Which ITR form should you file?
Why the form matters more than it looks
Choosing the wrong return form is one of the most common reasons a return is marked defective under Section 139(9). The department does not simply reassign you to the right form; the return is treated as not properly filed until you respond, and if you do not respond in time it can be treated as never filed at all, with the late-filing consequences that follow.
The forms are arranged by complexity of income, not by how much you earn. A salaried person earning ₹15 lakh with nothing else uses a simpler form than a salaried person earning ₹8 lakh who sold some shares.
ITR-1 (Sahaj): the simple case
You can use ITR-1 if you are a resident individual and your total income for FY 2025-26 is up to ₹50 lakh, made up only of the following.
- Salary or pension.
- Income from house property — up to two properties for AY 2026-27, which is a change from the single property allowed in earlier years.
- Long-term capital gains under Section 112A of up to ₹1.25 lakh, with no brought-forward loss to set off. This is new for AY 2026-27 and it removes the most common reason ordinary salaried investors used to be forced onto ITR-2.
- Other sources such as bank interest, dividends and family pension.
- Agricultural income up to ₹5,000.
Non-residents and RNORs cannot use ITR-1 at all, whatever their income looks like, and nor can a Hindu Undivided Family.
ITR-2: what pushes you off the simple form
Any single item on this list disqualifies ITR-1 and moves you to ITR-2, even if everything else about your return is straightforward. Several of them surprise people every year.
| Disqualifier | The version people miss |
| Capital gains beyond the ₹1.25 lakh 112A allowance | Short-term equity gains, debt fund gains, property or gold sales — any amount |
| You are a director in a company | Including an unpaid or nominal directorship in a dormant company |
| You held unlisted shares at any time in the year | Including ESOPs in an unlisted employer and angel investments |
| Foreign income, foreign assets, or signing authority abroad | A foreign brokerage account or overseas ESOPs both count |
| More than two house properties | Two is the new ceiling for ITR-1 |
| Total income above ₹50 lakh | Computed before deductions in the usual manner |
| Agricultural income above ₹5,000 | A small farm income can force the change on its own |
| Losses to carry forward or set off | Including a carried-forward capital loss from an earlier year |
The directorship and unlisted-shares entries are the two that most often catch salaried professionals. A directorship in a family company, or shares in the private employer you joined three years ago, are both reportable and both remove ITR-1.
ITR-3 and ITR-4: business and professional income
ITR-3 applies where you have business or professional income that is not fully declared under a presumptive scheme. That covers a proprietary business keeping regular books, a professional practice, partnership remuneration or profit share, and intra-day or speculative trading treated as business income.
ITR-4 (Sugam) is the presumptive route. It applies to a resident individual, HUF or firm other than an LLP, with total income up to ₹50 lakh, whose business or professional income is declared under Section 44AD, 44ADA or 44AE. Capital gains of any amount disqualify it, as do foreign assets, a directorship, unlisted shares and carried-forward losses.
A frequent freelancer error: declaring professional income under 44ADA in ITR-4 while also having sold some mutual funds during the year. The capital gain alone forces you off ITR-4. You can still use presumptive taxation — you simply report it in ITR-3 instead.
Deadlines for AY 2026-27
| Return | Due date |
| ITR-1, ITR-2 (non-audit) | 31 July 2026 |
| ITR-3, ITR-4 (non-audit) | 31 August 2026 |
| Cases requiring a tax audit | 31 October 2026 |
The separate, later date for ITR-3 and ITR-4 is new for AY 2026-27. Due dates are occasionally extended by circular, so check the e-filing portal before relying on any of them. A belated return remains possible after the due date, with a late fee under Section 234F and the loss of the right to carry forward most losses.
Frequently asked questions
I only sold a few shares. Do I really need ITR-2?
It depends on the type of gain. For AY 2026-27 you may stay on ITR-1 if the only capital gain is a long-term equity gain under Section 112A of up to ₹1.25 lakh with no loss to set off. Any short-term gain, any debt fund gain, or a long-term equity gain above that ceiling moves you to ITR-2.
What happens if I file the wrong ITR form?
The return is likely to be marked defective under Section 139(9). You normally get 15 days to correct and resubmit. If you do not respond within the time allowed, the return can be treated as never having been filed, which brings the late-filing fee and the loss of carry-forward rights with it.
Can I use ITR-4 if I have both salary and freelance income?
Yes, provided the freelance income is declared under 44ADA, your total income is within ₹50 lakh, and none of the other disqualifiers apply. Salary and presumptive professional income can sit in the same ITR-4. Add a capital gain, an unlisted shareholding or a directorship and you move to ITR-3.
Does a nominal directorship really matter?
Yes. The requirement is factual, not financial: if you were a director in any company at any point during the year, ITR-1 and ITR-4 are unavailable regardless of whether you were paid anything. Dormant family companies are the usual cause.
Where to go next on this site
- Income Tax Calculator — Old and new regime side by side, with rebate and cess.
- Capital Gains Calculator — Short and long term gains across asset classes.
- Old vs New Tax Regime — Lower slabs against the deductions you give up.
- Advance Tax on Freelance Income — The instalments due before the return is even filed.
- Learn: Taxation — The ten tax concepts arranged so the pieces connect.
- Markets and Taxation Guide — How investor and trader income is classified and taxed.
Sources
- Income Tax Department e-filing portal — the forms, utilities and current due dates
- ITR-4 (Sugam) FAQs — official eligibility guidance
- ITR form selection, AY 2026-27 — the AY 2026-27 changes summarised