ITR-1, also known as Sahaj, because it is the simplest form of all other forms to file ITR. This form applies to resident individuals having income from salary (or pension) of up to Rs 50 lakh, who own one residential property, and who get income from fixed deposit interest and dividends. If there is Agricultural income as well, the income should not exceed Rs 5,000.
If you are in having the following requirements, then you are eligible to file ITR-1:
a) The individual's primary source of income must be a salary, as well as one house property and additional sources of income, such as interest income, dividend income, etc., in addition to an agricultural income of no more than Rs.5,000.
b) The individual's annual income must not exceed Rs. 50 lakh in total.
c) The individual in concern must qualify as an Ordinarily Resident Indian.
If even a single one of these requirements is not met, the individual in concern will not be permitted to submit their tax return using the ITR-1 form.
The deadline for submitting an ITR-1 for a particular financial year is typically July 31 of the year. However, a request submitted to the Department of Income Tax for an extension of this date may be granted, depending on the circumstances.
If your yearly salary exceeds Rs 50 lakh, you must use Form ITR-2. The ITR-2 form, designed for taxpayers with comparatively more complex financial dealings, can also be used by those who get a salary. To put it another way, you must utilize this form if you do not have any income from a business or profession and are not qualified to file returns through the ITR-1 form. For instance, if your total income is more than Rs 50 lakh, you cannot use the ITR-1 form to complete your taxes.
You must use Form ITR-2 rather than Form ITR-1 if you have realized a net capital gain by selling equity shares, mutual fund units, or property. If you are a director of a corporation or hold assets in a foreign country, you must fill out Form ITR-2. It is mandatory for each resident taxpayer who possesses any foreign bank account, ESOP, or other securities account to submit their return using Form ITR-2 and report these assets using Schedule FA. The government imposes this obligation. Severe penalties may arise from a failure to report.
If an individual has a source of income other than the sources listed under the ITR-1 form, or their residential status is different from the person's residential status under ITR-1, they must use ITR-2 to file an income tax return.
If an individual meets any of the following requirements, they are qualified to file ITR-2:
a) The person's income must be from salary, one or more than one house property, and any other sources of income
b) He has income from outside the country, such as dividends from foreign shares, etc.
c) The individual is a director of a company
d) He holds an investment in unlisted equity shares
e) He has assets outside of India
f) The individual's total income is more than Rs 50 lakh
g) The person is from a Hindu Undivided Family (HUF)
h) The individual must be a non-resident or a resident (both ordinarily or not ordinarily)
i) In case of any losses present there, then that must be carried forward or brought forward under the income head 'Income from house property.'
But, if an individual has any other sources of income apart from what has been mentioned above, such as income from business and profession, etc., then they are not eligible to use either ITR-1 or ITR-2 to file ITR.
In that case, They should file ITR using a different ITR form as per the applicability.
Individuals who do not have to get their financial records examined by an auditor have the deadline to file ITR-2 until July 31, 2023. And September 30, 2023, is the deadline for individuals who are required to have their financial records examined.
It will be regarded as "defective" if you file your return using the incorrect form, so be sure you use the correct one. If you have capital gains but still use ITR-1, this will be interpreted as a failure to disclose all your income sources. The Department of income tax may request updated tax returns and failure to file tax returns. Your tax return will only be considered valid if you comply within the allotted time frame.
Within fifteen days of receiving notification, the taxpayer will have the opportunity to modify the incorrect return. However, if he does not rectify the error, the return will be regarded as invalid, just as if it had yet to be filed. After that, once again, upon receipt of a notification from the officer, a person has the opportunity to file the ITR; however, doing so would result in legal penalties.
This form requires specific additional disclosures in addition to the typical information regarding salary, bank accounts, and interest income. Because If you filed your taxes last year, these were already required. If you have retirement accounts in some specified countries like Canada, the United States, or the United Kingdom, you must reveal the details of those accounts in both the ITR-1 and the ITR-2 forms. The ITR-2 form also asks for information regarding the contributions made by your employees to the fund. If you make an employee provident fund (EPF) excess contribution of more than Rs. 2.5 lakh per year, any interest you receive from that contribution is taxable at the slab rate that applies to your tax bracket.