Here are the differences between the two and the eligibility criteria for each:
ITR 1 (Sahaj):
“Individuals being a resident, having income from salary, one house property, and income from other sources (excluding lottery winnings and income from race horses) will file ITR 1”,
It is not for individuals with income from business/profession or capital gains.
It is not for HUF.
You do not need to fill the ITR-1 form if:
You are anything but an Individual for taxation purposes.
You earn an income from more than one Property.
You earn an income from Other Sources through horse races, lotteries, gambling, etc.
You earn an income through short or long-term Capital Gains that are non-tax-exempted.
You earn an Exempt Income over Rs.5,000.
You earn an income through Business or Profession.
You have reported losses under Income from Other Sources.
How to File: You can file ITR 1 online by visiting the Income Tax Department’s e-filing website or through authorized intermediaries.
ITR 2:
Eligibility: Individuals and Hindu Undivided Families (HUFs) having income from any source other than business or profession.
According to CA Twinkle Jain, ITR-2 is for Individiuals /HUF who have:
-Income from sources mentioned in ITR-1 of more than Rs 50 lakh
-Income from Capital gains
-No income from any business /profession income
-Income from More than one house property
-Foreign Income/Foreign Asset
You need to fill the ITR-2 form if:
You are an Individual or a HUF.
You have an income from Salary / Pension.
You earn income from more than one Property.
You have any brought forward losses.
You earn an income from Other Sources (including income from lotteries, racehorses, gambling, etc.)
You’ve earned an income through Capital Gains.
If the individual makes more than Rs.5,000 in a tax-free source of income, such as agriculture
If the person has assets or property in another nation
If the person is not receiving revenue from other nations
If a person makes money through taxable capital gains
You do not need to fill the ITR-2 form if:
You have earned an income through business or profession.
If the person is a HUF or an entrepreneur with income from a job or a business
If the person qualifies under ITR-1 Form
Major changes in ITR-2 in FY 2022-23 (AY 2023-24)
A separate schedule has been added for reporting income from crypto and other Virtual Digital Assets (VDA).
How do I file my ITR?
Step 1: Visit https://www.incometax.gov.in/iec/foportal/.
Step 2: Create or log in to your account.
Step 3: Select “File” and choose “File Income Tax Return.”
Step 4: Select the relevant assessment year and go to the “Personal” section.
Step 5: Choose the correct ITR form based on your income sources.
Step 6: Verify and submit your ITR, ensuring accurate bank account details.
Step 7: E-verify your return using your bank account or other options.
Step 8: Keep the generated acknowledgement number for reference.
Step 9: Check the status online using the acknowledgement number.
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