Salary ITR

Salary ITR

What is Salary ITR?

Salary ITR refers to filing income tax returns by individuals whose primary source of income is salary received from an employer. It includes basic salary, allowances, perquisites, bonuses, etc.

Who Needs to e-File a Salary ITR (Income Tax Return)?

1. Individuals with income above the basic exemption limit:
If your total annual income from salary and other sources exceeds ₹2.5 lakh (for individuals below 60 years), you must file an ITR.

2. Individuals who want to claim a refund:
If excess TDS has been deducted and you want a refund, filing an ITR is necessary.

3. Individuals with foreign assets or income:
If you hold foreign bank accounts, property, or income abroad, filing ITR is mandatory, even if your income is below the exemption limit.

4. Individuals with income from more than one employer:
If you switched jobs during the year and received salary from multiple employers, you must file ITR to consolidate and report total income.

5. Individuals who earned income from investments:
If you earned capital gains or dividend income along with salary, it must be reported through ITR filing.

6. Individuals required to file ITR under other conditions:
Even if income is below the limit, you must file ITR if:
- You deposited over ₹1 crore in a bank account
- You spent ₹2 lakh or more on foreign travel
- Your electricity bill exceeded ₹1 lakh in a year

Applicable ITR Forms:

ITR-1 (Sahaj): For individuals having income up to ₹50 lakh from salary, one house property, and other sources.
ITR-2: If you have salary income plus capital gains or foreign income.

Documents Required for Salary ITR:

✔️ Form 16
✔️ Salary slips
✔️ PAN & Aadhaar
✔️ Bank account details
✔️ Investment proofs (for deductions)

Advantages Of Salary ITR

✅ Legal Compliance:
Filing ITR is a legal obligation for individuals earning above the taxable limit, ensuring compliance with the Income Tax Act.

✅ Easy Loan & Visa Processing:
ITR acts as income proof for loan approvals (home/car/personal) and visa applications for foreign travel.

✅ Refund of Excess TDS:
If excess TDS has been deducted by the employer, you can claim a refund by filing your ITR.

✅ Income Proof for Future Reference:
ITR serves as documented proof of your income, which can be useful in financial planning and investment.

✅ Carry Forward Losses:
If you have losses under any head (like capital gains), filing ITR allows you to carry forward these losses for future set-off.

✅ Avoid Penalty:
Filing ITR on time helps avoid late fees under Section 234F and other penalties.

✅ Build Financial Credibility:
Regular ITR filings build a financial track record, helping in higher loan sanctions and better creditworthiness.

Disadvantages of Salary ITR:

1. Limited Deduction Options: Salaried individuals have fewer tax-saving opportunities compared to business owners or professionals.
2. Inflexibility in Income Reporting: Salary is fixed and reported by the employer, leaving no scope for income adjustments.
3. Tax Deducted at Source (TDS): Tax is deducted automatically, even if eligible deductions are not claimed timely.
4. Complexity in Declaring Other Income: Salaried taxpayers with income from other sources (rent, capital gains, etc.) need to manually calculate and declare it.
5. Time-Consuming Documentation: Gathering Form 16, investment proofs, and other documents can be time-consuming during filing.
6. Penalties for Late Filing: Missing the deadline can lead to penalties and interest even for salaried individuals with TDS already paid.

Old Tax Regime

Features:
Offers various exemptions and deductions (like HRA, LTA, 80C, 80D, etc.)
Suitable if you claim significant deductions
Complex filing due to multiple deductions

Slab Rates (FY 2024-25):

Income Range		Tax Rate
₹0 – ₹2.5 lakh		Nil
₹2.5 – ₹5 lakh		5%
₹5 – ₹10 lakh		20%
Above ₹10 lakh		30%

New Tax Regime

Features:
Lower tax rates
Very limited deductions/exemptions allowed
Simpler and faster filing process

Slab Rates (FY 2024-25):

Income Range (₹)	Tax Rate
₹0 – ₹3,00,000	Nil
₹3,00,001 – ₹6,00,000	5%
₹6,00,001 – ₹9,00,000	10%
₹9,00,001 – ₹12,00,000	15%
₹12,00,001 – ₹15,00,000	20%
Above ₹15,00,000	30%

Which One Should You Choose?

Choose Old Regime if:
You claim deductions above ₹2–2.5 lakh
You pay home loan interest, invest in ELSS, or claim HRA

Choose New Regime if:
You don’t claim many deductions
You prefer lower rates and simpler compliance