Filing income tax returns can be confusing, especially when choosing between ITR-1 (Sahaj) and ITR-4 (Sugam). Picking the right form can save time and money. Here’s a simple breakdown to help you decide.
Who Can File ITR-1 and ITR-4?
Both ITR-1 and ITR-4 are for individuals with income up to ₹50 lakh. However, they apply to different types of taxpayers. Check the table below for eligibility:
| Feature | ITR-1 (Sahaj) | ITR-4 (Sugam) |
|---|---|---|
| Who can file? | Salaried individuals, pensioners | Small business owners, freelancers, professionals |
| Income limit | Up to ₹50 lakh | Up to ₹50 lakh |
| Allowed income sources | Salary, one house property, other sources (interest, dividends) | Presumptive income from business or profession, salary, one house property |
| Agricultural income | Up to ₹5,000 | Allowed |
| Who cannot file? | Business owners, non-residents, capital gains earners | LLPs, businesses with turnover above ₹2 crore, speculative traders |
Key Differences Between ITR-1 and ITR-4
- For Salaried vs. Self-Employed: If you earn only from salary or pension, ITR-1 is the right choice. If you have a small business or freelancing income, ITR-4 applies.
- Presumptive Taxation in ITR-4: This lets business owners declare income at a fixed percentage of turnover without maintaining detailed records.
- More Deductions in ITR-1: Since ITR-1 applies to salaried individuals, they can claim standard deductions, HRA, and other tax-saving options.
- Audit Requirements: ITR-4 filers using the presumptive scheme don’t need an audit if their declared income meets the required percentage.
Which One Should You Choose?
If you are a salaried employee with no business income, ITR-1 is the best option. If you run a small business or work as a freelancer, ITR-4 can reduce your tax burden through presumptive taxation.
Did You Know?
Under the presumptive taxation scheme (ITR-4), small businesses can declare just 8% of their turnover (6% for digital transactions) as taxable income, significantly lowering their tax liability!
Also Read: Which ITR Should You File? Know the Right Form for FY 2024-25
Final Verdict
Choosing the correct ITR form ensures a smooth filing process and helps avoid penalties. Salaried individuals should file ITR-1, while small business owners and freelancers should opt for ITR-4.
Make the right choice and file your return before the due date to avoid last-minute stress!
Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, financial, or other professional advice. While every effort is made to ensure the accuracy and reliability of the information, laws and regulations may change, and individual circumstances vary.
Readers are encouraged to consult with qualified professionals or official government resources for personalized guidance regarding their specific situations. The author and publisher disclaim any liability for decisions made or actions taken based on the information provided herein.
