New Delhi: For several taxpayers, filing Income Tax Return (ITR) is a cumbersome process. There are seven types of ITR. ITR 1 is for salaried employees with income less than 50 lakh. But, if you earn from intraday stock exchange or futures and options trading, then your should file ITR 3. If a salaried employee has made profits or suffered losses from stock purchases/sales, then the individual will have to File ITR 2 to report capital gains.
What needs to be done before filing ITR
Before filing an ITR, you should assess your tax liability. You can get information regarding TDS and other taxes, such as FD interest with Form-26AS. It informs you about tax deducted on behalf of you by the employer. Match the details with Form 16. Form 16 is the proof that your employer has submitted the tax with Income Tax department. Form 16 also makes the tax calculation easy as it already contains details you will need to file ITR like allowances or medical bills, and loan details.
Which ITR should you file?
A salaried employee can file ITR 1, ITR 2 OR ITR 3. It depends on whether you have an additional source of income other than your salary. Let’s discuss each ITR
ITR 1 or SAHAJ
ITR 1 is also called SAHAJ. If you have a total income of up to Rs 50 lakh and has one house property then you can file ITR 1. Salaried taxpayers can file ITR by using Form 16. Apart from salary, if you also earn income through rent via your house property, then you can file ITR 1.
ITR-2
ITR-2 is filed by individuals for income other than income from business or profession. However salaried employees who have made profit and losses from the sale or purchase of shares should also file ITR 2. They can’t file ITR 1 to report their capital gains arising from the sale/purchase of stocks
ITR-3
Profit or loss made from trading in futures and options is considered as business income. It is shown under the head “Income from business or profession” in the ITR. And, individuals earning income from business or profession will have to file ITR-3. So if you are a salaried employee, who also earns money through intraday stock exchange or futures and options trading, then you should File ITR 3.
ITR-1, ITR-2 or ITR-3: Before filing an ITR, you should assess your tax liability. Filing the type of ITR depends on the sources of income that an individual have other than salary. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
