It's that time of the year again! Book your slot for the upcoming 2024-25 filing season. Don't miss out on our exclusive discount. Pre-Book Your Appointment
Login

itr 1 vs itr 4

  • Home
  • Itr-1-vs-itr-4
heading
  • item

ITR 1 vs ITR 4: Know the Key Differences And Who Can File?

ITR 1 vs ITR 4: Know the Key Differences And Who Can File?

According to the Income Tax Act of 1961, every individual, including salaried and self-employed, must file an Income Tax Return (ITR). Depending on your type of income or category, it is imperative to submit the appropriate ITR form on or before the specified due date. If you choose the wrong form, you must go through the hassle of filing your ITR again.

So, if you are confused between the ITR forms, especially ITR 1 and ITR 4, you can rely on this article. This article will briefly discuss the forms, helping you understand the key differences between the two.  

Significance of Filing Income Tax Return

The income tax department mandates every earning individual to file ITR. Take a look at some of the reasons why you should not skip filing the applicable ITR:

  • Your tax contributes towards nation-building. For instance, in the financial year 2022-23, the Central Government collected Rs 16.61 lakh crore from direct tax payments. Henceforth, the government can utilise this amount for different developmental activities.
  • It makes the processing of loans relatively easier. If you wish to apply for a loan, the concerned lender will ask for your income tax return before sanctioning the loan amount.
  • In case you have suffered heavy losses from your business or profession, you can carry forward such losses to the next financial year. All you need to do is file your income tax return.
  • It permits you to claim your TDS seamlessly. The net tax liability can be adjusted using TDS while filing your income tax return for the specified year. If yor TDS or advance tax is more than the net tax liability you can file ITR to claim a refund.

So, if your gross income is taxable, it is crucial to file the ITR applicable to you. Depending on your income, there are different ITR forms for different individuals; however, the returns filed by most individuals are ITR-1 (SAHAJ) and ITR-4 (SUGAM). Read on to know the key differences between them.

All About ITR 1

ITR-1 or SAHAJ is a type of return filing form. If you are an individual earning an income from pension or salaries, single house property or other sources (excluding betting, gambling, and lotteries), you are eligible to file ITR-1 form. Also, for residential individuals having an agricultural income of up to Rs 5,000, ITR-1 form is applicable. Additionally, if the income of your spouse or minor is clubbed together, you can also file this particular form. However, it only applies if the income is up to Rs. 50 lakhs. 

To file ITR-1, you need to keep some documents ready such as Form 16, investment payment premium receipts (if applicable), and house rent receipts (if applicable). 

Who cannot use ITR-1 Form

  • Total income exceeding Rs 50 lakh
  • Agricultural income exceeding Rs 5000
  • If you have taxable capital gains
  • If you have income from business or profession
  • Having income from more than one house property
  • If you are a Director in a company
  • If you have had investments in unlisted equity shares at any time during the financial year
  • Owning assets (including financial interest in any entity) outside India, including signing authority in any account located outside India
  • If you are a resident not ordinarily resident (RNOR) and non-resident
  • Having any foreign income
  • If tax has been deducted under Section 194N
  • If in case payment or deduction of tax has been deferred on ESOP
  • If you have any brought forward loss or loss needs to be carried forward under any income head

Still, do you have any doubts about ITR-1 in your mind?
Read our comprehensive guide on ITR-1 to get answers to all your questions.

All About ITR 4

ITR 4 or Sugam is another type of ITR form applicable to individuals, HUFs, and Partnership Firms generating an income from a business or profession. Additionally, if you have chosen presumptive taxation on your business income under Section 44 AE, 44ADA and 44ADA of the Income Tax Act, 1961, you have to file ITR-4 form.

In order to file ITR-4, it is essential to keep the following documents ready: Form 16, Form 16A, Form 26AS and AIS, housing loan interest certificates, rental agreements, bank statements, rent receipts and receipt of investment premium payments. 

Who cannot use ITR-4 Form

  • If your total income exceeds Rs 50 lakh
  • Having income from more than one house property
  • Owning any foreign asset
  • If you have signing authority in any account located outside India
  • Having income from any source outside India
  • If you are a Director in a company
  • If you have had investments in unlisted equity shares at any time during the financial year
  • Being a resident not ordinarily resident (RNOR) and non-resident
  • Having foreign income
  • If you are assessable in respect of the income of another person in respect of which tax is deducted in the hands of the other person.
  • If in case payment or deduction of tax has been deferred on ESOP
  • If you have any brought forward loss or loss needs to be carried forward under any income head

Click here to read our comprehensive guide to the ITR-4

 

Key Differences Between ITR 1 and ITR 4

Both ITR 1 and ITR 4 are the most commonly used forms when it comes to ITR filing. However, from the above piece of information, it is evident that there are some slight differences. For a more comprehensive understanding, take a look at the table given below:

Basis of comparison

ITR-1 

ITR-4

Applicability

  • Individuals with an income not above Rs 50 lakh during a financial year 
  • If you earn interest from a savings account, deposits, etc. 
  • If you earn a pension
  • Interest from income tax refund
  • Individuals or HUFs with an income not above Rs 50 lakh during a financial year
  • If you earn income from professions or businesses under schemes like 44AD, 44AE, 44ADA
  • If you earn interest from a savings account, deposits, etc. 
  • If you earn a pension
  • Interest from income tax refund

Heads of income

  • Salary
  • Single house property
  • Any other sources
  • Salary
  • Presumptive taxation scheme
  • Single house property
  • Other sources

When are you not eligible to file this form?

  • Income exceeds Rs 50 lakh
  • Agricultural income is above Rs 5000
  • Possess taxable capital gains
  • Generate income from more than one house property
  • In case you are a director of a company
  • Own foreign assets 
  • Have any foreign income
  • If your investments are present in unlisted equity shares for a financial year
  • If you are an NRI or RNOR (Resident Not Ordinary Resident) 
  • Income exceeds Rs 50 lakh
  • Generate income from more than one house property
  • If you have carry forwarded any losses from previous years under any income head
  • Have signing authority in any account outside India
  • Generate foreign income
  • If you are either an RNOR or non-resident
  • Invested in unlisted equity shares

Due Date to File Income Tax Return for AY 2024-2025

 

After knowing about the two types of forms (ITR 1 and ITR 4), it is essential to know about their due dates. The due date to file ITR in the assessment year 2024-25 is 31st July 2024 for the majority of taxpayers. However, for companies, LLPs and some individuals who need to get their accounts audited before filing the return, it is 31st October 2024. 

Conclusion

For error-free tax filing, every taxpayer must assess these provisions mentioned above. One of the basic differences between ITR-1 and ITR-4 lies in the presumptive business scheme. This specific provision is applicable to ITR-4 but not ITR-1. At the same time, also ensure to file your ITR within a specified date. If you fail to do so, you will have to pay interest under Section 234A at 1% per month.

Plan Early and Get ahead for next year’s savings
Use Tax Calculator and get your taxes estimates in mins as per new budget
Calculate Now

Also read about:
1. Which ITR Should I File
2. How to file ITR Online
3. What is ITR 2 Form & How to File ITR-2
4. How to File ITR-2 for Income from Capital Gains FY 2022-23
5. ITR 3 vs ITR 4
6. What is ITR 3 Form & How to File ITR-3
7. How to File and Download ITR-7 Form
8. What is ITR-5 Form, Structure & How to File ITR 5
9. ITR 6

Frequently Asked Questions

The income types excluded from the ITR 1 form are as follows:

(a) Profits and gains from business and professions;

(b) Capital gains;

(c) Income from more than one house property;

(d) Income under the head of other sources, including:

  • Winnings from lottery;
  • Income from owning and maintaining racehorses;
  • Income taxable at special rates under section 115BBDA or section 115BBE;

(e) Income to be apportioned in accordance with provisions of section 5A.

Yes, it is necessary to specify the nature of employment when filing a return, selecting from the following options:

  • Central Government Employee
  • State Government Employee
  • Employee of Public Sector Enterprise (Central or State Government)
  • Pensioners (Central Government/State Government/Public Sector Undertaking/Other)
  • Employee of a Private Sector organization
  • Not applicable (for family pension income)

No, if a person is paying tax @ 8% as per section 44AD then he cannot claim depreciation or any other expenditure.

No, a person who opted for the presumptive taxation scheme is deemed to have claimed all deduction of expenses. Any further claim of deduction is not allowed after declaring profit at a specified rate. However, you can claim deductions under Chapter VI-A.