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August 13, 2020

Earning Salary & Filing ITR1? Know 10 Instances where you cannot file ITR1

by Rubina Dsouza in Income Tax

Earning Salary & Filing ITR1? Know 10 Instances where you cannot file ITR1

Introduction

Income Tax Return is the form in which assessee files information about his Income and tax thereon to Income Tax Department Act, reporting one’s income, profits and losses and other deductions as well as details about tax refund or tax liability. Various forms are ITR 1, ITR 2, ITR 3, ITR 4, ITR 5, ITR 6 and ITR 7. When you file a belated return, you are not allowed to carry forward certain losses.

Who is required to mandatorily file Income Tax Returns (ITR)?

  1. Individuals or HUF who is less than 60 years of age and has gross total income more than Rs 2.5 lakh i.e. above basic exemption limit has to file income tax returns, according to the Income Tax Act.  For senior citizens, the basic exemption limit is Rs 3 lakh, and for those who are more than 80 years old, the basic exemption limit is Rs 5 lakh.
  2. Companies have to compulsorily file income tax returns irrespective of profit or loss.
  3. A firm, individual or aHUFwhose books of account are required to be audited under section 44AB.
  4. A resident assessee having any assets (including financial interest in any entity) located outside India or signing authority in any account located outside India.
  5. Taxpayers claiming relief under section 90, 90A or 91.
  6. Assessee wanting to apply for refund.
  7. Assessee wanting to carry forward or set off their losses.
  8. Those who derive income from property held under a trust for charitable or religious purposes or a political party or a research association, news agency, educational or medical institution, trade union, a not for profit university or educational institution, a hospital, infrastructure debt fund, any authority, body or trust.
  9. If one has entered into any transaction under the Annual Information Return.

What is form ITR-1?

ITR -1 Form is a simplified one-page form for individuals having income up to Rs 50 lakh from the following sources:

  1. Income from Salary/Pension
  2. Income from One House Property (excluding cases where loss is brought forward from previous years)
  3. Income from Other Sources (excluding winning from Lottery and Income from Race Horses)

Mandatory details required to file ITR-1 online are:

  1. PAN
  2. Form 16 issued by employer
  3. Form 26AS from TRACES
  4. Aadhar Number or Aadhar Enrolment ID

What are the contents of ITR 1 Form?

  1. Part A – General Information
  2. Part B – Gross total Income
  3. Part C – Deductions and taxable total income
  4. Part D – Computation of Tax Payable
  5. Part E – Other Information
  6. Schedule IT – Detail of Advance Tax and Self-Assessment Tax payments
  7. Schedule TDS – Detail of TDS/TCS
  8. Schedule DI – Details of Investments

Due Date for Filing ITR 1 Online AY 2020-21

Every year ITR -1 has to be filed on or before 31 July, this year because of covid19 the due dates are extended to 30 November 2020 of the following year. After that, a late fee under section 234F is levied.

10 Instances where you cannot file ITR1 and Has to file returns in ITR2

1.Individuals who are non-resident or not ordinarily resident.

2. Resident individuals whose total income exceeds Rs 50 lakh

3. Individuals who are directors in a company

4. Individuals who have invested in unlisted equity shares 

5. Individuals who have incurred income from the following means:-

i. Capital gains – either short-term, long-term or both

ii. Income from more than one House Property

iii. Winnings from Lottery, Racehorses, Legal Gambling etc.

iv. Agricultural income exceeding Rs. 5,000

v. Profits or Gains from Business or Profession

6. Individual who is a Resident and has assets (including financial interest in any entity) outside India or signing authority in any account located outside India.

7. Individual claiming relief of foreign tax paid or double taxation relief under section 90/90A/91.

8. Individual taxpayers who made cash deposits not exceeding Rs 1 crore with a bank

9. Individual taxpayers who incurred expensed below Rs 2 lakh on foreign travel

10. Individual taxpayers whose expenditure is below Rs 1 lakh on electricity bill

Filing ITR comes with a number of benefits such as claiming deductions, set off and carry forward of losses, avoid interest and penalties on tax liability and so on. It is always considered a prudent action to file one’s income tax return on time.

More than any other benefit, being on the right side of law helps. It is recommended to keep the income tax department informed about one’s income and taxability. This communication is only possible when one files their ITR.

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