Tax Filing

Salary and Other Income

 
File ITR for salary income, one house property and other income

An individual or HUF having salary income, one house property and other income should file ITR-1. The form ITR-1 is applicable for your tax filing if you satisfy the below conditions:

1. 1. You are a resident in India (resident and ordinarily resident);
   2. Total income is up to Rs 50 lakh;
   3. Income from salary or pension; one house property (let-out or self-occupied) and other sources; and agricultural income up to Rs 5,000.

Note: ITR-1 is not applicable if you have brought forward house property loss or winnings from lottery and income from race horses. Also, if you are director in any company or hold unlisted equity, you need to file ITR-2. A taxpayer having income from business/profession, capital gains etc., should file appropriate ITR (discussed separately under relevant topic of income tax filing).

Reporting income from salaries under ITR-1:

A taxpayer should provide break-up of components of salary such as allowances, exemptions, value of perquisites and deductions. Form 16 generally provides the break-up and the various components of salary. However, in certain other cases, the employee should obtain the break-up from their annual tax computation.

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Reporting income from house property under ITR-1:

Individual taxpayer who owns a single house property (whether sole owner or joint ownership) can report the income and claim deductions from such property in ITR-1. Loss up to Rs 2 lakh arising from deduction on account of interest on housing loan is eligible for set off against income from salaries.

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Individual taxpayer who earns the following incomes can report those in ITR-1:

1. 1. Interest on savings bank accounts and fixed deposits
   2. Interest on post office accounts, term deposits and SCSS
   3. Dividend income from mutual funds, equity shares etc.
   4. Interest on bonds and debentures
   5. Any other income not falling under specific heads under income-tax

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Option for new tax regime

An individual or HUF filing ITR can opt for the new tax regime under section 115BAC. The taxpayer needs to choose the new tax regime by filing Form 10IE before the filing of their ITR form.

The new tax regime under section 115BAC consists of different slab rates and without any tax deductions for tax saving investments/expenses.

Slab rates under section 115BAC vs normal slab rates:

The new tax regime allows deduction or exemption only for:

1. 1. Conveyance allowance provided to an employee to meet the any expenditure on conveyance as part of the employment.
   2. Compensation received to meet the cost of travelling on tour or on transfer.
   3. Daily allowance received for the purpose of meeting daily charges or expenditure incurred on account of absence from their place of duty.
   4. Employer’s contribution to employee’s NPS account.
   5. Transport allowance granted to a specially disabled person.
   6. Employer claiming deduction under section 80JJA towards additional employee cost.

A salaried individual can choose new tax regime or normal tax regime at the beginning of the financial year. They should make suitable declaration to their employer, and the TDS deduction will be as per their declaration. An employee cannot change their choice at any time during the financial year. However, an employee can change their choice at the time of filing their income tax return. Accordingly, an employee can choose between new tax regime and normal tax regime, whichever is beneficial, at the time filing their return. An employee should indicate their choice in the ITR.

A salaried individual can exercise their option each year. However, an individual having income from business or profession cannot opt again for new regime once they opt out in a particular year.

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An individual should mandatorily file an ITR if they meet any of the below criteria during the financial year:

1. 1. made cash deposits above Rs 1 crore with a bank
   2. incurred expenditure above Rs 2 lakh on foreign travel
   3. incurred expenditure above Rs 1 lakh on electricity

While filing the ITR, an individual should indicate the amount of the deposit made or expenditure incurred during the financial year.

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