Income Tax Return: Which ITR Form Should You Use While Filing?

ITR Forms’ modifications could lead to better and more precise tax filings, enhancing compliance procedures for both individuals and organizations.
Income Tax Return, Tax
Income Tax Return, Tax

ITR Forms: The Central Board of Direct Taxes (CBDT) has rolled out revised versions of the Income Tax Return (ITR) forms - ITR-1 and ITR-4 early this year, with some changes. These forms serve as vital documents for individuals to report their income and fulfil their tax obligations. 

The CBDT hasn't updated Rule 12 of the Income-tax Rules, 1962, which explains how different types of taxpayers should use ITR forms and submit returns.

ITR -1, also known as ‘Sahaj,’ is a simplified one-page income tax return filing form that can be filed by residents of India who earn an income up to Rs 50 lakh from sources like income from salary/pension, income from house property, other sources like interest and agricultural income upto Rs 5,000. As the name Sahaj signifies, this form is easy to fill and is appropriate for salaried individuals. 

ITR-4, also known as ‘Sugam,’ is an income tax return form for taxpayers who opt for the presumptive income scheme under Section 44AD, 44AE, and Section 44ADA. “However, if the total turnover for the year exceeds Rs 2 cr (Rs 3 crore in some situations), the taxpayer cannot file ITR-4. ITR-4 applies to individuals /partnership firms (excluding LLPs) /HUFs whose total income does not exceed Rs 50 lakh,” Abhishek Soni, CEO, Tax2Win, an Income Tax portal said.

Freelancers having a total income of up to Rs 50 lakh can also opt for the presumptive income scheme and file ITR-4. 

Amendments In ITR-1 And ITR-4 Forms

Following are the amendments in the Finance Act 2023: 

New Regime Becomes Default Regime

The new regime has been made the default regime. In other words, if a taxpayer wants to keep following the old regime, they need to opt out of it specifically under section 115BAC. 

“While individuals filing ITR-1 can simply select their preferred tax regime as the old regime to switch their preferred tax structure, individuals filing ITR-4 have to fill out Form 10-IEA on or before the filing deadline specified under section 139(1) for submitting the tax return,” Soni said. 

Deduction Under Section 80CCH

A new column has been introduced to facilitate claiming deductions under Section 80CCH. As per the Finance Act 2023, individuals participating in the Agnipath Scheme and contributing to the Agniveer Corpus Fund from 01-11-2022 onwards will qualify for a tax deduction equivalent to the total deposited amount in the fund.

“The Finance Act 2023 added a new section of 80CCH, which states that individuals enrolled in the Agnipath scheme and subscribing to the Agniveer corpus fund can claim a tax deduction for the total amount of deposit in the Agniveer corpus fund,” Soni said. 

Forms ITR-1 and ITR-4 have been amended, and a new column has been added to furnish the amount eligible for deduction. A new column named ITR-4 called ‘Receipts in cash’ has been added under income from business and profession under section 44ADA, 44AD to ITR-4 to claim enhanced turnover. 

Type Of Bank Account Detail

As per the new amendment, the assessees are also required to furnish the type of bank account under details of bank accounts held in India in both ITR 1 and ITR 4.

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