ITR Filing For Salaried Person - All You Need To Know!

Income Tax Return (ITR) filing is a system for taxpayers to provide reports to the Income Tax Department about their earnings and tax payments. As a salaried individual, you need to file your income tax returns for every financial year to comply with the law and avoid any penalty or interest liability. In this article, I’ll guide you through all the requirements of ITR filing for salaried persons. 

What is an ITR?

In the simplest of terms, you can think of an ITR as a report card for your income. It contains the details of your earnings throughout the financial year and the taxes deducted from your salary. This helps the government determine any additional tax you might owe or if you're eligible for a refund.

I am a salaried individual, how do I know if I need to file ITR?

Sure, not every salaried individual would be required to file an ITR, but even if you don’t fall within any tax slabs, it is still beneficial to file an ITR. It can be of help if you wish to avail a loan since the lender will want to see your income tax returns. Similar is the case in visa applications for foreign travel; the issuing authority will most likely ask for your income tax returns. 

If you are a salaried resident individual with an annual income of under ₹50 lakhs, then you need to file the ITR 1 (Sahaj) form. To be more specific, you can file the ITR 1 form if you satisfy the following conditions:

• Your total income does not exceed ₹50 lakh during the Financial Year
• Your income is earned from salary, single house property, family pension, agricultural income of up to ₹5000/-, and from other sources, which include:
  - Interest from Savings Accounts
  - Interest from Deposits (Bank or Post Office or Cooperative Society)
  - Interest from Income Tax Refund
  - Interest received on Enhanced Compensation
  - Any other Interest Income
  - Family Pension
• If the income of Spouse or Minor is clubbed. This would only be applicable if the source of income is within the specified limits as mentioned above. Please note that the income from the Spouse does not include those covered under the Portuguese Civil Code.

What kind of income cannot be a part of the ITR 1 form?

All your profits and gains from business and professions, capital gains, income from more than one house property, income under the head - ‘other sources’ - which includes winnings from a lottery, the activity of owning and maintaining race horses, and income taxable at special rates under section 115BBDA or section 115BBE - all these kinds of income cannot be a part of ITR 1 form.

Documents required for ITR 1 filing

You will need the following documents to file the ITR-1 form:

• Form 16: This form is issued by your employer for the given financial year
• Form 26AS: Make sure to verify that the TDS mentioned in Form 16 matches the TDS in Part A of your Form 26AS
• Receipts: If you haven’t submitted the proof of certain exemptions or deductions (like HRA or Section 80C or 80D deductions) to your employer on time, keep all such receipts handy to claim them on your ITR directly.

• PAN card

• Bank investment certificates: Bank passbook or FD certificate (if any)

When is a salaried person required to file ITR 2 instead of ITR 1?

A salaried individual needs to file their tax return using the ITR 2 form if he or she:

• Total income exceeds Rs 50 lakh
• Is a Director of a company
• Holds an investment in unlisted equity shares
• Has income from salaries, more than one house property, capital gains, foreign income and other sources of income
• Holds assets outside India
• Is a non-resident individual (NRI) or a resident individual (both ordinarily resident or not ordinarily resident)
• If there are losses that need to be carried forward or brought forward under the head 'Income from house property'.
• If TDS under Section 194N applied to the individual for certain cash withdrawals made during the FY 2022-23
• If agriculture income exceeds ₹5,000 in a financial year
• Has capital gains from selling virtual digital assets such as cryptocurrency, NFTs, etc.
• Has signing authority in any account outside India

If any salaried individual satisfies any of the above conditions, then they cannot use the ITR 1 form to file their income tax return. They will have to use the ITR 2 form.

The last date to file income tax returns for the Financial Year 2023-24 is 31st July 2024. Make sure to file your income tax returns before the due date to avoid any penalty or interest liability or even an income tax notice. Our professionals can help file your income tax returns so that you don’t have to worry about missing out on mandatory compliances. Contact us today to get answers to all your queries from our team of Chartered Accountants.

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