What are ITR 1 & 4 forms?
Gopal Bohra, Partner, N.A. Shah Associates said CBDT has released excel utilities for filing ITR 1 & 4, for AY 2023-24 on 25th April, 2023. ITR 1 (Sahaj), the simplest of all other forms, can be filed by a resident individual, whose total income does not exceed Rs. 50 lakh and earns income from salary, 1 house property and other sources whereas, ITR 4 (Sugam) can be filed by resident individuals having total income upto Rs. 50 lacs and having income from business/ profession computed on presumptive basis u/s 44AD, 44ADA & 44AE.
Nikhil Vikamsey, Partner Alpha Capital said the Income Tax Department has released the excel utilities for ITR 1 and ITR 4 much in advance and way before last quarter’s TDS payment deadline. The IT Department is yet to release Java utilities that can work in most computers but are expected to release soon,
A few changes have been made to the ITR-1 and 4 forms to switch between old vs new tax-regime, additional conditions for filing income tax returns such as turnover from business exceeding ₹60 lakh in the previous fiscal year, turnover from profession exceeding ₹10 lakh in the previous fiscal year, and the TDS deducted in the previous fiscal year, which are introduced in ITR 1 and ITR 4
Overall, we predict that much of the tax base is expected to prepare and file taxes in the months of May and June compared to earlier years.
How offline utility for the ITR Forms 1 and 4 will benefit taxpayers?
Dr. Suresh Surana, Founder, RSM India said considering that the Income tax department has introduced the excel utilities for Income tax forms (ITR 1 and ITR 4) well before in advance, it would enable in smooth facilitation of furnishing of return by the taxpayers.
A taxpayer can file the applicable income tax returns either directly on the e-filing portal or through offline mode. In offline mode, assessee shall download the excel/ java utilities and after filing the necessary income and deduction related income on the utility form, upload the same on the income tax e-filing portal. The income tax department every year releases the offline utility for ITR Forms.
As the department has already released excel utility for ITR Forms 1 and 4 with respect to financial year 2022-2023 (AY 2023-24), the Java utilities for the same are expected to be released soon as well.
Filing income tax returns through offline mode is one of the most efficient and convenient way of filing returns as online ITR filing may exposes the taxpayer to the risk of loss of data due to various reasons such as session time out, taxpayers failure to click on the Save draft option.
To whom ITR 1 and ITR 4 is applicable
Suresh Surana said the Central Board of Direct Taxes (CBDT) via Notification No. 04/2023, dated 10 February 2023, and Notification No. 05/2023, dated 14 February 2023, has notified the Forms for furnishing the income-tax returns for the financial year 2022-23 (AY 2023-24).
Among all the available ITR Forms, ITR-1 and ITR-4 are the most commonly used ITR forms as the ITR-1, also known as Sahaj, is applicable for resident and ordinarily resident individuals whose total income is upto ₹50 lakh. The sources of income must be salary income, income from one house property and other sources such as interest income, dividend income and agricultural income (not exceeding Rs. 5,000) etc. However, it is pertinent to note that ITR-1 cannot be filed by individuals who are either directors in a company or holding unlisted equity shares and individuals whose tax has been deducted u/s 194N of Income Tax Act, 1961(herein after referred to as ‘IT Act’) or have deferred tax liability for ESOPs received from eligible start-up, has brought forward or carried forward loss, etc.
The ITR-4 form, also known as Sugam, can be used by individuals, HUFs, firms (other than Limited Liability Partnership firms), having total income up to ₹50 lakh, and having income from businesses and professions which is computed u/s 44AD, 44ADA, 44AE of IT Act.
However, the same cannot be used by individuals who are either directors in a company or have invested in unlisted equity shares or have deferred income tax on ESOPs received from eligible start-up, have agricultural income exceeding ₹5,000, any income source outside India, etc.
CA Viral S Vora, Partner, Vora Vora and Associates (Chartered Accountants) said the Income Tax Department Issues Income Tax Return (ITR) forms for filing of returns every fiscal year. This year too, the Central Board of Direct Taxes (CBDT) vide Notification No. 04/2023, dated 10 February 2023, and Notification No. 05/2023, dated 14 February 2023, has notified the Forms for furnishing the income-tax returns for the Financial Year 2022-23, corresponding to the Assessment Year 2023-24.
In this regard, the Income Tax Department released the offline utility for ITR Forms 1 and 4 on 25 April 2023.
ITR-1 is applicable to
- Residents (other than not ordinarily residents) individual taxpayers
- Having income from salaries or pension, one house property, income under the head other sources (excluding lotteries, betting, and gambling but including income from retirement benefit accounts maintained outside India), and agricultural income up to ₹5,000, which in aggregate should not exceed ₹50,00,000.
ITR-4 is applicable to
- Wider category of Resident taxpayers, i.e., individuals, HUFs, and Firms (other than LLP)
- Having income from presumptive business, profession or income from goods or carriage which is computed under sections 44AD, 44ADA or 44AE, respectively, besides the category of income specified under ITR-1, which in aggregate should not exceed ₹50,00,000.
NOTABLE CHANGES
A few changes have been made to the ITR-1 and 4 forms to switch between the old vs new tax regime, additional conditions for filing income tax returns such as turnover from business exceeding ₹60 lahks in the previous fiscal year, turnover from profession exceeding ₹10 lahks in the previous fiscal year, and the TDS deducted in the previous fiscal year, which are introduced in ITR 1 and ITR 4.
How to download ITR 1 & 4?
CA Manish Mishra, Virtual CFO said the Income Tax Department of India has released offline forms for Income Tax Return (ITR) 1 and ITR 4 ahead of schedule for the financial year 2022-23. This will give taxpayers ample time to prepare their tax returns before the due date.
ITR 1 is designed for individuals with an income of up to ₹50 lakh who have only one house property and no capital gains. The due date for filing ITR 1 for the financial year 2022-23 is 31st July 2023.
On the other hand, ITR 4 is meant for individuals, Hindu Undivided Families (HUFs) and firms with a total income of up to ₹50 lakh who have opted for the presumptive taxation scheme. The due date for filing ITR 4 for the financial year 2022-23 is 31st October 2023.
The offline forms can be downloaded from the Income Tax e-filing portal. The forms are available in both Excel and Java utility formats, making the tax-filing process more accessible and user-friendly.
The early release of the offline forms is a positive move that is likely to make tax-filing less stressful for taxpayers, giving them more time to prepare and file their returns before the respective due dates.
Changes in new ITR forms
Vivek Jalan, Partner, Tax Connect Advisory, a multi-disciplinary tax consultancy firm said this year the Government has notified the ITRs much earlier than March itself and hence the taxpayers will get sufficient time to prepare for amendments in the returns. However, the returns can be filed only once the online format to file the same are available. This online format is called “ITR utility”. Excel utility is one of the utilities. The Excel-based utility for filing ITR-1 Sahaj and ITR-4 Sugam for AY 2023-24 is available for download from the Income Tax Department’s official website. These two ITRs are the simplest of ITRs and there is not much change in the same vis-a-vis last year and possibly the reason why the CBDT has chosen to make these utilities live. I am sure the others will follow suit soon.
However, there is one important change in ITR-4 utility which assesses should take note of. In the case of the assessee having income from business or profession, the option to opt for the new Income Tax regime, once exercised, is allowed to be withdrawn only once in a lifetime. The new ITR forms seek details if the assessee has ever opted out of the new regime in earlier years. If the assessee has opted out, he is required to give details of the Assessment Year in which said option is opted out, Date of filing and Acknowledgement number of Form 10-IE.
The assesses should take note of this change and ensure they file accordingly.
How to file IT return?
Suresh Surana, Founder, RSM India said as the new assessment year begins, taxpayers will be required to file the applicable income tax returns for the previous fiscal year i.e. FY 2022-23 (AY 2023-24). The last date for filing income tax returns with respect to AY 2023-24 is 31st July 2023 for individual taxpayers, Hindu-undivided family (HUF), Association of persons (AOP) and Body of Individuals (BOI), provided their books of accounts are not required to be audited. As mentioned above in response to question 1, a taxpayer can file income tax returns either directly on the e-filing portal or through offline mode. An overview of such procedure with respect to both such methods has been discussed below:
Offline mode:
Step 1: In order to file ITR using XML method, the assessee will be required to download either the excel utility or the Java utility from https://www.incometax.gov.in/
Step 2: Extract the downloaded utility ZIP file and fill the applicable and mandatory fields of the ITR Form.
Step 3: Validate all the tabs of the ITR form and calculate the Tax
Step 4: Generate and save the XML file
Step 5: Lastly, the assessee will be required to attach the XML file on the “income tax return” link and validate the same using any of the specified options
(Login to e-filing portal< click on “e-file” menu < click on “income tax return” link< select the submission mode as “Upload XML”)
Online mode:
Step 1: Login to https://www.incometax.gov.in/iec/foportal/ using PAN and password
Step 2: Click on “e-file” menu< “Income Tax return” link< Select the submission mode as “Prepare and submit online”
Step 3: Carefully fill out all the applicable and mandatory fields of the ITR form
Step 4: Lastly, choose the appropriate verification option in the “Taxes paid and Verification” tab and submit the form.