Which ITR Form to file for Salaried Person​?

“The applicable ITR forms to file for salaried persons are ITR-1 and ITR-2. ITR-1 to be filed if income is up to ₹50 lakh with limited sources like salary and one house property. ITR-2 to be filed if income exceeds ₹50 lakh, or includes multiple house properties, capital gains, or foreign income/assets.”

Which ITR Form to file for Salaried Person? is the question often confused by the taxpayers. Salaried persons in India typically file their Income Tax Return (ITR) using ITR-1 (Sahaj) or ITR-2, depending on income sources. ITR-1 is suitable for those with a total income up to ₹50 lakh, derived from salary, one house property, and other sources like interest or family pension. On the other hand, ITR-2 is required for individuals with income exceeding ₹50 lakh, multiple house properties, capital gains, foreign assets, or directorship in a company. Choosing the correct form ensures accurate reporting and avoids filing errors. In this article, we’ll provide a more detailed answer to this question.

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Who is Considered a Salaried Person for ITR Filing?

For the purpose of ITR filing, a salaried person is defined as an individual who receives a fixed amount of income from an employer under a contract of employment. This income includes salary, allowances, perquisites, and other benefits as per Section 17(1) of the Income Tax Act, 1961. Salaried employees must file ITR every year, as meeting the criteria, and report the details of their income, deductions, taxes paid, and any refund claimed. 

ITR Forms Applicable for Salaried Persons

Here is a detailed exploration of ITR-1 and ITR-2, which helps the salaried person to understand where they fit:

ITR-1 Form:

ITR-1 Form is applicable for resident individuals having a total income up to ₹50 lakh from specific sources. This form, also known as Sahaj, is the simplest form of return for salaried taxpayers.

Eligible Income Sources:

• Income from salary or pension
• Income from one house property (excluding cases of losses)
• Income from other sources like interest from savings accounts, deposits, or family pension
• Agricultural income, if it does not exceed ₹5,000
• The individual must not have income from foreign sources or own assets outside India

Ineligible to File ITR-1 If:

• Total income exceeds ₹50 lakh
• Residential status is Non-Resident or Resident but Not Ordinarily Resident (RNOR)
• Income is from more than one house property
• Earns income from business or profession
• Has capital gains (short-term or long-term)
• Income from other sources includes lottery, gambling, horse racing, or similar activities
• Has incurred losses under the head "Income from Other Sources"
• Owns foreign assets or earns income from abroad
• Is a director in a company or has invested in unlisted equity shares
• Has deferred tax on ESOPs from eligible startups

Here is the sample ITR-1 form for salaried persons. 

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ITR-2 Form:

ITR-2 form is applicable for individuals and HUFs not having income from business or profession, particularly when the income exceeds ₹50 lakh, or when there are multiple house properties, capital gains, foreign income/assets.

Eligible Income Sources:

• Income from salary or pension
• Income from more than one house property
• Capital gains (short-term and long-term)
• Income from other sources, including lotteries, betting, and horse racing
• Agricultural income exceeding ₹5,000
• Foreign assets or income from outside India
• Income exceeding ₹50 lakh
• Unlisted equity investments
• Director in a company
• Relief claimed under DTAA (Sections 90/91)
• Deferred tax on ESOPs from eligible start-ups
• Carry-forward or set-off of losses from previous years

Ineligible to File ITR-2:

• Individuals or HUFs with income from business or profession
• Companies, firms, and trusts

Here is the sample ITR-2 Form for salaried persons. 

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How to file ITR returns for Salaried Employee​?

Now, you know which ITR form applies to you as a salaried person. The next step is to understand how to file ITR returns for salaried employee to complete the legal compliance set by the government.

Here is a brief step-by-step guide on how to fill ITR online for salaried employee.

• Step 1: Log in to the Income Tax e-Filing Portal
• Visit the official income tax e-Filing Portal.
• Log in using your PAN, Aadhaar, or other user ID.
• Step 2: Select the "File Income Tax Return" Option
• Navigate to "e-File" -> "Income Tax Returns" -> "File Income Tax Return".
• Step 3: Choose the Assessment Year
• Select the current assessment year (e.g., AY 2024-25).
• Choose the mode of filing as "Online".
• Step 4: Select the Applicable ITR Form
• For most salaried individuals, ITR-1 is suitable if income is up to ₹50 lakh from salary, one house property, and other sources.
• If ineligible for ITR-1, use ITR-2.
• Step 5: Fill in Personal and Income Details
• Enter personal information and income from salary, house property, and other sources.
• Claim deductions under relevant sections (e.g., 80C, 80D).
• Step 6: Verify and e-File
• Review all details carefully.
• e-Verify your return using Aadhaar OTP, Net Banking, or EVC.
• Step 7: Submit and e-Verify
• Once submitted, ensure to e-verify your return to complete the filing process.

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Comparison between ITR-1 and ITR-2 Forms for Salaried Employees

Below, we have compared the ITR-1 and ITR-2 forms for salaried employees based on the most important factors,

Learn more: ITR-1 vs ITR-2: Know the Differences, Meaning, and Applicability

Common Mistakes to Avoid while ITR Filing for Salaried Persons

Filing Income Tax Returns (ITR) correctly is essential for salaried individuals to stay compliant and avoid unnecessary problems. Here are some commonly occurring mistakes while filing ITR, which help you to prevent errors :

• Incorrect Personal Information: Ensure that your name, PAN, Aadhaar number, address, email ID, and mobile number are accurate and consistent with the records in your PAN card. Even minor mismatches can delay processing or lead to rejection.
• Choosing the Wrong ITR Form: Selecting the incorrect ITR form is one of the most frequent errors. Make sure to identify the correct form based on the prescribed criteria.
• Failure to Report All Income Sources: Many taxpayers forget to include interest income, capital gains, or salary from previous employers. Ensure your ITR matches your Form 16, Form 26AS, and Annual Information Statement (AIS) to ensure complete income disclosure.
• Not Claiming Eligible Deductions: Salaried individuals often miss out on deductions available under Sections 80C, 80D, 80TTA, etc, applicable under the old tax regime.
• Late Filing or Non-Filing: Filing after the due date may attract penalties and interest. It can also restrict your ability to carry forward certain losses. 

Conclusion

In conclusion, selecting the appropriate ITR form—ITR-1 or ITR-2—is essential for salaried individuals to ensure accurate tax filing based on their specific income sources and financial profile. ITR-1 is ideal for those with income up to ₹50 lakh from salary, one house property, and other simple sources, while ITR-2 is necessary for individuals with more complex income such as capital gains, multiple properties, or foreign assets. Filing the correct form on time and avoiding common mistakes not only ensures compliance but also facilitates smoother processing and quicker refunds.

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