The income tax department has categorised taxpayers based on income, source of income and many other factors to ensure easy compliance. Taxpayers with incomes from different categories, thus, have to download and fill out different income tax return forms.
Who should file the Income Tax Return?
- People having deposits of amount exceeding Rs.1 crore or more in a current account.
- Anyone who wants to claim a tax refund.
- Person who wants to carry forward or set-off losses should file return irrespective of income/loss.
- Person who needs to produce returns as an income proof for loans etc.
- People having income from foreign assets.
What is Form-ITR-1 (SAHAJ) ?
ITR-1 form (SAHAJ) is simplest Income Tax Return form. This form is to be filed by Resident Individuals. Income Tax Department has divided these forms on the basis of source of income and category of taxpayer. In this case also there are guidelines as to that who can file their return of income under ITR-1.
Applicability of ITR-1
- This form can be used by a resident individual.
- The income of the person should be less than Rs.50 lakhs.
- The source of income should be salary, house property or income from other sources.
- A person for whom, income from any of above sources is clubbed for spouse/minor.
- Has agriculture income up to Rs.5000/-
What is ITR-2?
TR-2 is utilized by individuals and Hindu Undivided Families (HUFs) for filing their Income Tax returns when they do not earn income from business or profession. Typically, it is used by those receiving income from sources like salary, pension, capital gains, and other sources.
Who is eligible to file ITR-2 for AY 2024-25?
ITR-2 form is for individuals and HUF receiving income other than income from ‘Profits and Gains from Business or Profession’. Thus, individuals with income from the following sources are eligible to file Form ITR-2:
- Income from salary/pension
- Income from house property (income can be from more than one house property)
- Income from capital gains/loss on sale of investments/property (both short-term and long-term)
- Income from other sources (including winning from lottery, bets on racehorses and other legal means of gambling)
- Agricultural income of more than Rs 5,000
- Resident not ordinarily resident and a non-resident
The total income from the above sources may exceed Rs 50 lakh.
Understanding Forms ITR-1 and ITR-2 Applicable
| Basis | ITR-1 | ITR-2 |
| General Information | Basic details like name, address, DOB, type of employer, option to avail new and old tax regime | |
| Gross Total Income | Income Details under all heads of income. | Income under all heads of income. Details of Foreign Source Income, Exempt Income, Tax Relief u/s 90,90A and 91 |
| Deductions | Deductions to be claimed under chapter VI-A. Details for medical insurance and donations | Deduction to be claimed under chapter VI-A. Deduction for medical insurance, donations, donation for scientific research or rural development. |
| Taxable total income | Computation of Total income
| |
| Computation of Tax Payable
| Details of tax payable, Details of Advance Tax, Self-Assessment Tax and TDS deducted | |
| Other Schedules |
| |
| Other Information | Bank Account for refund of tax | |
| Verification and Submission | Verification using EVC, Aadhaar OTP | |
Who cannot file ITR-2 for AY 2024-25?
- Any individual or HUF having income from business or profession
- Individuals who are eligible to fill out the ITR-1 form (Sahaj)
Major changes in ITR-2 in AY 2023-24 and AY 2024-25
- Schedule VDA: Income from transfer of Virtual Digital Assets
A new schedule is added to compute income from cryptocurrencies or other virtual Digital assets - Relief u/s 89A: An additional clause has been added related to relief to residents who have income from foreign retirement benefits accounts:
Point No. 1(e)4: Income taxable during the previous year on which relief u/s 89A was claimed in any earlier previous year - Sec 10(12C): In other Exempt Income one new exemption added under Sec 10(12C) – Any payment from the Agniveer Corpus Fund to a person enrolled under the Agnipath Scheme or to his nominee.
- Schedule SI: New point added 115BBH – Income by way of transfer of Virtual Digital assets
- Section 80 CCH: Under Chapter VI A deduction new clause was added- The entire amount contributed by applicants employed by the Central Government to the Agniveer Corpus Fund is eligible for tax deductions.
- ARN: In schedule 80G clause D additional information is required for ARN (donation Reference number)
FAQs
Which ITR to file if you have only income from the sale of shares or mutual funds?
If you have only income from the sale of shares and securities or mutual funds, you can file ITR-2.
I am supposed to file ITR-2 and not ITR-1 if my maximum exempted income exceeds Rs.5,000. I am confused – what qualifies as exempt income?
Incomes that are not taxable are specified under Section 10 of the Income Tax Act. Such incomes are excluded from the total income while calculating the taxes. The income can be partly or fully exempt depending on the guidelines or conditions prescribed in Section 10. Allowances that may be exempt to a certain extent include HRA, LTA, transport allowance, etc. Gratuity, leave encashment, and pension may be exempt under Section 10 of the Act.