Who is eligible to file an ITR 1 and who is not?


The form ITR 1, often known as Sahaj, is to be utilized by the vast majority of taxpayers. However, determining who can and cannot use ITR 1 is not straightforward (Sahaj), so I decided to write this essay to assist individuals in determining who can and cannot use ITR 1.


Who can submit ITR 1

First, let's go over who can use this ITR form, and then we'll go over who can't use it even if he is otherwise eligible. For tax purposes, ITR 1 can only be utilized by an individual taxpayer who is a resident of India. As a result, under tax legislation, all non-resident and non-ordinary resident individuals are ineligible to utilize this form. Similarly, anyone with taxable income of fewer than fifty lakhs can file ITR 1 if he does not have any income from "Capital gains" or "Profits and gains of company or profession." You can utilize ITR 1 if you have income from any of these three sources: "Salaries," "Income From House Property," or "Income From Other Sources."Even if your income comes from these three sources, you cannot use ITR 1 in the following situations:

To begin with, those of you with salary income cannot use ITR 1 if your tax deduction on the perquisite value of an Employee Stock Option Plan (ESOP) has been deferred due to your employer's status as a start-up as defined by the IRS. Second, those with income from a single home property can only use ITR 1 if they have income under the heading "Income from House Property." If you are staying in a rented house or an employer-provided residence, the single property does not have to be self-occupied and can even be rented out. Finally, if your source of income under this heading includes income from maintaining racing horses or prize money or income that is taxed at a flat rate like unexplained investments or unexplained expenditure that is taxed at 60%, you cannot use ITR 1.

Even if your income does not include any of the above-mentioned income, you cannot use ITR 1 if you are claiming any expenses against it. So, if you earn money by moonlighting, you can only utilize it if you don't plan to claim any expenses against it. A special exception is granted for people who get family pensions, for whom a standard deduction is permitted up to 1/3 of the pension received, up to a maximum of Rs. 15,000/-, and for whom ITR 1 can be used.

If the nature of the income to be clubbed falls under any of the three heads of income stated above and does not fall under any of the exclusions discussed above, you can use this form only if the nature of the income to be clubbed falls under any of the three heads of income enumerated above.


Who cannot use ITR 1

Because ITR 1 can only be used by individuals, it is evident that HUFs cannot utilize it, even if it otherwise meets all other criteria. Individuals who hold a directorship in a company or have stakes in unlisted company shares, regardless of the structure of their income, are not eligible to employ ITR 1. Similarly, anyone with an asset outside of India or signing authority over an account outside of India is ineligible to utilize this form.

For this purpose, the asset's value or the balance in the bank account is irrelevant. As a result, anyone who invested in foreign enterprises or foreign mutual funds under the Liberalised Remittance Scheme (LRS) is ineligible to use ITR 1. Please note that this restriction does not apply to all investors in Indian mutual fund schemes who also invest in overseas companies and mutual fund schemes. If you have any income from outside India, you cannot use ITR 1. You are ineligible to utilize this form if your agricultural income exceeds Rs. 5,000/-.

You cannot use ITR 1 if you have brought forward losses or losses during the current year under the House property head of other sources head and desire to carry them forward. Individuals who have had tax deducted by banks or post offices for cash withdrawals in excess of a specific limit are likewise ineligible to use ITR 1.

I've seen examples where retired people who have been recruited as consultants have filed an ITR 1, which I believe is incorrect because the consultancy fees received cannot be taxed under the heading "Income From Other Sources." ".. This is because consulting is not a transaction, but rather an activity that is carried out in a systematic manner and is in the nature of professional income, and thus must be offered for tax under the heading "Profits and Gains of Business or Profession." "If you are eligible for presumptive taxation, you can use either ITR 3 or ITR 4 for this purpose.




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