Before finding which Income Tax Return (ITR) form a salaried individual should file with the government, you must know whether you are liable to file your tax return or not. As per the present tax laws, every individual whose total income before allowing deductions under Chapter VI-A, exceeds the maximum amount which is not chargeable to tax is obligated to furnish return of income on or before the due date of tax return filing.
The maximum amount not chargeable to tax for the financial year 2021-22 and 2022-23 in case of an individual who is below the age of 60 years is Rs 2, 50,000.
The most basic Income tax return (ITR) form issued by the Government for salaried individuals to file their tax return is ITR-1. It’s also known as “sahaj”. However, tax department has restricted ITR-1 form for a certain section of salaried individuals.
As per the Government’s instructions, following salaried individual should file their annual return of income in ITR-1:
- When total income is up to Rs 50 Lakh; or
- Total income includes income from one house property (excluding cases where there is brought forward loss or loss to be carried forward from previous year); or
- Total income includes income from Other Sources (excluding winning from lottery and Race Horses, Income taxable under section 115BBDA or of the nature referred to in section 115BBE).
Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, ITR-1 can be used only if the income being clubbed falls into the above income categories.
When salaried individual should not file tax return in form ITR-1
As per the tax department, in certain cases a section of salaried individual can’t file ITR-1. Here are a few cases where tax return of salaried individual has to be filed in ITR-2/ITR-3 (provided conditions to these forms are met) instead of using ITR-1.
The return in ITR-1 should not be used by an individual whose total income for financial year 2021-22 exceeds Rs 50 lakh or includes:-
- Income from
- Business or Profession; or
- winnings from lottery or income from Race horses; or
- more than one house property and where there is brought forward loss or loss to be carried forward from previous year; or
- Agricultural activitied in excess of ₹5,000; or
- “Capital Gains” e.g., short-term capital gains or long term capital gains from the sale of house, plot, shares etc.; or
- Income taxable under section 115BBDA; or
- Income of the nature referred to in section 115BBE; or
- Income to be apportioned in accordance with the provisions of Section 5A.
- Loss under the head ‘Income from other sources’; or
- Person claiming relief under section 90 and/or 91; or
- Any resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India; or
- Any resident having income from any source outside India; or
- In case the income is to be apportioned in accordance with the provisions of section 5A.
In most cases if you are not eligible to file ITR-1, then you have to file your tax return in ITR-2. However, ITR-2 cannot be filed by a salaried individual if he or she has income under the head “profits or gains of business or profession”. Before choosing the form you need to make sure that conditions as specified by the tax department to these forms are met.
If you choose the wrong form for filing your annual tax return, then it may be considered as defective. In such case, you need to file a tax return again in response to the defective notice. If you did not respond within the time allowed, then the return filed may be considered as invalid.
Late fee for not filing tax return before due date
For default in furnishing tax return, assessee will be liable to pay late fee under section 234F of IT act 1961. As per section 234F late fee structure is as follows;
- Late filing fee shall be Rs 5,000 if tax return is filed after the specified date of filing but on or before 31st December of the following financial year to the previous year for which return is filed.
Based on section 234F, if you missed the deadline of filing tax return for the financial year 2021-22 but filed it on or before 31/12/2022, then while filing you are liable to pay a late fee of Rs 5,000. If 31st December 2022 is missed and you can not file your income tax return. CBDT may extend these due dates based on the difficulties faced by tax payers. If these dates are extened, then the extended date will be considered as the actual due date instead of 31st July and 31st December. We will update our article in case these due dates are extended by CBDT.
However please note, if the total income of the assessee is less than Rs 5, 00,000, then late filing fee under section 234F shall not exceed Rs 1,000.
