ITR 1 Vs. ITR 4: Differences Between ITR-1 and ITR-4

What is ITR -1?

ITR 1 is a form that is used for filing income tax returns. This form is filed by an assessee whose total income during the previous year includes income from salary, house property, or pension and income from other sources like interest on savings bank and fixed deposits. ITR 1 is also used in cases where a minor or spouse's income is clubbed with the assessee's income. However, this is applicable only if the income of the spouse or minor falls under the heads specified under ITR 1. ITR 1 is also known as Sahaj and applies to individuals having an income of less than 50 lakhs.

What is ITR-4?

ITR 4, also known as Sugam, is an Income tax return filing form that applies to individuals, partnership firms, and HUFs, who have opted for a presumptive tax scheme under sections 44AD and 44AE. It also includes -

• Presumptive income under section 44ADA.
• Income from pension or salary up to 50 lakhs.
• Income up to 50 lakhs from one house property.
• Income from other sources not exceeding 50 lakhs, except the income from horse races and lottery.

The presumptive income scheme allows the assessee to derive his/her income on a presumptive basis as a minimum percentage of the gross receipts during a year.

How are ITR-1 and ITR-4 Different?

Even though ITR 1 and ITR 4 are both used for filing Income Tax Returns, there are a few ways in which they differ from each other. Here are the differences between ITR 1 and ITR 4 -

Who should File ITR-1?

ITR 1 is a simplified return filing form that applies to individuals having an income not exceeding INR 50 lakhs. The following people should file ITR 1 -

• Income from salary/pension
• Income from house property (only one)
• Income from other sources.
• If the income of the minor/spouse falls into the above categories, it can be clubbed with the assessee’s income.

Here are some cases in which the assessee cannot file ITR 1 -

• Any individual having an income of more than INR 50 lakhs.
• An individual holding a directorial position in a company or having unlisted equity shares during the financial year.
• Non-residents and Resident but not ordinarily resident (RNOR).
• Individuals with income from more than one house property
• Income from lottery, horse races, and legal gambling.
• Short-term and long-term capital gains
• Agricultural income is more than 5000.
• Income from business and profession
• Any resident having assets outside India
• Individuals claiming Foreign Tax Credit under sections 90, 90A, and 91.
• Deferred Income Tax on ESOP.

What is the Eligibility to File ITR-4?

The eligibility for filing ITR 4 includes the following -

• Business income as per presumptive income scheme under sections 44AD and 44AE.
• Professional income under presumptive income scheme under section 44ADA.
• Income from salary/pension, one house property, and income from other sources should be at most 50 lakhs.

You cannot file ITR 4 in the following cases -

• If the turnover of the business exceeds Rs. 2 crores (3 crores for FY- 2023-24), the taxpayer will have to file ITR-3
• If your total income is more than INR 50 lakhs
• Have income from more than one house property and own a foreign asset
• Signing authority in any foreign account
• Having a foreign income source
• Have directorship in a company
• Non-resident or RNOR status
• Having unlisted equity shares
• If the ESOP payment is deferred to ESOP
• In case you have any brought forward losses.

What are the Components of ITR-1?

ITR 1 consists of 4 different parts -

Part A - General Information

• First Name and Last Name
• PAN number
• Age, communication address
• Date of Birth, gender
• Aadhaar details
• Date of filing the return
• Location of the taxpayer
• Taxpayer’s ward and assessing officer details.

Part B - Gross Total Income

This section consists of the details of the gross income of the assessee. It includes income details from salary, house property, and other sources.

Part C - Total Taxable Income and Deductions

This section of the ITR 1 consists of the details of the total income of the taxpayer and the details of the deductions under sections 80 C, 80 D, 80 U, and 80 G.

Part D - Tax Payable Calculation

This section has a total of 20 rows. These rows are dedicated to information regarding tax calculations, TDS claims, rebates, and status. The last row, i.e., D20, consists of the bank account details of the assessee.

What are the Documents Required for Filing ITR 1?

Before you file ITR 1, make sure you have these documents handy -

• Form 16 issued by the employer
• Form 26AS
• Receipts
• Proof of investment like FD certificates and details of interest from the bank.

What are the Components of ITR-4?

Below is the structure of the ITR 4 form -

• Part A - Part A consists of general information like name, address, and date of birth.
• Part B - This section entails income details from different sources
• Part C - This section includes the total taxable income and the deductions.
• Part D - Consists of tax calculations
• Schedule BP - Income details of businesses under sections 44AD, 44ADA, 44AE. It also consists of information about annual turnover and gross receipts.
• Schedule IT, TCS, and TDS 1 - It contains information about self-assessment, advance tax, and TDS.
• Schedule TDS2 - Comprises of the statement of TDS deducted on income from other sources.

What are the Documents Required for Filing ITR 4?

Here are a few prerequisites for filing ITR 4.

• A valid user id and password on the e-filing website
• Active PAN card
• Linked Aadhaar card and PAN card
• Pre-validation with a bank
• Linked mobile with e-filing website

Now that you know all about ITR 1, ITR 4 and their differences, you can simply go ahead and file your ITR. You can also book an eCA with Tax2win and ensure a hassle-free ITR filing process.