How to choose between ITR-1 and ITR-2 when filing income tax returns. 

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When it comes to filing income tax returns in India, choosing the correct form is essential. The form you need to use depends on your sources of income, the nature of income, and certain other factors. Let's discuss the differences between ITR-1 and ITR-2 and how to determine which one to use;

  1. ITR-1 (Sahaj):

ITR-1, also known as Sahaj, is a simple form used by individuals who have income from the following sources:

  • Salary or pension income
  • Income from one house property (excluding cases with brought forward loss or losses to be carried forward)
  • Income from other sources (excluding winning from lottery and racehorses)
  • You can use ITR-1 if your total income is up to Rs. 50 lakh, and you meet the above criteria. 

ITR-2;

ITR-2 is a form for individuals and Hindu Undivided Families (HUFs) who do not qualify to file ITR-1. You should use ITR-2 if you have income from the following sources:

  • Salary or pension income
  • Income from more than one house property
  • Income from capital gains (short-term and long-term)
  • Income from foreign assets/foreign income
  • Agricultural income exceeding Rs. 5,000
  • Income from business or profession
  • Any other source not mentioned in ITR-1

If you have income from the above sources, you are required to file ITR-2. However, if you are an individual or HUF and have income from business or profession and wish to opt for presumptive taxation under Section 44AD, 44ADA, or 44AE, you can file ITR-4 instead.

In summary, choose ITR-1 if you meet the eligibility criteria mentioned earlier and have income from salary, pension, one house property, and other sources. Use ITR-2 if you have income from multiple house properties, capital gains, foreign assets, agricultural income exceeding Rs. 5,000, income from business or profession, or any other income not covered by ITR-1.

It's crucial to select the correct form to ensure accurate reporting of your income and compliance with tax regulations. If you have any doubts or complex situations, it's advisable to consult a tax professional or chartered accountant for personalized guidance based on your specific circumstances.


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