Prepare yourself to file I-T returns -- By IBNlive.com

As the month of July approaches, taxpayers are getting ready to file their income tax returns. The procedure for each individual taxpayer is to fill Form 16 and Form No16A (tax deducted on Other Income). To avoid last minute rush one must keep the necessary documents ready, well ahead of the stipulated last date. An individual whose taxable income during a financial year exceeds the exemption limit of Rs 1 lakh (Rs 1.35 lakh in case of females and Rs 1.85 lakh in case of senior citizens) has to file in tax returns.

Which ITR Form is applicable to you?

With the introduction of new income tax return forms based on nature of income earned during the year, one needs to know relevance of each return form and select the right form.

ITR 1: This form can be used only by an individual having a salary and interest income. Form ITR-1 cannot be used if the individual has any income under other heads like:

# Property rental income

# Capital gains

# Dividend income from shares of foreign companies (which is not tax free in India)

# Winning from lotteries or any other prize money

Thus, even under the head “Income from Other Sources”, if the taxpayer has any income other than interest income then he cannot use ITR 1.

On the web site of the IT Department, there are two versions of ITR 1 available for downloading. Version 1 is two pages and Version 2 is three pages, long.

Both versions have additional pages of notes that serve as guidance to the taxpayer, when filling up the form. The font size seems to be the only difference between the two versions though.

It may be noted that this 'Form' is likely to be of use to a very limited number of taxpayers.

Most salaried taxpayers have income from other heads as well as income from sources other than interest (which would be chargeable to tax under the head 'Income from Other Sources'). Therefore, one can only wonder about the actual utility of this form.