Which itr to choose

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This query is : Resolved

K G Karthikeyan (Querist)

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?

Ganeshbabu K

Ganeshbabu K (Expert)

22 January 2014 Yes itr 4 can be filed treating lease income as business income

K G Karthikeyan

K G Karthikeyan (Querist)

23 January 2014 His main source of income is salary. Lease income is other sources only. Can ITR 1 be used?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

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.

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