The correct ITR form depends on your income sources and taxpayer category. A resident individual with salary, up to two house properties and total income up to Rs 50 lakh files ITR-1 (Sahaj). Anyone with capital gains beyond the small LTCG limit, foreign assets or income above Rs 50 lakh uses ITR-2. Business or professional income needs ITR-3 (regular books) or ITR-4 (Sugam) (presumptive). Filing the wrong form leads to a defective-return notice under Section 139(9).
ITR-1 and ITR-4 now accept up to two house properties and a small amount of long-term capital gains under Section 112A (up to Rs 1.25 lakh) from listed shares or equity funds — so a salaried person with modest equity gains and a second home no longer has to jump to ITR-2. The seven-form structure (ITR-1 to ITR-7) is unchanged under the Income-tax Act, 2025.
ITR-1 to ITR-7 — Who Files Which
The Income-tax Act, 2025 prescribes seven return forms. Match your taxpayer type and income to the right one for AY 2026-27 (financial year 2025-26).
| Form | Who should file | Income / turnover limit |
|---|---|---|
| ITR-1 (Sahaj) | Resident individual — salary/pension, up to two house properties, other sources (interest), LTCG u/s 112A up to Rs 1.25L, agri income up to Rs 5,000 | Up to Rs 50 lakh |
| ITR-2 | Individuals & HUFs with capital gains, more than the ITR-1 limits, foreign assets/income or being a director — no business/profession income | No limit |
| ITR-3 | Individuals & HUFs with income from business or profession (regular books of account) | No limit |
| ITR-4 (Sugam) | Resident individual/HUF/firm (not LLP) on presumptive taxation u/s 44AD, 44ADA or 44AE | 44AD Rs 3cr · 44ADA Rs 75L |
| ITR-5 | Partnership firms, LLPs, AOPs, BOIs and similar entities (not companies or individuals) | No limit |
| ITR-6 | Companies not claiming exemption under Section 11 (charitable/religious) | No limit |
| ITR-7 | Trusts, political parties, institutions, universities filing u/s 139(4A)/(4B)/(4C)/(4D) | No limit |
ITR-1 & ITR-4 total income cap is Rs 50 lakh; ITR-4 turnover is Rs 3 crore u/s 44AD (Rs 2 crore if cash receipts exceed 5%) and Rs 75 lakh u/s 44ADA. NRIs cannot use ITR-1 or ITR-4.
Map Your Income to the Right Form
A quick-reference mapping from what you earn to the form you should file for AY 2026-27.
| Your income source | Applicable form(s) |
|---|---|
| Salary / pension only | ITR-1 |
| Salary + up to two house properties | ITR-1 |
| Salary + LTCG 112A up to Rs 1.25 lakh | ITR-1 |
| Salary + capital gains (above the small limit) | ITR-2 |
| Salary + foreign income / assets | ITR-2 |
| Freelancer / professional (presumptive) | ITR-4 |
| Freelancer / professional (regular books) | ITR-3 |
| Business income (presumptive 44AD/44AE) | ITR-4 |
| Business income (regular books) | ITR-3 |
| Director / unlisted shares held | ITR-2 or ITR-3 |
| Partnership firm / LLP | ITR-5 |
| Private / public limited company | ITR-6 |
| Charitable trust / NGO / political party | ITR-7 |
When two forms could apply, the presence of business/profession income is usually what tips you from ITR-2 to ITR-3.
- 1CategoryIndividual, firm, company or trust
- 2Income mixSalary, capital gains, business?
- 3Check limitsRs 50L cap, LTCG, house count
- 4Pick formITR-1 … ITR-7
- 5File & verifye-verify within 30 days
Multiple income sources and unsure which form fits?
Get ITR Filing Help →ITR-1 vs ITR-2 — Which One Is Yours?
The most frequent confusion is between ITR-1 and ITR-2. ITR-1 is the simplest form; the moment your situation exceeds its boundaries, you move to ITR-2.
File ITR-1 (Sahaj) if
- Resident individual, total income up to Rs 50 lakh
- Salary/pension, interest and up to two house properties
- LTCG u/s 112A only, up to Rs 1.25 lakh
- No foreign assets, no carry-forward losses
- Not a company director; no unlisted shares
Move to ITR-2 if
- Total income above Rs 50 lakh
- Any capital gains beyond the small 112A limit
- Foreign income or foreign assets held
- You are a company director or hold unlisted shares
- You are an NRI / RNOR (cannot use ITR-1)
ITR-1 now allows only LTCG under Section 112A up to Rs 1.25 lakh with no capital loss to carry forward. Short-term capital gains, property sale gains, or LTCG above Rs 1.25 lakh all require ITR-2. Reporting capital gains on the wrong form is the most common cause of a defective-return notice.
Not sure if your capital gains fit in ITR-1?
Ask a TaxClue expert →What Happens If You File the Wrong Form
If you file an incorrect ITR form, the Income Tax Department issues a defective-return notice under Section 139(9). You typically get 15 days (extendable on request) to file a corrected return. Ignore it and the return is treated as invalid — as if you never filed, which can attract late-filing consequences.
- Confirm your residential status (NRI cannot use ITR-1/ITR-4)
- Total income within the form limit (Rs 50L for ITR-1)
- Capital gains type checked against ITR-1's 112A cap
- House-property count within two for ITR-1/ITR-4
- Business/profession income routed to ITR-3 or ITR-4
- Presumptive turnover within 44AD/44ADA limits
- Old vs new regime selected before filing
- Return e-verified within 30 days of filing
Non-Resident Indians (and RNORs) must use ITR-2 (no business income) or ITR-3 (with business income), regardless of income level. The presumptive form ITR-4 is limited to resident individuals, HUFs and firms.
Salaried Employees With Investments
A salaried employee with salary, bank interest and up to two house properties files ITR-1. If you also sold equity shares, mutual-fund units or property (beyond the Rs 1.25 lakh 112A allowance), or your income crosses Rs 50 lakh, you move to ITR-2. See our income-tax slabs and old vs new regime guides before you file.
Want us to pick the form and file it for you?
File My ITR →- ITR forms & utilities: incometax.gov.in
- Defective return: Section 139(9), Income-tax Act 2025
- Presumptive taxation: Sections 44AD / 44ADA / 44AE
- ITR-1/ITR-4 AY 2026-27 changes: CBDT ITR notifications
Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.