Filing your income tax return can sometimes feel overwhelming, especially when you have to choose between different forms. Among the most commonly used are ITR-1 (Sahaj) and ITR-4 (Sugam). Both are designed for people earning up to Rs 50 lakh, but they serve different purposes and types of taxpayers.
What is ITR-1 (Sahaj)?
ITR-1, or Sahaj, is a simple form meant for resident individuals whose total income does not exceed Rs 50 lakh. If your earnings come mainly from a salary or pension, or you have income from one house property, and perhaps some extra income from interest or similar sources, this is likely the right form for you.
However, you cannot use ITR-1 if you have income from capital gains (except for certain long-term capital gains from stocks or mutual funds), business or profession, agricultural income above Rs 5,000, more than one house property, or any foreign income or assets.
What is ITR-4 (Sugam)?
ITR-4, known as Sugam, is a bit different. It’s for those who run small businesses, freelance, or practice a profession such as medicine, consultancy, or retail. If you opt for the presumptive taxation scheme—where you declare a fixed percentage of your total receipts as income, rather than keeping detailed books—you should use ITR-4.
This form is open to resident individuals, Hindu Undivided Families (HUFs), and firms (except LLPs), as long as their total income does not cross Rs 50 lakh. It covers income from business or profession (under the presumptive scheme), salary or pension, one house property, and other sources.
How Do ITR-1 and ITR-4 Differ?
The main difference is the type of income they cover. ITR-1 is best for straightforward income from salary or pension, while ITR-4 is tailored for those with business or professional income who prefer the presumptive taxation method. If your income includes business or profession earnings, ITR-1 is not an option—you’ll need to use ITR-4.
Both ITR-1 and ITR-4 now allow reporting of long-term capital gains (LTCG) under Section 112A, up to Rs 1.25 lakh. This means if you have gains from stocks or mutual funds, and your income otherwise fits the Sahaj or Sugam criteria, you can report it directly in these forms without switching to more complex ones.
Selecting the right form is crucial. It helps you avoid delays, errors, and unwanted notices from the tax department. Take a moment to review your income sources and choose the form that matches your situation. This simple step can make your tax filing process much smoother and hassle-free.
