ITR-1 vs ITR-4: What’s the Difference and Who Should File Which Form?
According to the Income Tax Act, 1961, everyone who earns—whether from a job or business—must file their Income Tax Return (ITR) every year. But with different forms available, choosing the right one can be confusing. If you’re unsure whether to file ITR-1 vs ITR-4, this blog will help you understand the key differences and make the right choice.
Why Filing Your ITR Is Important:
Here’s why filing your income tax return is necessary:
- Helps build the nation: Taxes collected are used for development projects. For example, in FY 2023-24, India collected ₹19.60 lakh crore in direct taxes.
- Required for loans: Banks and lenders ask for your ITR when you apply for a loan.
- Carry forward losses: If you’ve had business losses, you can carry them forward only if you file your return.
- Claim TDS refunds: If tax has been deducted from your income, you can claim a refund by filing your return.
About ITR-1 (SAHAJ):
Who can file ITR-1:
- Salaried or pensioned individuals
- Income from a single house property
- Income from other sources (like interest, but not lottery or gambling)
- Agricultural income up to ₹5,000
- Total income up to ₹50 lakh
Who cannot file ITR-1:
- Income above ₹50 lakh
- Agricultural income above ₹5,000
- Capital gains (except LTCG under Sec 112A up to ₹1.25 lakh)
- Income from business or profession
- More than one house property
- Director in a company
- Investments in unlisted shares
- Foreign income or foreign assets
- RNORs and NRIs
- If tax is deferred on ESOPs
- If you have carry-forward losses
Documents Needed:
- Form 16
- Rent receipts (if applicable)
- Investment proofs
About ITR-4 (SUGAM):
Who can file ITR-4:
- Individuals, HUFs, or firms with business/profession income under presumptive tax schemes (Sec 44AD, 44ADA, 44AE)
- Income up to ₹50 lakh
Who cannot file ITR-4:
- Income above ₹50 lakh
- More than one house property
- Foreign income or foreign assets
- Signing authority in any foreign bank account
- Director in a company
- Investments in unlisted equity shares
- RNORs and NRIs
- If tax is deferred on ESOPs
- If you have losses to carry forward
Documents Needed:
- Form 16, 16A
- Form 26AS and AIS
- Rent receipts, loan interest certificates, investment proofs
ITR-1 vs ITR-4: Key Differences
Due Date to File ITR for AY 2025-26:
- For most individuals: 31st July 2025
- For those needing audit (like companies or certain businesses): 31st October 2025
Final Words:
Choosing the right ITR form is important for accurate and smooth tax filing. ITR-1 is ideal for salaried individuals with no business income, while ITR-4 is for those using the presumptive taxation scheme for business or profession.
Also, remember to file your return on time. Late filing can lead to penalties and interest under Section 234A.
Note: This article is for educational purposes only. It reflects the author’s personal opinion and is not meant as financial or tax advice.
