“For FY2020-21, return in ITR 1 cannot be filed by a taxpayer whose tax has been deducted under Section 194N. TDS is required to be deducted under Section 194N by banks, co-operative banks or a post office from any sum paid in cash from one or more accounts maintained by the recipient. Tax is deducted at the rate of 2% or 5% depending on the amount withdrawn and the fact that the taxpayer has filed income tax return in the past three years or not,” said Tarun Kumar, a Delhi-based chartered accountant. Such taxpayers won’t be able to file ITR 1. They may use ITR 2 or 3.

There is another set of taxpayers who won’t be able to use the two ITR forms. “As per an amendment in Budget 2020, from FY21, an employee receiving ESOPs from an eligible startup need not pay tax in the year of exercising the option. The TDS on the ‘perquisite’ stands deferred to earlier of the events that is expiry of five years from the year of allotment of ESOPs or date of sale of the ESOPs by the employee or date of termination of employment. Such employees won’t be able to file ITR 1 and 4; they will have to file ITR 2. ITR 2 and 3 are more detailed,” said Archit Gupta, founder and CEO, ClearTax.

Apart from these changes, there are certain other conditions under which a taxpayer can’t file ITR 1 and ITR 4.

ITR 1 can be filed by a person whose salaried income doesn’t exceed ₹50 lakh and has only one residential property and agriculture income is below ₹5,000. ITR 4 can be filed by taxpayers who have opted for the presumptive tax regime and their turnover doesn’t exceed ₹2 crore.