ITR 1 | ITR 2: What is the difference between ITR 1 and ITR 2?
An individual will either file ITR 1 or ITR 2 depending on the sources of income earned during the financial year. It is important to know the difference between the two income tax return forms because if the ITR is filed using the wrong ITR form, then it will be termed as a defective return. The income tax department will send you a tax notice asking you to file ITR using the correct ITR form as applicable to your income(An individual can file ITR even if the July 31, 2022 deadline of filing ITR is missed. The income tax return filed after the deadline is called belated ITR. One will have to pay a late filing fee when filing a belated ITR. Click here to fine out what to do if you have missed income tax return filing deadline of July 31.)
Who is eligible to file using ITR-1?
If you satisfy the following conditions then you can use ITR-1:a)His/her source of income must be salary, one house property and other sources of income, i.e., interest income, dividend etc. and agricultural income up to Rs.5,000 only.
b)The total income of an individual must not exceed Rs.50 lakh
c)Individual must be Ordinarily Resident Indian
If any of the one condition is not satisfied, then he/she will not be eligible to file ITR.
Who is eligible to file using ITR-2?
If an individual has income from the sources other than above or his/her residential status is different, then one must file income tax return using ITR-2 form.An individual is eligible to file ITR-2 if he/she satisfies the following conditions:
a) Has income from salaries, one or more than one house property and other sources of income
b) Has foreign income such as dividends from the foreign shares etc.
c) Is a director of a company
d) Is holding an investment in unlisted equity shares
e)Is holding assets outside India
f)Total income exceeds Rs 50 lakh
g) Is a Hindu Undivided Family (HUF)
h) Is a non-resident individual or a resident individual (both ordinarily or not ordinarily)
i)If there are losses that must be carried forward or brought forward under the income head 'Income from house property'.
However, if an individual has further sources of income such as income from business and profession etc. then he/she cannot file ITR using either ITR-1 or ITR-2. He/she has to file ITR using different a ITR form as applicable to him/her.
It is important to note that ITR-2 is much more complex form then ITR-1; ITR-1 is also known as Sahaj because it is a simple ITR form that does not require much information as compared to ITR-2.
An individual can easily file his/her tax return using ITR-1 on the new income tax portal. Most of the information in the ITR-1 form is already pre-filled. An individual is required to cross-check the same from the documents available and file the tax return. On the other hand, filing ITR-2 on the new income tax portal is very complicated. Though the information is pre-filled here as well, however, the portal demands certain questions to be answered before the start of the form and additional details like date of purchase, unit details (in case of capital gains from shares or mutual funds) etc.
( Originally published on Jul 30, 2022 )
This story originally appeared on: Muscle & Fitness - Author:Faqs of Insurances
