Salaried Employees: Which ITR Form to File?

Introduction

Who Qualifies as a Salaried Individual for ITR Filing?

For income tax return (ITR) purposes, a salaried person is someone who earns a fixed income from an employer under a formal contract of employment. This income typically includes basic salary, allowances, perquisites, and benefits as outlined under Section 17(1) of the Income Tax Act, 1961. Salaried individuals are required to file an ITR annually, disclosing income details, deductions, taxes paid, and any refunds claimed.

Applicable ITR Forms for Salaried Individuals

Salaried taxpayers generally file ITR-1 or ITR-2, depending on their income sources and other specific conditions.

ITR-1 (Sahaj)

This form is suitable for resident individuals with a total income up to ₹50 lakh from the following sources:

Eligible if income includes:

Salary or pension
Income from one house property (not involving losses)
Income from other sources like interest (excluding winnings from lottery, etc.)
Agricultural income up to ₹5,000
No foreign income or foreign assets

Not eligible for ITR-1 if:

Total income exceeds ₹50 lakh
Individual is Non-Resident or Resident but Not Ordinarily Resident (RNOR)
Income is earned from more than one house property
Has capital gains or income from business/profession
Income includes winnings from lottery, gambling, or racehorses
Has losses under “Income from Other Sources”
Owns foreign assets or earns foreign income
Is a director in a company or holds unlisted equity shares
Has deferred tax liability on ESOPs from eligible startups
ITR-2 Form: For Individuals and HUFs Without Business Income
The ITR-2 Form is meant for individuals and Hindu Undivided Families (HUFs) who do not earn income from business or profession. It is typically used when total income exceeds ₹50 lakh or includes complex sources such as capital gains, multiple house properties, foreign income/assets, or other special circumstances.
Eligible Scenarios for Filing ITR-2:
- Income from salary or pension
- Income from more than one house property
- Capital gains (both short-term and long-term)
- Income from other sources, including lotteries, gambling, or horse racing
- Agricultural income exceeding ₹5,000
- Foreign assets or income from abroad
- Total income over ₹50 lakh
- Holding unlisted equity shares
- Serving as a director in a company
- Claiming relief under DTAA (Double Taxation Avoidance Agreement – Sections 90/91)
- Deferred tax on ESOPs from eligible start-ups
- Carry-forward or set-off of losses from previous years
Who Cannot File ITR-2:
- Individuals or HUFs earning income from business or profession
- Companies, firms, or trusts

How to File ITR for Salaried Employees

Once you’ve identified the correct ITR form (usually ITR-1 or ITR-2), the next step is to file your income tax return online. Here’s a quick, step-by-step guide to help salaried individuals file their returns with ease:

Step-by-Step Guide to File ITR Online

Step 1: Log in to the e-Filing Portal

Visit the Income Tax Department’s e-Filing portal.
Log in using your PAN, Aadhaar, or registered User ID and password.

Step 2: Start Filing Your Return

Go to ‘e-File’ > ‘Income Tax Returns’ > ‘File Income Tax Return’.

Step 3: Select the Assessment Year

Choose the applicable Assessment Year (e.g., AY 2024–25).
Select the ‘Online’ mode for filing.

Step 4: Choose the Correct ITR Form

Select ITR-1 (Sahaj) if your total income is up to ₹50 lakh from salary, one house property, and other sources.
If not eligible for ITR-1, opt for ITR-2.

Step 5: Enter Required Details

Fill in your personal, income, and deduction details.
Include income from salary, house property, and other sources.
Claim deductions under sections like 80C, 80D, etc. as applicable.

Step 6: Review and Submit

Cross-check all entries carefully.
Submit your return electronically.

Step 7: Complete e-Verification

Verify the return using Aadhaar OTP, Net Banking, or EVC.
e-Verification is mandatory to complete the filing process.

Comparison Between ITR-1 and ITR-2 Forms for Salaried Employees

Here’s a quick comparison of the ITR-1 (Sahaj) and ITR-2 forms for salaried employees based on key factors:

Aspect	ITR-1 (Sahaj)	ITR-2
Income Sources	Salary, one house property, interest income, agricultural income up to ₹5,000	Salary, multiple house properties, capital gains, foreign income/assets, agricultural income over ₹5,000
Income Threshold	Total income up to ₹50 lakh	Total income exceeding ₹50 lakh
Residential Status	Ordinarily Resident Indian	Any residential status (including Non-Resident)
Complexity	Simple form, requires less information	More detailed, requires additional information
Eligibility Exclusions	Not applicable if there is income from business/profession, capital gains, or foreign assets	Not applicable if there is income from business/profession

Common Mistakes to Avoid While Filing ITR for Salaried Persons

Filing your Income Tax Return (ITR) accurately is crucial for salaried individuals to ensure compliance and avoid complications. Here are some common mistakes to watch out for when filing your ITR:

Incorrect Personal Information
Ensure that your name, PAN, Aadhaar number, address, email ID, and mobile number match the details in your PAN records. Even small discrepancies can delay the processing of your return or result in rejection.
Choosing the Wrong ITR Form
One of the most frequent mistakes is selecting the wrong ITR form. It’s important to identify the correct form based on your income sources and tax filing requirements to avoid errors.
Failure to Report All Sources of Income
Make sure to report all your income sources, including salary, interest income, capital gains, or income from any other sources. Double-check that your ITR aligns with your Form 16, Form 26AS, and the Annual Information Statement (AIS) to ensure accurate reporting.
Not Claiming Eligible Deductions
Many salaried individuals overlook deductions available under sections like 80C, 80D, and 80TTA, which can help reduce taxable income. Be sure to claim all eligible deductions to minimize your tax liability.
Late Filing or Non-Filing
Filing after the due date may result in penalties and interest, and it can also limit your ability to carry forward certain losses. Avoid the rush and file your return on time to stay compliant and avoid unnecessary costs

About the Author

Muskan
Muskan is a seasoned content writer with expertise in business registration, tax regulations, trademark laws, and company compliance. Through his well-researched and practical articles, he provides businesses with clear and actionable guidance, helping them navigate complex legal and regulatory landscapes with ease

May 29, 2025