Article
What is ITR-1 and ITR-2?
On the basis of the income you earn, as a taxpayer, you file the ITR Form that is applicable to you. Therefore, before e-filing IT Return, make sure that you choose the correct return filing form in order to avoid receiving a Notice under Section 139(9) of the Income Tax Act, 1961 for filing a defective return.
Here, we will compare the Income Tax Return Filing Form ITR-1 and Form ITR-2. Also, we will provide you with a list of the additional documents that are usually submitted with Form ITR-1 and ITR-2.
Who should File ITR 1?
ITR-1 is commonly known as Sahaj form which is filed solely by an individual. Any other assessee will not be able to avail ITR-1 to file their IT Return. ITR-1 is applicable to the following taxpayers –
- Derive income from salary or pension.
- Earn income from a single house property.
- Have no income from any other businesses or sale of any assets (capital gains).
- Do not own any property or assets in any other country besides India.
- Do not derive income from any other country besides India.
- Earns an agricultural income below Rs.5,000.
- Derive income from different investments or sources such as Fixed Deposits, Investments, Shares, etc.
- Do not have any income from winnings on lotteries or race horses.
- Wish to club their income with a spouse or minor child as long as the income to be clubbed meets the criteria mentioned above.
Who is supposed to file ITR-2?
ITR – 2 is used by those individuals and/or HUFs who have accrued income from sale of assets or property or those who earn their income from countries outside of India. ITR-2 can be filed by the following taxpayers: -
- Earn income from salary and/or pension.
- Derive income from sale of assets or property in India (capital gains).
- Earn an income from multiple house properties.
- Do not earn any income from business ventures.
- Own any assets in countries outside India.
- Income from agriculture is more than Rs.5,000.
- Derived income from lottery winnings and/or horse racing.
| Form | Income from Property | Income from Other Sources | Exempt Income (Agricultural Income) | Losses from Property |
| ITR-1 | Only from 1 property | Cannot use in case of income from lottery winnings, race horses, etc. | Up to Rs.5,000 | Cannot be used in case a loss is being brought forward under this heading |
| ITR-2 | From multiple properties | Must use in case of income from lotteries, race horses, etc. | Above Rs.5,000 | Must be used in case a loss is being brought forward under this heading |
In addition to the forms ITR-1 and ITR-2, you also need to keep the following documents handy while filing your Income Tax Return –
- A copy of the previous year’s tax return
- Bank statements
- TDS Certificates
- Certificates of your savings from the bank
- Balance sheets, account statements of profit and loss and other requisite audit reports, wherever applicable.
It is always recommended to keep all the relevant documents that you require while e-filing your tax return consolidated into a single folder, in order to avoid missing out on any document when you file ITR.
