ITR-1 (Income Tax Return-1)

Eligibility: Who can File ITR - 1

• Their total income for the financial year is up to ₹50 lakh or less.
• The sources of income are:
• Salary or pension.
• Income from one house property (excluding cases where there is a brought-forward loss).
• Income from other sources like interest on savings accounts, fixed deposits, or dividends.
• Agricultural income up to ₹5,000.
• The individual must be a resident of India, as non-residents and Resident but Not Ordinarily Residents (RNOR) cannot use this form.

This form is ideal for those with straightforward income sources and tax requirements.

Ineligibility:

Certain individuals are not eligible to use ITR-1. This includes:

• Individuals whose total income exceeds ₹50 lakh in the financial year.
• Those with income from more than one house property.
  Individuals with income from capital gains (whether short-term or long-term).
• Those who have income from a business or profession, which requires filing ITR-3 or ITR-4.
• Individuals who own foreign assets or have income from foreign sources.
• Those claiming tax relief under sections 90, 90A, or 91, which deal with Double Taxation Avoidance Agreements (DTAA).
  Non-Residents (NRIs) and Resident but Not Ordinarily Residents (RNOR).

Structure:

The ITR-1 form consists of various sections that taxpayers must fill out, each requiring specific details:

Personal Information – This section captures the taxpayer’s personal details, such as full name, date of birth, PAN (Permanent Account Number), Aadhaar number, address, and contact information. It ensures accurate identification of the taxpayer.
Income Details – In this section, taxpayers report their income from salary, pension, one house property, and other sources like interest from savings accounts. It also includes any exemptions under sections like 10(14) (allowances) and section 10(10D) (life insurance maturity proceeds).
Deductions – Taxpayers can claim deductions under various sections of the Income Tax Act, such as:
Section 80C: for investments in PPF, EPF, LIC premiums, etc.
Section 80D: for medical insurance premiums.
Section 80TTA: for savings account interest income deduction up to ₹10,000.
Section 80G: for donations to eligible charitable institutions.
Tax Calculation – After calculating the gross income and deducting the applicable exemptions and deductions, the taxpayer arrives at their taxable income. This section helps calculate the total tax liability based on the applicable tax slabs.
Tax Payments and Verification – In this section, taxpayers must report any taxes they have already paid through Tax Deducted at Source (TDS), advance tax, or self-assessment tax. It ensures that the tax department is aware of the payments already made, preventing double taxation.

Filing Process:

The filing process for ITR-1 is straightforward and can be completed in the following ways:

Online Method: Most individuals file their ITR-1 electronically through the Income Tax Department’s official e-filing portal. This method allows taxpayers to submit their details directly online, verify their submission using Aadhaar OTP, net banking, or through a verification form called ITR-V (for offline verification).

Offline Method: Senior citizens (aged 80 years and above) can file their ITR-1 through the offline method by submitting a paper return. This option is provided to those who may not be comfortable using digital platforms.
Benefits of Filing ITR-1: There are several advantages to using ITR-1:

Simplified Filing: ITR-1 is designed to be user-friendly and simple to fill out, making it accessible for individuals who do not have complicated financial situations.
Faster Refunds: Taxpayers who have had excess tax deducted can easily claim refunds by filing ITR-1. Once verified, refunds are typically processed faster for electronically filed returns.
Proof of Income: A filed income tax return serves as a documented proof of income, which can be useful when applying for loans, mortgages, or visas.
Legal Compliance: Filing income tax returns, even when not mandatory, can keep you in compliance with tax regulations and prevent penalties or fines for non-filing.

Example:

Let’s say a salaried individual with a total income of ₹40 lakh and interest income of ₹50,000 from a savings account is eligible to file ITR-1. The individual also has a housing loan on their self-occupied house and claims deductions for the interest on the home loan under Section 24(b). After claiming all eligible deductions, such as under Section 80C (for investments like PPF or life insurance premiums), the taxpayer can compute their total tax payable and file the ITR-1 form electronically.

Common Deductions Under ITR-1:

Here are some common deductions that can be claimed while filing ITR-1:

Section 80C: Up to ₹1.5 lakh deduction for investments in PPF, EPF, life insurance premiums, NSC, etc.
Section 80D: Deductions for medical insurance premiums for self, spouse, children, and parents.
Section 80TTA: Up to ₹10,000 deduction for interest income from savings accounts.
Section 80G: Deductions for donations made to eligible charitable institutions.

Challenges:

While ITR-1 is simple and convenient, it does have some limitations:

Limited Scope: The form cannot be used by individuals with income from multiple house properties, capital gains, or businesses. They must opt for more detailed forms like ITR-2 or ITR-3.
Exclusion of NRIs: Non-Residents and Resident but Not Ordinarily Residents must use ITR-2 or ITR-3, which have more complex filing requirements.
Complicated Tax Situations: If an individual’s financial situation includes income from foreign assets, multiple house properties, or business profits, ITR-1 is not sufficient.

Tips for Filing ITR-1:

Keep Records Handy: Gather all relevant documents such as Form 16 (for salaried individuals), interest certificates, investment proofs, and TDS certificates before starting the filing process.
Accurate Deductions: Ensure all eligible deductions are claimed, but avoid claiming deductions that don’t apply to you, as it may lead to an audit or notice.
Verify Tax Credits: Before submitting the ITR-1, cross-check tax payments and TDS details in the Form 26AS to ensure accuracy.
File Early: Filing early can help avoid the last-minute rush and allow more time for any necessary corrections or adjustments.