lottery and income from racehorses)

Who Should Not Use ITR 4?

ITR 4 should not be used if:

• Total income exceeds Rs. 50 lakh
• Income includes more than one house property
• Income includes capital gains
• Income includes foreign assets or foreign income

Detailed Guide on ITR 1 (Sahaj) for Salaried Individuals

Given its simplicity and relevance, ITR 1 is the most commonly used form by salaried individuals. Here’s a detailed guide on how to fill out ITR 1 for AY 2024-25:

Personal Information

1. PAN: Enter your Permanent Account Number.
2. Name: Provide your full name as per PAN records.
3. Date of Birth: Enter your date of birth.
4. Address: Fill in your residential address.
5. Email and Mobile Number: Provide your email address and mobile number for communication.

Filing Status

1. Assessment Year: Select AY 2024-25.
2. Return Filed Under Section: Choose the appropriate section under which the return is being filed (e.g., Section 139(1) for timely filing).
3. Residential Status: Select your residential status as Resident.

Income Details

1. Income from Salary/Pension:
   • Basic Salary: Enter the basic salary received during the financial year.
   • Allowances: Include allowances such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and other taxable allowances.
   • Perquisites: Enter the value of perquisites provided by the employer.
   • Exempt Allowances: Deduct exempt allowances like HRA (subject to conditions), LTA, etc., as per Form 16.
2. Income from House Property:
   • Rental Income: Enter rental income received from one house property. If the property is self-occupied, enter ‘0’ as income.
   • Interest on Home Loan: Deduct interest paid on home loan up to Rs. 2 lakh for self-occupied property.
3. Income from Other Sources:
   • Interest Income: Include interest income from savings accounts, fixed deposits, recurring deposits, etc.
   • Dividend Income: Enter dividend income received from shares and mutual funds.
   • Other Taxable Income: Include other taxable incomes such as pension, winnings from lotteries (not allowed in ITR 1), etc.
4. Deductions and Exemptions:
   • Section 80C: Enter the total amount of eligible deductions like Life Insurance Premiums, PPF contributions, NSC, ELSS, tuition fees, etc., up to Rs. 1.5 lakh.
   • Section 80D: Enter the amount paid for health insurance premiums for self, spouse, children, and parents.
   • Section 80TTA: Deduct up to Rs. 10,000 for interest earned on savings accounts.
   • Section 80G: Enter donations made to eligible charitable institutions.
   • Other Sections: Include deductions under other sections such as 80E (interest on education loan), 80EEA (additional interest on home loan for affordable housing), etc.

Tax Computation

1. Gross Total Income: Sum up all the income sources before deductions.
2. Deductions: Subtract the total deductions claimed under various sections.
3. Total Taxable Income: Calculate the taxable income after applying all eligible deductions.
4. Tax Liability: Compute the tax liability based on the income slabs applicable for AY 2024-25.
5. Rebate under Section 87A: If your total income is up to Rs. 5 lakh, claim a rebate under Section 87A.
6. Interest and Penalty: Calculate interest under Sections 234A (for late filing), 234B (for late payment of advance tax), and 234C (for deferment of advance tax).
7. Total Tax Payable: Determine the final tax payable after accounting for all deductions and rebates.

Taxes Paid

1. TDS from Salary: Enter the total TDS deducted as per Form 16.
2. TDS from Other Sources: Enter TDS deducted on other incomes as per Form 16A or Form 26AS.
3. Advance Tax and Self-Assessment Tax: Include any advance tax or self-assessment tax paid during the financial year.

Verification

1. Bank Account Details: Provide details of all your bank accounts, including account number, IFSC code, and bank name. Make sure to select the account where you prefer to receive the refund.
2. Declaration: Confirm that the details provided in the return are accurate to the best of your knowledge.
3. E-Verification: Choose the mode of e-verification (e.g., Aadhaar OTP, Electronic Verification Code (EVC) via net banking, or by sending a signed ITR-V form to the CPC Bangalore).

Step-by-Step Guide to Filing ITR 1 Online

1. Login to the Income Tax Portal: Visit Income Tax e-filing and log in using your PAN, password, and Captcha code.
2. Select the ITR Form: Choose ITR 1 from the list of available forms.
3. Fill in the Details: Enter all required details, including personal information, income details, deductions, and taxes paid.
4. Upload Documents: Attach relevant documents, such as Form 16, Form 26AS, and other proofs of income and deductions.
5. Verify and Submit: Review the details entered, verify the return using Aadhaar OTP or other methods, and submit the return.
6. E-Verification: Complete the e-verification process within 120 days of filing the return to ensure it is processed.

Common Mistakes to Avoid While Filing ITR 1

1. Incorrect Personal Details: Ensure your PAN, name, and other personal details are correct to avoid processing delays.
2. Mismatched Income Figures: Cross-verify the income figures with Form 16 and Form 26AS to avoid discrepancies and potential notices from the Income Tax Department.
3. Forgetting to Claim Deductions: Ensure you claim all eligible deductions to reduce your tax liability.
4. Incorrect Bank Details: Double-check your bank account details to ensure timely processing of refunds.
5. Skipping E-Verification: Complete the e-verification process to validate your return and avoid it being considered invalid.

Filing ITR 2 for Salaried Individuals with Additional Income Sources

If you have additional income sources such as capital gains, more than one house property, or foreign income, you should use ITR 2. Here’s how to file ITR 2:

Additional Income Details

1. Capital Gains: Report short-term and long-term capital gains from the sale of property, stocks, mutual funds, etc. Include details such as sale and purchase dates, amounts, and expenses incurred.
2. More Than One House Property: Report rental income or deemed rental value for multiple properties. Deduct interest paid on home loans.
3. Foreign Assets and Income: Declare foreign bank accounts, financial interests, and income earned abroad. Include details such as account numbers, foreign income, and taxes paid.

Deductions and Exemptions

1. Section 54/54EC/54F: Claim exemptions on capital gains by reinvesting in specified assets like residential property or bonds.
2. Foreign Tax Credit: Claim credit for taxes paid in foreign countries to avoid double taxation.

Verification

1. Bank Account Details: Provide details of all bank accounts, including foreign accounts if applicable.
2. Declaration and Verification: Confirm the accuracy of the details and choose the mode of e-verification.

Filing Process

1. Login to the Income Tax Portal: Visit Income Tax e-filing and log in using your PAN, password, and Captcha code.
2. Select ITR 2: Choose ITR 2 from the list of available forms.
3. Fill in the Details: Enter all required details, including personal information, income details, deductions, and taxes paid.
4. Upload Documents: Attach relevant documents, such as Form 16, Form 26AS, capital gains statements, and other proofs of income and deductions.
5. Verify and Submit: Review the details entered, verify the return using Aadhaar OTP or other methods, and submit the return.
6. E-Verification: Complete the e-verification process within 120 days of filing the return to ensure it is processed.

Conclusion

For salaried individuals, choosing the right ITR form is crucial for accurate reporting and compliance with tax laws. ITR 1 (Sahaj) is the most suitable form for most salaried individuals with straightforward income sources. However, if you have additional sources of income such as capital gains, more than one house property, or foreign income, you should use ITR 2.

Filing your ITR accurately ensures compliance with tax laws and helps in avoiding penalties. At Apkireturn, we assist individuals in navigating the complexities of income tax filing. If you need further assistance or have any questions regarding which ITR form to use, feel free to contact our expert team.

For more detailed guides and professional assistance, visit our website Apkireturn or call us at +91 7665156000. Let us help you make your tax filing process smooth and hassle-free.

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