What is the difference between ITR-1 and ITR-2 forms? Utilizing an incorrect form may prompt correspondence from the tax authority, necessitating rectification. Therefore, it is crucial to use the appropriate form to avert this situation
When filing your income tax return, you must use either ITR 1 or ITR 2, depending on your sources of income for the year. Filing with the wrong form can result in a notice from the tax department, asking you to correct it. It's important to use the correct form to avoid this issue.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} Let's examine the key distinctions between ITR-1 and ITR-2 forms.
Who is eligible to file using ITR-1 form?
You can use ITR-1 if you meet the following conditions. If an individual does not meet any of the conditions mentioned, they will not qualify to submit their income tax return using the ITR-1 form.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
ET OnlineET OnlineAlso read: How to file ITR-1 with salary, income from house property and other sources for FY 2023-24 (AY 2024-25)
Who is eligible to file using ITR-2 form?
If you have income from sources other than those mentioned above, or if your residential status is different, you must use the ITR-2 form to file your income tax return.An individual is eligible to file ITR-2 if he/she satisfies any of 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'.
ET OnlineAlso read: How to file ITR-2 form: 10 documents you need to file ITR-2
Also read: How to file ITR-2 online with salary, capital gains and other incomes for FY 2023-24 (AY 2024-25)?
ITR-1 vs ITR-2: Other important differences
If an individual has additional sources of income, such as income from a business or profession, they cannot file their tax return using either ITR-1 or ITR-2. They must use a different ITR form that applies to their situation.ITR-2 is a more complex form than ITR-1, which is also known as Sahaj because it is a simple form that requires less information.
Most of the form's information is already filled out when filing tax returns using ITR-1 on the new income tax portal. Just double-check it with your documents and submit the return. Filing ITR-2, on the other hand, is more complex. Although the information is pre-filled, the portal requires you to answer certain questions before starting the form and provide additional details like the date of purchase and unit details for capital gains from shares or mutual funds.
Here are a few important FAQs on the difference between ITR-1 and ITR-2.
What is ITR 1?
The ITR 1 form, also called SAHAJ, is used for filing income tax returns by Indian residents whose total income comprises of salary/pension, one property, other sources of income (such as interest), and agricultural income of up to Rs 5,000.What is ITR 2?
Individuals and Hindu Undivided Families (HUFs) without income from profits and gains of business or profession fall under the purview of ITR 2. This form applies to those with more than one house property, capital gains, foreign income or foreign assets, and agricultural income exceeding Rs 5,000.Are NRIs eligible to file ITR 1?
NRIs cannot use ITR 1. They must use ITR 2 or other relevant forms based on their income types.Types of income covered under ITR 1 and ITR 2?ITR 1: Income from salary or pension, a single residential property, and other sources of income except for lottery and horse racing are included. Agricultural income up to Rs 5,000 is also included.ITR 2: More complex Incomes, such as owning multiple properties, making capital gains, having foreign income, and earning agricultural
What happens if wrong ITR form is used?
Filling out an incorrect ITR form may result in your return being processed incorrectly or rejected, and may lead to penalties, notices, and the requirement to file a revised return within a specified deadline.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances
