Tax filing tips: ITR-1 and ITR-4 simplify taxes for many, but don’t follow blindly. Check key exceptions

Tax season can feel like a maze, especially with the alphabet soup of ITR forms on offer. But filing your Income Tax Return (ITR) right and on time isn’t just a civic duty; it’s a shield against future legal trouble. As the 2024-25 financial year nears its end for individuals and non-audit cases, understanding which form applies to you is crucial. Two of the most commonly used ones — ITR-1 (Sahaj) and ITR-4 (Sugam) — are designed for ease but come with distinct eligibility rules.

Understanding ITR-1 (Sahaj)

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This form is tailored for resident individuals earning up to ₹50 lakh annually from straightforward income sources:

• Salary or pension
• One-house property (with no carry-forward losses)  
• Other income (like interest, excluding windfalls such as lottery wins or horse racing income)  

You can also club the income of your spouse or minor child—provided their income falls under these same categories.

Who should avoid ITR-1

You cannot file ITR-1 if you fall into any of the following categories:

• Non-resident or not ordinarily resident  
• Director in a company  
• Income exceeds ₹50 lakh  
• Own more than one house property or held unlisted equity shares  
• Claimed deductions under specific sections like 80QQB, 80RRB, or 10AA  
• Earn income from business, capital gains, or foreign sources  
• Own foreign assets or have signing authority in foreign accounts  
• Receive dividend income above ₹10 lakh or agricultural income over ₹5,000  

When to use ITR-4 (Sugam)  

ITR-4 is ideal for individuals, HUFs, and firms (excluding LLPs) who opt for the presumptive taxation scheme:

• Business income under sections 44AD or 44AE  
• Professional income under section 44ADA  
• Income from salary, one house property, and other sources (with similar exclusions as ITR-1)  

Clubbed income is allowed, provided it fits within these categories.

Who cannot file ITR-4

Like ITR-1, you’re ineligible if:

• You’re a non-resident or company director  
• Your income exceeds ₹50 lakh  
• You own multiple properties or hold unlisted equity shares  
• You claim certain deductions or have foreign income/assets  
• You have capital gains or income requiring special tax rates  

If your accounts are audited under sections 44AA or 44AB, ITR-4 is optional — you can opt for ITR-3 or ITR-5 instead.