ITR-1 (Sahaj) vs ITR-4 (Sugam): Key Differences and Eligibility Explained

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Key Differences and Eligibility Explained

Filing an Income Tax Return (ITR) can be a daunting task, especially with multiple forms available for different types of taxpayers. Among the seven available forms (ITR-1 to ITR-7), ITR-1 (Sahaj) and ITR-4 (Sugam) are the most commonly used by individuals and small business owners.

In this detailed guide, we will break down the eligibility, applicable income sources, and key differences between ITR-1 and ITR-4 to help you select the right form for hassle-free filing.

What is ITR-1 (Sahaj)?

ITR-1, commonly known as the Sahaj form, is designed for individuals with straightforward income sources. This form is meant for resident individuals who earn income through salary, pension, or one house property (excluding cases with losses carried forward).

Who Can File ITR-1?

The following individuals are eligible to file ITR-1:

Salaried employees or pensioners earning income from salary or pension.
Individuals earning income from one house property (except in cases where losses are carried forward).
Individuals earning income from interest, dividends, or other sources (excluding lottery winnings or horse race income).
Total annual income must not exceed ₹50 lakh.

Who Cannot File ITR-1?

You cannot file ITR-1 if:

You have foreign income or foreign assets.
You are a non-resident or Not Ordinarily Resident (NOR).
You earn income from business or profession.
You hold directorship in a company or own unlisted equity shares.
Your total agricultural income exceeds ₹50,000.
You have capital gains or claim deductions under Section 80QQB/80RRB.

What is ITR-4 (Sugam)?

ITR-4, commonly known as the Sugam form, is suitable for taxpayers with business income or professional income who opt for presumptive taxation under Sections 44AD, 44ADA, or 44AE of the Income Tax Act.

https://www.incometax.gov.in/iec/foportal/

Who Can File ITR-4?

The following taxpayers are eligible to file ITR-4:

Individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) earning income under the presumptive taxation scheme.
Those earning business income under Section 44AD (small businesses with turnover up to ₹2 crore).
Professionals earning income under Section 44ADA (such as doctors, lawyers, etc.).
Transporters earning under Section 44AE (owning up to 10 vehicles).
Individuals earning from interest, dividends, or other sources with total income up to ₹50 lakh.

Who Cannot File ITR-4?

You cannot file ITR-4 if:

You have foreign income or foreign assets.
You are a non-resident or Not Ordinarily Resident (NOR).
You earn income from capital gains.
You earn income from salary above ₹50 lakh.
You own unlisted equity shares or have business turnover exceeding ₹2 crore.

Key Differences Between ITR-1 and ITR-4

Aspect	ITR-1 (Sahaj)	ITR-4 (Sugam)
Eligibility	Resident individuals with salary, pension, or one house property income.	Residents (Individuals, HUFs, and firms except LLPs) under presumptive taxation.
Income Sources	Salary, pension, one house property, and other sources like interest/dividends.	Business or professional income under presumptive taxation, plus interest/dividends.
Total Income Limit	Up to ₹50 lakh per financial year.	Up to ₹50 lakh per financial year (on a presumptive basis).
Business Income	Not Allowed	Allowed under presumptive taxation (Section 44AD/44ADA/44AE).
House Property	Income from one house property only.	Income from multiple house properties (if declared under presumptive taxation).
Filing Restriction	Only for resident individuals.	For residents including individuals, HUFs, and firms (excluding LLPs).

How to Choose the Right Form for Filing?

Choose ITR-1 if you are a salaried individual, pensioner, or earn through simple income sources such as bank interest or dividends.
Choose ITR-4 if you are a small business owner, professional, or transporter using the presumptive taxation scheme to simplify your tax filing.

Conclusion

Selecting the correct ITR form is crucial to ensure your income details are accurately reported and your tax filing is processed without issues. Filing the wrong form may result in rejection or delayed processing. Carefully analyze your income sources, eligibility criteria, and compliance requirements before choosing between ITR-1 (Sahaj) and ITR-4 (Sugam).

For seamless tax filing, consider consulting a professional or using trusted online platforms to simplify the process.

For More Information :https://taxgyany.com/