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ITR-1 vs. ITR-4S: Which Form Fits Your Income Tax Profile?

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Tax season is just around the corner, and for many of us, that means scrambling to fill out forms and make sense of tax codes. But fear not! Understanding the basics of tax forms can help ease some of that stress.

ITR-1, also known as Sahaj, is an income tax return form for individuals having income from salary, one house property, and other sources. While TR-4S, also known as Sugam, is an income tax return form for individuals and Hindu Undivided Families (HUFs) having income from a presumptive business or profession.

ITR-1 vs. ITR-4S

ITR-1ITR-4S
ITR-1 is applicable to salaried individuals, pensioners, and those with income from one house property or other sources below a specified limit.ITR-4S is applicable to individuals, HUFs (Hindu Undivided Families), and partnership firms with presumptive income from business or profession below a specified limit.
In this, individuals need to report their salary, income from house property, income from other sources, and deductions under various sections of the Income Tax Act.In this, individuals need to report their presumptive income from business or profession based on a percentage of gross receipts or turnover. There is no separate reporting of individual expenses or deductions.
In ITR-1 the tax liability is calculated based on the applicable slab rates for the total income reported by the individual.In ITR-4S, the tax liability is calculated based on the presumptive income rates specified for different types of businesses or professions.
In this, individuals filing ITR-1 are not required to undergo a tax audit if their total income exceeds a specified limit.In this, a tax audit is not required for individuals filing ITR-4S if the total turnover or gross receipts from the business or profession are below a specified threshold.
ITR-1 is a relatively simpler form with fewer reporting requirements and options compared to ITR-4S.ITR-4S is a more detailed form with additional sections and reporting requirements related to the business or profession.

What is ITR-1?

ITR-1, also known as Sahaj, is an income tax return form in India. It is specifically designed for individuals who have income from salary, one house property, and other sources such as interest income, pension, or agricultural income up to ₹5,000.

It is suitable for individuals with relatively straightforward income and allows for a simplified tax filing process. Taxpayers filing ITR-1 need to ensure that they meet the eligibility criteria and accurately report their income and deductions as per the prescribed format.

What is ITR-4S?

The Indian Income Tax Return Form 4S is a simplified form used for filing tax returns by salaried taxpayers. This form can be used by individuals who are residents of India and whose total income does not exceed Rs. 5 lakhs. The ITR-4S must be filed online and the taxpayer must have a valid PAN (Permanent Account Number) in order to file this return.

Income from salaries, one-house property, other sources (including interest income), and losses from specified businesses or professions can be declared using this form. Deductions under Chapters VI-A (like 80C, 80D, etc.) can also be claimed using ITR-4S.

Similarities between ITR-1 and ITR-4S

  1. Reporting personal details: Both forms require taxpayers to provide their personal details such as name, address, PAN (Permanent Account Number), and contact information.
  2. Tax calculation: Both forms involve the calculation of taxable income, deductions, and the determination of tax liability based on the applicable tax rates and slabs.
  3. Filing electronically: Both ITR-1 and ITR-4S can be filed electronically through the Income Tax Department’s online portal or through authorized intermediaries.
  4. Mandatory disclosure of Aadhaar number: Both forms require taxpayers to provide their Aadhaar number, which is a unique identification number issued by the Indian government.
  5. Verification: Taxpayers need to sign and verify their income tax returns in both ITR-1 and ITR-4S to declare the accuracy and completeness of the information provided.
  6. Income tax return filing deadline: The due date for filing both ITR-1 and ITR-4S is typically July 31st of the assessment year, although this deadline may vary and is subject to change by the Income Tax Department.

When to use each form

If you are an employee with a salary of P30,000 per month or less, you must use the ITR-S form. If you are employed but earn more than P30,000 per month, you have the option to use either the ITR or ITR-S form. If you are self-employed or a professional, you must use the ITR form.

The ITR includes a schedule of deductions while the ITR-S does not. The schedule of deductions allows taxpayers to claim additional deductions for things like health insurance premiums, charitable donations, and home mortgage interest. Taxpayers who choose to use the ITR-S can still claim some deductions, but they will not be able to take advantage of all of them.

FAQs about the two forms

  • What is the difference between ITR- and ITR-S tax forms?

The main difference between ITR- and ITR-S tax forms is that ITR- is used for tax returns for individuals, while ITR-S is used for tax returns for companies. Both forms are available on the website of the Inland Revenue Department (IRD).

  • Do I need to fill out both forms?

No, you only need to fill out one form. If you are an individual taxpayer, you should use the ITR- form. If you are a company, you should use the ITR-S form.

  • What information do I need to provide in order to complete either form?

Both forms will require your personal information, such as your name, address, contact details, and National Tax Number (NTN). You will also need to provide information about your income and any deductions or expenses that you want to claim.

For the ITR- form, you will need to provide detailed information about your income from all sources, including employment, business activities, investments, and property rentals. For the ITR-S form, you will need to provide information about your company’s income and expenses.

Key differences between ITR-1 and ITR-4S

  1. Eligibility: ITR-1 is applicable for individuals with income from salary, one house property, and other sources such as interest income, pension, or agricultural income up to ₹5,000. On the other hand, ITR-4S is applicable for individuals and HUFs (Hindu Undivided Families) who have income from presumptive businesses and professions.
  2. Income sources: ITR-1 covers a limited number of income sources, while ITR-4S is designed for taxpayers with income from presumptive sources such as small businesses, freelancing, or commission-based income.
  3. Tax calculation: ITR-1 uses a simple tax calculation method based on the income slabs and rates applicable to individual taxpayers. ITR-4S, on the other hand, calculates tax liability based on the presumptive income method, where a certain percentage of total receipts is considered as taxable income.
Differences between ITR-1 and ITR-4S

Conclusion

ITR-1 is suitable for individuals with income from salary, house property, and other sources within specified limits, ITR-4S caters to taxpayers with income from presumptive business and profession. The key differences lie in the eligibility criteria, income sources covered, tax calculation methods, required financial statements, audit requirements, and form complexity. It is important for taxpayers to understand these distinctions and select the appropriate form.

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