Your income sources decide the form. Your income level only decides whether the simplest one is still open to you.
Most salaried filers use ITR-1. One capital gain, one foreign asset or one company directorship moves you to ITR-2. Business or professional income moves you to ITR-3 or ITR-4. Getting this wrong makes the return defective, so it is worth two minutes.
Eligibility below is as published by the Income Tax Department, current as of 17 August 2026.
Which form applies to you?
| Form | Who files it | Key limit | Source |
|---|---|---|---|
| ITR-1 (Sahaj) | Resident individuals with salary or pension, one house property, other sources, and agricultural income up to ₹5,000 | Total income up to ₹50,00,000; long-term capital gain under Section 112A up to ₹1,25,000 | incometax.gov.in |
| ITR-2 | Individuals and HUFs without business or professional income | No limit; use where ITR-1 is barred | incometax.gov.in |
| ITR-3 | Individuals and HUFs with income from business or a profession | No limit | incometax.gov.in |
| ITR-4 (Sugam) | Residents opting for presumptive taxation under Sections 44AD, 44ADA or 44AE | Total income up to ₹50,00,000 | incometax.gov.in |
| ITR-5 | Firms, LLPs, AOPs and BOIs | Not for individuals or companies | incometax.gov.in |
| ITR-6 | Companies, other than those claiming exemption under Section 11 | Filed with digital signature | incometax.gov.in |
| ITR-7 | Trusts, political parties, institutions and similar entities | Under Sections 139(4A) to 139(4D) | incometax.gov.in |
Who cannot file ITR-1, even on a salary?
The exclusions matter more than the eligibility. You are out of ITR-1 if any one of these applies.
- Total income exceeds ₹50,00,000
- You are a director in a company
- You have short-term capital gains
- Your long-term capital gains under Section 112A exceed ₹1,25,000
- You held unlisted equity shares at any point in the year
- You own assets outside India, including a financial interest in any entity
- You have signing authority in an account outside India
- You have income from a source outside India
- Tax was deducted under Section 194N
- Tax on ESOPs from an eligible start-up was deferred
- You have losses brought forward or losses to carry forward
One line applies to a lot of people: unlisted equity shares. Employees holding shares in a private company, including their own employer, are out of ITR-1 even if they sold nothing.
Another is more than one house property. ITR-1 permits income from one house property only. A second flat, even a vacant one, moves you to ITR-2.
ITR-2 or ITR-3: how do you tell?
The test is whether you have income from a business or a profession. If you do, it is ITR-3. If you do not, it is ITR-2.
Capital gains alone do not make you a business. Selling shares as an investor is capital gains, filed in ITR-2. Trading in futures and options is treated as business income and needs ITR-3. So does freelancing, consulting, or any professional practice not filed under presumptive rules. See F&O taxation.
Salaried people with capital gains are the largest group here. Salary plus listed share sales plus mutual fund redemptions is ITR-2. Add a side consultancy and it becomes ITR-3 or ITR-4. See LTCG on shares and capital gains on property.
When is ITR-4 the right choice?
ITR-4 Sugam is for residents declaring income on a presumptive basis under Sections 44AD, 44ADA or 44AE, with total income up to ₹50,00,000.
It suits small businesses and professionals who would rather declare a prescribed percentage of turnover than maintain full books. The trade-off is that you cannot then claim expenses against that income, and switching out of the scheme carries a lock-out period. Read presumptive taxation before choosing it.
Note that ITR-4’s ₹50,00,000 cap is on total income, not turnover. The turnover thresholds for 44AD and 44ADA are separate and higher.
What happens if you file the wrong form?
The return can be treated as defective under Section 139(9). You get a notice and a window to correct it. If you do not respond in time, the return can be treated as never filed, which drags in the Section 234F fee and the loss of carry-forward rights.
The portal will often block an obviously wrong choice, but it cannot catch everything. It does not know you hold unlisted shares unless you tell it. So the responsibility stays with you.
If you are not sure between two forms, choose the more detailed one. Filing ITR-2 when ITR-1 would have done is not an error. Filing ITR-1 when you needed ITR-2 is. Then follow the steps in how to file your ITR.
Frequently asked questions
Can I file ITR-1 if I have capital gains?
Only long-term capital gains under Section 112A up to ₹1,25,000. Any short-term capital gain, or long-term gain above that figure, moves you to ITR-2.
I am salaried but also a director. Which form?
ITR-2 at minimum. Being a director in a company is an explicit disqualification from ITR-1, regardless of your income level or whether the company paid you anything.
Which form does a freelancer file?
ITR-4 if you declare income presumptively under Section 44ADA and your total income is within ₹50,00,000. ITR-3 if you maintain books and claim actual expenses, or if you fall outside the presumptive rules.
Does an NRI file ITR-1?
No. ITR-1 is for resident individuals only, and it excludes those who are not ordinarily resident. Non-residents file ITR-2 or ITR-3 depending on their income sources. See NRI taxation.
Do the forms change every year?
The structure is stable but the schedules and disclosures are notified afresh each assessment year. Check the current year’s form on the portal before you start, and check the utility version if you file offline.
Sources
- Income Tax Department, guidance on which ITR form to file and ITR-1 eligibility and exclusions, as of 17 August 2026. incometax.gov.in
- Income Tax Act, 1961, Sections 44AD, 44ADA, 44AE, 112A and 139(9). incometaxindia.gov.in
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