ITR Filing by Salaried Person; Know difference between ITR-1 and ITR-2

The Deadline for submitting an Income Tax Return (ITR) for the financial year 2022-23 (AY 2023-24) is July 31, 2023. This deadline is applicable on individuals whose accounts are not required to be audited. Through this article we will explain how a salaried individual may file his income tax return and which form he must use so that his return is a valid return.

Salaried Person should fill their Returns this way

A salaried employee can use the ITR-1 or ITR-2 form to file their income tax return. It is important to note that there is a difference between these two forms. Which type will be applicable to an individual is determined by the salaried individual’s sources of income. It is important to ensure that the tax return is filed using the correct form.

What if the Taxpayer is using an incorrect form?

If the person is using an incorrect form, it means he is filing an invalid ITR. This amounts to filing “No ITR”.

Filing an ITR using the incorrect tax return form will result in an incorrect ITR submission. In this case, the tax department will issue you a tax notice asking you to file ITR using the correct form. The form you must use to file ITR will be determined by the sources of your income throughout the financial year.

Who can file tax returns using the ITR-1 form?

If you fulfill the below-mentioned conditions, then you will be able to file your tax return using the ITR-1 form. However, if a salaried individual has income from any other source like capital gains, foreign income, etc., or is a non-resident individual, he cannot file a tax return using ITR-1. You must pay attention to the points listed below:

• If your total income in FY 2022-23 does not exceed Rs.50 lakh.
• Salary, a house, and other sources of money are the sole sources of income.
• You are normally a resident of India. [Non-Ordinary resident cannot use ITR-1]

Who is the ITR-2 form for?

A salaried individual can file his tax return using the ITR-2 form if he matches the below-mentioned factors:

• Is a director of a company.
• Investing in unlisted equity shares.
• Income from salary, more than one house property, capital gains, foreign income, or other sources of income holding assets outside India.
• Total income exceeds Rs.50 lakh.
• Hindu Undivided Family (HUF).
• Is a non-resident individual or a resident individual (ordinarily or not ordinarily).
• If TDS u/s 194N was applicable to you for certain cash withdrawals made during FY 2022-23.
• If agricultural income exceeds Rs.5,000 in a financial year.
• If you have capital gains from selling virtual digital assets such as cryptocurrencies, non-fungible tokens, etc.
• Have signing authority in any account outside India.