Excluded Types of Income in ITR-1 Form
Excluded Types of Income in ITR-1 Form
Introduction:
When filing income tax returns, it is crucial to understand which types of income should not be included in specific tax return forms. In the case of ITR-1, also known as Sahaj, there are certain types of income that should not form part of this form. This article aims to provide a comprehensive overview of the types of income that are excluded from the ITR-1 form for accurate and compliant filing.
Excluded Types of Income in ITR-1 Form:
The following types of income shall not form part of the ITR-1 form:
(a) Profits and Gains from Business and Professions:
Income derived from business and professions is not eligible to be reported in the ITR-1 form. This category includes income earned from entrepreneurial activities, self-employment, consultancy services, freelancing, and any other business or professional endeavors.
(b) Capital Gains:
Income generated from the sale or transfer of capital assets, such as property, stocks, bonds, or mutual funds, falls under the category of capital gains. However, such income is not to be included in the ITR-1 form. Capital gains are subject to specific tax rules and require the use of different tax return forms depending on the nature of the capital gain (short term or long term).
(c) Income from More Than One House Property:
If an individual owns more than one house property and earns income from these properties, it should not be reported in the ITR-1 form. The ITR-1 form is designed for individuals who have income from a single house property only. Individuals with multiple house properties should utilize the appropriate tax return form to report their income accurately.
(d) Income under the Head "Other Sources" of the Following Nature:
The ITR-1 form excludes certain income from the category of "Other Sources." These include:
Winnings from Lottery:
Income generated from winning lotteries, games, or other similar forms of gambling is not to be included in the ITR-1 form. Such income has its own tax implications and requires separate reporting.
Activity of Owning and Maintaining Race Horses:
Income derived from owning and maintaining racehorses is not eligible for inclusion in the ITR-1 form. This type of income falls under a specific category and necessitates the use of the relevant tax return form.
Income Taxable at Special Rates under Section 115BBDA or Section 115BBE:
Income that is taxable at special rates under Section 115BBDA or Section 115BBE of the Income Tax Act should not be reported in the ITR-1 form. These sections pertain to specific types of income, and individuals must utilize the appropriate tax return form to disclose and pay taxes on such income.
(e) Income to be Apportioned in Accordance with Provisions of Section 5A:
Any income that is required to be apportioned in accordance with the provisions of Section 5A of the Income Tax Act should not be included in the ITR-1 form. Section 5A deals with the allocation of income between spouses in certain cases and requires the use of a different tax return form for accurate reporting.
Conclusion:
Accurate and compliant filing of income tax returns is crucial for every taxpayer. When using the ITR-1 form, it is essential to exclude specific types of income that are not eligible for inclusion. These excluded types include profits and gains from business and professions, capital gains, income from more than one house property, income from lottery winnings, income from owning and maintaining racehorses, income taxable at special rates under relevant sections, and income to be apportioned as per the provisions of Section 5A. By understanding and adhering to the exclusion criteria, taxpayers can ensure the proper disclosure of income and fulfill their tax obligations effectively.