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What is ITR Type 1 and 4?

Updated: Mar 29, 2023

Income Tax Return (ITR) is a form that taxpayers in India use to file their tax returns with the Income Tax Department of India. The government has categorized different types of ITR forms based on the source of income, residential status, and type of business. This classification helps taxpayers choose the right form and file their returns correctly. In this article, we will discuss two types of ITR forms, ITR Type 1 and ITR Type 4.


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ITR Type 1 or Sahaj Form


ITR Type 1 is also known as Sahaj form. It is the most commonly used form for individuals who have a salary or pension income, income from one house property, or income from other sources like interest on bank deposits or dividends. Sahaj is a Hindi word that means easy or simple. The form is designed to be user-friendly, and taxpayers can fill it out without any professional help.


ITR Type 1 is divided into several parts, and each part asks for specific information about the taxpayer's income, deductions, and tax liability. The following are the sections of ITR Type 1:


Part A - General Information: This section asks for basic details like name, address, PAN number, and Aadhaar number (if available).

Part B - Gross Total Income: This section asks for details of the taxpayer's income from various sources like salary, house property, other sources, and exempt income.

Part C - Deductions and Taxable Total Income: This section asks for details of deductions claimed under various sections of the Income Tax Act, 1961, and the taxpayer's taxable income.

Part D - Computation of Tax Payable: This section calculates the tax liability based on the taxable income, tax rate, and deductions claimed.

Part E - Other Information: This section asks for other details like bank account details, refund details, and verification of the return.


ITR Type 4 or Sugam Form


ITR Type 4 is also known as Sugam form. It is used by individuals and Hindu Undivided Families (HUFs) who have income from a proprietary business or profession. This form is suitable for taxpayers who have presumptive income from business or profession, and their turnover is less than Rs 2 crores (for businesses) or Rs 50 lakhs (for professionals).


Sugam is a Hindi word that means simple or easy. The form is designed to be user-friendly, and taxpayers can fill it out without any professional help. ITR Type 4 has fewer sections compared to ITR Type 1, and the following are the sections of ITR Type 4:


Part A - General Information: This section asks for basic details like name, address, PAN number, and Aadhaar number (if available).

Part B - Gross Total Income: This section asks for details of the taxpayer's income from business or profession and presumptive income.

Part C - Deductions and Taxable Total Income: This section asks for details of deductions claimed under various sections of the Income Tax Act, 1961, and the taxpayer's taxable income.

Part D - Computation of Tax Payable: This section calculates the tax liability based on the taxable income, tax rate, and deductions claimed.

Part E - Other Information: This section asks for other details like bank account details, refund details, and verification of the return.


Conclusion

In conclusion, ITR Type 1 and ITR Type 4 are two different forms used by taxpayers in India to file their tax returns. ITR Type 1 is suitable for individuals who have a salary or pension income, income from one house property, or income from other sources like interest on bank deposits or dividends.


 

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