ITR-1 is the easiest of the various Income Tax Return (ITR) forms issued by the Income Tax Department. Many a times, ITR-1 is filed without understanding the eligibility to file the correct ITR form.
ITR filing: ITR-1 is the easiest form among the various Income Tax Return (ITR) forms issued by the Income Tax Department. Many a times, ITR-1 is filed as a standard ITR form by taxpayers without understanding their eligibility to file the correct ITR form. This would have been due to various misconceptions regarding income tax rules. Tax Deduction at Source (TDS) is one such rule that an earner should be aware of while choosing his ITR form.
According to tax and investments experts, the TDS rules applicable on ITR form for an earner during ITR filing are explained in Section 194N of the Income Tax Act, 1961. If a taxpayer makes a cash withdrawal of ₹ 1 crore or more, then the earner cannot file ITR using Form ITR-1. However, if the earning person has not filed ITR in the last three financial years, the limit will be ₹20 lakh instead of ₹1 crore. In such a situation, taxpayers will have to file their ITR using Form ITR-2, experts said.
On how the TDS rule works while choosing the right ITR form, Mumbai based tax and investment expert Balwant Jain said, “Under Section 194N of the Income Tax Act, 1961, a taxpayer will not be able to file Income Tax Return through Form-1 if If he has made a cash withdrawal of ₹ 1 crore or more. However, if the earning person has not filed ITR in the last three financial years, the applicable TDS limit will be ₹ 20 lakh instead of ₹ 1 crore.
“If the taxpayer has exceeded the cash withdrawal limit under section 194N, in that case the bank will deduct TDS under this section,” said Jitendra Solanki, SEBI registered tax and investment expert. When asked which ITR form taxpayers can use when TDS is deducted under section 194N, Balwant Jain said, “If TDS is deducted under section 194N, then in that case taxpayers will have to use ITR-1 instead of ITR-1.” -2 form has to be used.” tell me
The due date for filing ITR for the financial year 2021-22 and assessment year 2022-23 is 31 July 2022.
