Filing Income Tax Returns in 2024: Understanding ITR-1 Eligibility

As the July 31 due date for filing income tax returns (ITRs) for the financial year 2023-24 (assessment year 2024-25) approaches, it's essential for individual taxpayers to start preparing. To ensure a smooth and quick process, gather all relevant documents such as bank and capital gains tax statements, Form 16, Form 26AS, annual information statement (AIS), salary slips, and last year’s ITR.

ITR-1: Not for Everyone

For salaried individuals or pensioners without any income from business or profession, the two relevant forms are ITR-1 and ITR-2. However, not everyone can use ITR-1. Here’s a quick guide to check if you are eligible to use ITR-1:

Who Can Use ITR-1?

ITR-1, also known as Sahaj, can be used by resident (and ordinarily resident) individuals who meet the following criteria:

• Income is not more than Rs 50 lakh.

• Income includes salary, pension, one house property, agriculture (up to Rs 5,000), savings or fixed deposits, dividends, and family pension.

Who Cannot Use ITR-1?

You are not eligible to file ITR-1 if:

• You are a resident but not ordinarily resident (RNOR) or a non-resident individual.

• Your income exceeds Rs 50 lakh.

• You have income from business or profession.

• You own more than one house property.

• Your agricultural income exceeds Rs 5,000.

• You are a director in a company.

• You own unlisted shares or have ESOPs (employee stock options).

• You have foreign income or hold assets outside India, including pension and bank accounts.

• You have made any capital gains on the sale of stocks, mutual fund units, or other securities, or have brought forward any losses.

• Tax has been deducted under Section 194N of the Income-tax Act. This section applies if you withdraw cash over Rs 20 lakh (if no return was filed for the previous three years) or Rs 1 crore (if a return was filed for any one of the three previous assessment years).

What to Do If You’re Not Eligible for ITR-1?

If you cannot use ITR-1, you may need to use ITR-2. This form is more detailed and requires you to provide comprehensive information about your income, financial transactions, assets, and liabilities. For instance, you must disclose details in the capital gains (CG), foreign assets (FA), asset-liability (AL), and virtual digital assets (VDA) schedules.

For Those with Business or Professional Income

If you have income from business or profession, you cannot use the ITR-2 form either. In this case, you need to determine whether ITR-3 or ITR-4 is the appropriate form for you.

Conclusion

Choosing the correct ITR form is crucial as using the wrong one can render your tax return defective. Make sure to check your eligibility and gather all necessary documents to ensure a hassle-free filing process. If you’re unsure which form to use, consider consulting a tax professional to guide you through the process.