When can you not use the ITR1 form to file your tax return for the 2020-2021 fiscal year?

Almost half of all income tax returns (ITRs) filed for the 2021-22 fiscal year were filed using the ITR-1 form. This is the ITR form used by most salaried taxpayers and is also known as Sahaj. RTI-1 can be deposited if:
  • The taxpayer is a resident
  • Total income does not exceed Rs 50 lakh
  • Sources of income include salary, home ownership, farm income up to Rs 5,000 and other sources such as savings account interest, deposits, home tax refund. income, family pension, etc.
  • Income clubbing with spouse or minor

Keep in mind that the ITR-1 can be used to generate the ITR even if you own only one property jointly with your spouse.

However, there are situations where an individual cannot use the ITR-1 to file tax returns for the 2020-2021 fiscal year despite the aforementioned sources of income.

When can you not use the ITR-1?

Under tax laws, an individual cannot file an ITR-1 if one of the following criteria is met:

  • Invested in unlisted stocks
  • Administrator if a company
  • Hindu Undivided Family (HUF)
  • Hold foreign assets such as shares of a foreign company, etc.
  • Deferred income tax on the ESOP (Employees’ Stock Ownership Plan) received from the employer being an eligible start-up
  • Owns and has more than one property in the house (owned alone or jointly)
  • Agricultural income during a financial year exceeds Rs 5,000
  • Is an Ordinary Non-Resident Resident (RNOR) and a Non-Resident Indian (NRI)
  • Have taxable capital gains (short term and long term)
  • Total income from all sources exceeds Rs 50 lakh
  • Income from lottery, racehorses, legal games of chance, etc.
  • Losses carried forward or to be carried over to subsequent years under the heading ‘Income from real estate assets’.
  • Income from a business or profession
  • The tax was deducted under section 194N of the Income Tax Act. The TDS is deducted under Section 194N on cash withdrawals exceeding a certain limit provided certain conditions are specified.

What to do if you cannot produce ITR-1

People who do not meet the ITR-1 eligibility requirements should not be concerned. These people can use different RTI forms to file their tax returns. For example, individuals with capital gains (short term and / or long term), holding unlisted shares or running a business can use ITR-2 to file their income tax return.

Likewise, individuals / HUFs with business income or professional income can use ITR-3 to file their tax return.

Also read: Which tax return form is applicable to you for fiscal year 2020-21?

Also read: How to file an RTI-2 with salary, capital gains and other income

Also Read: How To File ITR-1 With Salary, Home Loan, And Other Income


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