Which itr to choose
This query is : Resolved
22 January 2014
A person has salary income and lease income from renting of Machinery.
Can ITR 1 be used to file returns in this case?
Or, should lease be treated as Business income and ITR 4 be used?
Can ITR 1 be used to file returns in this case?
Or, should lease be treated as Business income and ITR 4 be used?
22 January 2014
Yes itr 4 can be filed treating lease income as business income
23 January 2014
His main source of income is salary. Lease income is other sources only. Can ITR 1 be used?
03 August 2025
For a person with salary income and lease income from renting machinery, here’s how to decide the ITR form:
ITR-1 (Sahaj) can be filed only if income is from salary/pension, one house property (excluding loss), and other sources like interest, but NOT from business or professional income.
If lease income is treated as business income, then ITR-4 is to be used.
If lease income is treated as income from other sources (not business), then ITR-1 can be used along with salary income.
So, the key is whether the lease income is considered business income or other sources:
If the lease income is a regular commercial activity (like leasing machinery regularly for profit), it is business income → ITR-4.
If the lease income is more passive (occasional leasing) and not a business, then it is other sources → ITR-1 can be used.
Summary:
Salary + lease as other sources → ITR-1
Salary + lease as business income → ITR-4
You should check how lease income is classified in your client’s books or income tax filings. Usually, lease of machinery is treated as business income, so ITR-4 is safer.
ITR-1 (Sahaj) can be filed only if income is from salary/pension, one house property (excluding loss), and other sources like interest, but NOT from business or professional income.
If lease income is treated as business income, then ITR-4 is to be used.
If lease income is treated as income from other sources (not business), then ITR-1 can be used along with salary income.
So, the key is whether the lease income is considered business income or other sources:
If the lease income is a regular commercial activity (like leasing machinery regularly for profit), it is business income → ITR-4.
If the lease income is more passive (occasional leasing) and not a business, then it is other sources → ITR-1 can be used.
Summary:
Salary + lease as other sources → ITR-1
Salary + lease as business income → ITR-4
You should check how lease income is classified in your client’s books or income tax filings. Usually, lease of machinery is treated as business income, so ITR-4 is safer.
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