When filing your Income Tax Return for Assessment Year 2026–27, choosing the correct form is the most important step. Salaried individuals usually have a simple structure of income, but the right form depends on extra income sources like capital gains, property, or business income.

Here’s a clear guide to help you pick the correct ITR form.

1. ITR-1 (Sahaj) – Most Salaried Employees Use This

✔ Who can file:

You can use Income Tax Return Form ITR-1 if:

  • You are a resident individual
  • Total income is up to ₹50 lakh
  • Income sources include:
    • Salary or pension
    • One house property
    • Interest income (FD, savings)
    • Small agricultural income (up to ₹5,000)

✔ New update (important for 2026):

  • You can also include limited capital gains (up to ₹1.25 lakh under Section 112A) in some cases

👉 This makes ITR-1 suitable for most salaried people.

2. ITR-2 – For Salaried with Extra Income

Use Income Tax Return Form ITR-2 if you:

  • Have income above ₹50 lakh
  • Own more than one house property
  • Have capital gains (shares, mutual funds, property, etc.) beyond limits
  • Have foreign assets or foreign income
  • Are NOT earning business income

👉 This is common for salaried people who also invest heavily.

3. ITR-3 – If You Have business or Freelance Income

Use Income Tax Return Form ITR-3 if:

  • You are salaried + freelancer
  • You earn from trading, business, or profession
  • You have F&O trading or side business income

4. ITR-4 (Sugam) – For Presumptive Income

Use Income Tax Return Form ITR-4 if:

  • You are a small business owner or professional under presumptive scheme
  • Or you have salary + small business income under 44AD/44ADA

Quick Summary (Easy View)

✔ Most salaried people:

👉 ITR-1

✔ Salaried + investments/complex assets:

👉 ITR-2

✔ Salaried + freelance/business:

👉 ITR-3

✔ Small business under presumptive tax:

👉 ITR-4

Common Mistakes to Avoid

❌ Using ITR-1 when you have capital gains beyond limits
❌ Ignoring foreign assets (must use ITR-2)
❌ Mixing freelance income with salary in wrong form
❌ Choosing form without checking AIS/Form 26AS

Final Takeaway

For most salaried employees, the correct choice is:

👉 Income Tax Return Form ITR-1 (simple salary case)

But if your financial situation is more complex, you may need ITR-2 or ITR-3.

Simple Rule

👉 “Salary only = ITR-1, anything extra = different form.”

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.

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Kokila Chokkanathan

10/05/2026 12:59 PM