When can you not use Form ITR1 to file income tax return for FY 2020-21?

Nearly half of all the income tax returns (ITRs) filed for FY2021-22 has been filed using Form ITR-1. This is the ITR form used by most salaried taxpayers and is also known as Sahaj. ITR-1 can be filed if:

• Taxpayer is a resident Individual
• Total income does not exceed Rs 50 lakh
• Sources of income include salary, one house property, agricultural income up to Rs 5,000 and other sources such as interest from savings account, deposits, income tax refund, family pension etc.
• Clubbing of income with spouse or minor

Do keep in mind that ITR-1 can be used to file ITR even if you own one single property jointly with your spouse.
However, there are situations where an individual taxpayer cannot use ITR-1 to file tax returns for FY 2020-21 despite having the above-mentioned sources of income.

When can you not use ITR-1?

According to tax laws, an individual cannot file ITR-1 if any of the following criterion are met:

• Invested in unlisted equity shares
• Director if a company
• Hindu Undivided Family (HUF)
• Holding foreign assets such as stocks of a foreign company etc.
• Deferred income tax on ESOP (Employees' Stock Ownership Plan) received from employer being an eligible start-up
• Owns and has more than one house property (either owned as single or jointly)
• Agriculture income in a financial year exceeds Rs 5,000
• Is a Resident Not Ordinarily Resident (RNOR) and Non-resident Indian (NRI)
• Have taxable capital gains (short term and long term)
• Total income from all sources exceeds Rs 50 lakh
• Income from lottery, racehorses, legal gambling etc.
• Losses that have brought froward or to be carried forward for subsequent years under the head 'Income from house property'.
• Income from business or profession
• Tax has been deducted under section 194N of the Income-tax Act. TDS is deducted under section 194N on the cash withdrawals exceeding certain limit provided certain conditions are specified.

What to do if you cannot file ITR-1
Individuals who do not satisfy the eligibility conditions of ITR-1 should worry not. These individuals can use different ITR forms to file their tax returns. For instance, individuals having capital gains (either short-term and/or long-term), holding unlisted equity shares or is a director of a company can use ITR-2 to file their income tax return.
Similarly, individuals/HUF having business income or income from profession can use ITR-3 to file their income tax return.

Also Read: Which income tax return form is applicable to you for FY 2020-21?

Also Read: How to file ITR-2 with salary, capital gains and other incomes

Also Read: How to file ITR-1 with salary, home loan and other incomes