How to Choose between ITR 1 and ITR 2

Here’s how salaried people can choose between ITR-1 and ITR-2 forms:

ITR-1 (Sahaj) is Easy to Use

ITR-1 (Sahaj)—Sahaj means simple or easy — is a basic form that salaried taxpayers or pensioners with simple finances can use.

The form already has your personal details, income information and financial transaction data filled in to make filing returns quick and easy. You just need to check this information with your Form-16 and bank statements, and also verify Form 26AS and Annual Information Statement (AIS) before completing the process online.

Only Indian residents with an income of not more than Rs 50 lakh can use this form. This includes salary/pension, one house property (except when you have losses to carry forward), farm income (up to Rs 5,000), and income from savings or fixed deposits, dividends, and family pension.

Taxpayers who made LTCG of up to Rs 1.25 lakh under Section 112A from listed company shares or equity mutual funds can also use this form this year.

Who cannot Use ITR 1

You cannot use ITR-1 if:

•  Your total income is more than Rs 50 lakh
• Your capital gains under section 112A are more than Rs 1.25 lakh
•  You are a director in a company
•  You own unlisted company shares
•  You earned any foreign income during the financial year
•  You have any foreign bank accounts or assets (including financial interest in any foreign company)
•  You have deferred tax payment or deduction on ESOP (Employee Stock Options)
•  You have losses from previous years to carry forward, or current year losses to be carried forward under any income category

In such cases, you have to use ITR-2. This form is for individuals who do not have any income from a business or profession. Simply put, this form is for salaried individuals or pensioners who cannot file returns using ITR-1.