ITR form for Salaried person

Filing Income Tax Returns (ITR) is a critical responsibility for every salaried individual in India. The Income Tax Department has streamlined the process, making it simple and user-friendly. This guide will walk you through everything you need to know about the ITR forms applicable to salaried persons, the filing process, benefits, and common mistakes to avoid.

Which ITR Form is Applicable for Salaried person?

Understanding the correct ITR form is essential for filing your income tax returns accurately. The choice of form primarily depends on the nature of your income and its sources. Here’s a detailed breakdown of the ITR forms applicable to salaried individuals in India:

1. ITR-1 (Sahaj): Simplified Form for Most Salaried Individuals

This is the most commonly used ITR form by salaried taxpayers. It’s designed to accommodate individuals with straightforward income sources.

Eligibility for ITR-1:

• Individuals earning income from:
  • Salary or pension.
  • One house property (excluding cases of loss brought forward).
  • Other sources, such as interest income from savings accounts, fixed deposits, or dividends.
• Total annual income should not exceed ₹50 lakhs.

Not Eligible for ITR-1 if:

• You have income exceeding ₹50 lakhs.
• You own more than one house property.
• You have income from capital gains (e.g., sale of shares or property).
• You have foreign income or assets.
• Agricultural income exceeds ₹5,000.
• You are a director in a company or hold unlisted equity shares.

2. ITR-2: For Salaried Individuals with Additional Income Sources

This form is suitable for individuals whose income sources go beyond what is covered in ITR-1. It provides more flexibility for those with diverse income streams.

Eligibility for ITR-2:

• Salaried individuals with total income exceeding ₹50 lakhs.
• Income from multiple house properties.
• Capital gains income from the sale of assets such as shares, property, or mutual funds.
• Agricultural income exceeding ₹5,000.
• Foreign assets or income, including overseas bank accounts or investments.
• Being a director of a company or holding unlisted equity shares.

Not Eligible for ITR-2 if:

• You have income from business or profession. For that, ITR-3 or ITR-4 will apply.

3. ITR-3: For Salaried Individuals with Business or Professional Income

Though primarily meant for individuals with business or professional income, salaried individuals with side income from freelancing, consultancy, or a business must use this form.

Eligibility for ITR-3:

• Income from salary combined with:
  • Income from a proprietorship business.
  • Income from a profession (e.g., consultants, freelancers).
  • Income from capital gains or house property.

4. ITR-4 (Sugam): Presumptive Taxation for Small Businesses and Professionals

This form is part of the simplified presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE. Although it mainly caters to small businesses and professionals, salaried individuals with income from such sources may also use this form.

Eligibility for ITR-4:

• Income from salary or pension.
• Business income under the presumptive taxation scheme.
• Total income not exceeding ₹50 lakhs.

Not Eligible for ITR-4 if:

• You have income from capital gains, foreign assets, or are a director in a company.

Choosing the Right Form

Key Takeaway

Choosing the correct ITR form ensures a seamless filing process and minimizes the risk of errors or notices from the Income Tax Department. If your income sources are simple, ITR-1 is ideal. However, for complex income scenarios, opt for ITR-2 or ITR-3 based on your situation.

When in doubt, consult with a chartered accountant to identify the appropriate form for your income profile.

Documents Required for Filing ITR for Salaried Individuals

Before filing your ITR, gather the following documents to ensure a smooth process:

1. Form 16: Provided by your employer, this summarizes your salary details and tax deducted at source (TDS).
2. Salary Slips: To cross-check your income details.
3. Form 26AS: A consolidated statement of TDS, taxes paid, and refunds.
4. Investment Proofs: Evidence for tax-saving investments under Sections 80C, 80D, etc.
5. Bank Statements: For interest income and other transactions.
6. Aadhaar and PAN: Essential for verification.

Step-by-Step Guide to Filing ITR Online

Filing ITR online is quick and straightforward. Follow these steps:

Step 1: Register/Login on the Income Tax Portal

• Visit the Income Tax e-Filing Portal.
• Use your PAN as your user ID.

Step 2: Select the Appropriate ITR Form

• Choose ITR-1 or ITR-2 based on your income sources and eligibility.

Step 3: Fill in Your Income Details

• Input salary details from Form 16.
• Add income from other sources (e.g., interest income).

Step 4: Claim Deductions

• Enter deductions under Sections like 80C (e.g., ELSS, PPF), 80D (medical insurance), and others.

Step 5: Verify TDS and Tax Payments

• Match your TDS with Form 26AS to avoid discrepancies.

Step 6: Submit and Verify

• Review your form for accuracy.
• Submit the form and complete e-verification using Aadhaar OTP, net banking, or other available methods.

Common Mistakes to Avoid

1. Selecting the Wrong ITR Form: Ensure you pick the correct form based on your income sources.
2. Ignoring Form 26AS: Verify your TDS and tax payments against this form.
3. Skipping Deductions: Claim all eligible deductions to lower your tax liability.
4. Delaying the Filing: File within the due date to avoid late fees.

Due Dates for Filing ITR

The due date for salaried individuals is usually July 31st of the assessment year. For example, for FY 2023-24, the filing deadline would be July 31, 2024.

Conclusion

Filing your ITR as a salaried individual doesn’t have to be complicated. With the right form, accurate details, and timely filing, you can enjoy the benefits while staying compliant with the law. Whether you’re filing on your own or seeking professional assistance, ensure you file before the due date to avoid penalties and unlock the financial advantages of being tax-compliant.