How to file ITR-1 with salary, income from house property and other sources for FY 2023-24 (AY 2024-25) ITR-1 form is also known as Sahaj. Individuals having income from salary, house property, interest and dividend incomes can use ITR-1 to file income tax return
Naveen Wadhwa
Vice-President, Taxmann
Tarun Kumar Madaan
Chartered accountant
For individual taxpayers not subject to a tax audit under the Income-tax Act, 1961, the due date for filing the ITR for FY 2023-24 (AY 2024-25) is July 31, 2024. This article explains the most efficient way to file your tax return using Form ITR-1, with practical examples to ensure clarity.
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Who can file ITR-1?
Form ITR-1 can be used by an Ordinary Resident (ROR) Individual with a total income of up to Rs. 50 lakh. This can include income from salary, income from one house property and income from other sources such as bank interest, dividends, and agricultural income up to Rs 5,000.This form cannot be used by individuals who are either directors in a company, have invested in unlisted equity shares or whose tax is deducted by banks on cash withdrawals under Section 194N. TDS is deducted under section 194N by banks or post offices if cash is withdrawn above the threshold limit from any bank account (savings or current bank account) maintained by a person. Those with deferred income tax on Employee Stock Option Plans (ESOPs) also cannot use this form. Individuals having foreign shares or having foreign income (dividends from foreign shares) are also not eligible to use ITR-1.
Ways to file ITR-1
There are various ways to file Form ITR-1: Via Excel utilities or Java utilities or directly on the e-filing platform or it can also be filed using third-party software. It is recommended that the e-filing platform be used to file returns as it auto-fills basic information and tax details into the ITR-1 form without any manual intervention, which saves time and effort.Steps to e-file ITR-1 online on income tax e-filing website
Step 1: Go to https://www.incometax.gov.in/iec/foportal/ and log in with your PAN/Aadhaar and password.Step 2: Go to E-File > Income Tax Returns > File Income Tax Return from the menu.
Step 3: Select the assessment year 2024-25 and mode of filing 'online' and click 'Continue' to proceed. The assessment year is the year in which income earned in the previous financial year is assessed. If you are uploading a JSON file generated from the department's excel or java utility, you must select 'Offline' as the mode of filing.
Step 4: Select your status as Individual and click 'Continue'.
Step 5: From the 'ITR Form' dropdown, select 'ITR-1'.
Step 6: Even if the total income of an individual does not exceed the maximum exemption limit, tax return filing is mandatory in certain situations. Select why you are filing the Income-tax Return and click 'Continue'. Here, we have selected the most commonly applicable option, 'Taxable income is more than basic exemption limit'.
Step 7: On the next page, you will find 5 sections to fill in:
(a) Personal Information
(b) Gross Total Income
(c)Total Deductions
(d) Tax Paid
(e) Total Tax Liability
Section 1: Personal InformationIn this section, verify the data pre-filled from your e-filing profile. You cannot directly edit certain personal data in the form. However, you can make the necessary changes by accessing your e-filing profile. Certain pre-filled details can be edited directly in this section, such as your contact details, nature of employment and filing section 139(1).
From FY 2023-24 (AY 2024-25), the new tax regime is the default regime. If you prefer the old tax regime, you must explicitly opt-out of new tax regime in your tax return. When filing ITR-1, you simply need to indicate your choice of tax regime. If you opt for the new tax regime, your taxes will be computed at lower rates but without the benefit of specified exemptions or deductions.
The ITR-1 form asks, "Do you wish to exercise the option u/s 115BAC (6) of Opting out of new tax regime?" An individual is required to select 'Yes' if he wants to file ITR with old tax regime. If the option 'No' is selected, then ITR is filed with new tax regime.
You must report all bank accounts held at any time during the year. In case of multiple accounts, the income tax refund will be credited to one of the validated accounts after the tax return is processed.
Section 2: Gross Total IncomeIn this section, review the pre-filled information, such as income from salary/pension, interest income, and dividend, and enter any remaining or additional details, including exempt income.
Illustration on reporting of salary income: Mr. A has a gross salary of Rs. 12 lakh, including an exempted House Rent Allowance (HRA) of Rs. 2 lakh if the old tax regime has been chosen. The individual's salary will be reported as the sum of gross salary, exempt allowances, perquisites, and profit in lieu of salary. This figure will be adjusted by deducting the available deductions under section 16, such as standard deduction. While the details are auto-filled, it is important to cross-check the information in Form-16, salary slips, and bank statements to ensure accuracy.
If the individual has opted for the new tax regime, he shall not be able to claim a deduction of HRA. The gross salary of Rs 12 lakh will be reported as taxable income. However, from the AY 2024-25, he can claim the standard deduction of Rs. 50,000 from the salary income.
Illustration on reporting of house property income: Mr. A earned a rental income of Rs. 15 lakh. He has also paid a house tax of Rs. 10,000 and interest on home loan of Rs. 2 lakh. Additionally, he has received rent arrears of Rs. 1 lakh for the previous FY 2022-23. While reporting income from house property, the taxpayer must select the type of property, such as self-occupied, let out, or deemed let out. In the above example, we have taken a let-out property. A salaried individual may also disclose the details of other income earned by them during the year to their employer. In that case, these details can also be reconciled with Form 16, and appropriate TDS shall be deducted by the employer after considering these incomes.
Rent arrears received by an assessee pertaining to a previous year are taxable in the year of receipt under the head "Income from House Property." However, a standard deduction of 30% of the arrears or unrealised rent is allowed from such rental income. ITR 1 does not provide the option to show a 30% deduction for arrears separately. Therefore, the taxpayer should report only the taxable portion of the rent arrears received during the year, which is the arrears of rent received minus 30%.
If the ITR is being filed with a new tax regime, the above deductions can still be claimed in case of let-out property. However, no deductions are allowed in the case of self-occupied property.
Illustration on reporting of income from other sources: For the financial year 2023-24, Mr. A has savings bank interest of Rs. 18,000 and a fixed deposit interest of Rs. 60,000. Additionally, he has earned an insurance commission of Rs. 5,000 . Some incomes, like, interest income, dividends, etc., are automatically filled from AIS (Annual Information Statement). However, taxpayers should remember to report the interest earned from savings accounts held with banks or post offices.
Taxpayers should ensure they claim a deduction of up to Rs. 10,000 under Section 80TTA for the interest earned on their savings bank account under 'Total Deductions' section in the old tax regime. It is important to note that this deduction is not automatically filled in from the above screen where the details of interest on the savings deposit have been reported. For senior citizens, Section 80TTB would be applicable for claiming a deduction of up to Rs. 50,000 for total interest received from bank and/or post office deposits.
If the ITR is filed with new tax regime, then no such deductions are allowed in the ITR-1.
Total deductions
In the total deductions section, you are required to add and verify any deductions you intend to claim under Chapter VI-A of the Income Tax Act. The section will allow only those deductions which an individual is eligible to claim as per the tax regime chosen.
Tax paid
In the 'Tax Paid' section, you need to verify the taxes paid in the FY 2023-24. The tax details should include TDS from Salary/Other than Salary provided by the deductor, TCS, Advance Tax, and Self-Assessment Tax.
Total tax liability
In the 'Total Tax Liability' section, you need to review the tax liability computed based on the details filled in the previous sections.
After filling in the required details, click "proceed" to preview the return. If the filled-in details are correct, you may submit the return. You can navigate to the relevant section to update the income or deductions if you need to edit any details.
Step 8: Verification of ITR
Once the filing process is completed successfully, the next step is verifying the return. Failure to verify the filed ITR within 30 days will render it invalid. The income tax Department will only process the tax return after the taxpayer has verified it. An income tax return can be verified using various methods, such as a Digital Signature Certificate (DSC), Electronic Verification Code, Aadhaar-based OTP, or by sending a signed copy of the acknowledgement to CPC Bengaluru.
After verification, you will receive an SMS and/or email confirmation that your return has been successfully filed. It is important to note that the ITR cannot be revised unless it is verified.
(The article is written by Naveen Wadhwa - AVP, Taxmann.com and Tarun Kumar Madaan is a chartered accountant.)
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This story originally appeared on: India Times - Author:Faqs of Insurances
