ITR Form Selection Guide AY 2026-27
A complete guide to help salaried individuals understand the key differences between ITR-1 (SAHAJ) and ITR-2, determine eligibility, and choose the correct ITR form for their income profile.
Understanding ITR Forms
The content on this page provides general guidance on ITR form selection and is not exhaustive. For complete details, refer to the Income Tax Act, Rules, Notifications, and official e-Filing resources. Consult a tax professional for personalized advice.
ITR-1, also known as SAHAJ, is the simplified income tax return form for resident individuals with simpler income profiles. It is applicable when total income is up to ₹50 lakh and comes from permitted sources only.
ITR-2 is applicable for individuals and HUFs who have income from any head other than business or profession, and who do not qualify for ITR-1. It covers more complex income scenarios.
ITR-1 (SAHAJ)
ITR-1 (SAHAJ) can be filed by a Resident Individual (other than Not Ordinarily Resident) who meets all of the following conditions:
The following income sources are permitted under ITR-1:
The total income must not exceed ₹50 lakh, excluding the permitted Long-Term Capital Gain under section 112A up to ₹1,25,000. This means if your total income (excluding the LTCG) is below ₹50 lakh, you may still be eligible for ITR-1 even if including the LTCG it exceeds ₹50 lakh.
ITR-2
ITR-2 is applicable for:
Use ITR-2 when any of the following conditions apply:
ITR-2 is the appropriate form when you have income that does NOT qualify under ITR-1, or when you have income from heads other than those permitted in ITR-1. If you cannot use ITR-1, ITR-2 is typically the next option unless you have business income (then ITR-3).
Side-by-Side Comparison
| Criteria | ITR-1 (SAHAJ) | ITR-2 |
|---|---|---|
| Applicable to | Resident Individual only | Individual and HUF |
| Total income limit | Up to ₹50 lakh | No upper limit |
| Salary / Pension | Allowed | Allowed |
| House property | One property only | Multiple properties allowed |
| Capital gains | LTCG u/s 112A up to ₹1,25,000 only | All types allowed |
| Foreign income | Not allowed | Allowed |
| Director in company | Not allowed | Allowed |
| Unlisted shares | Not allowed | Allowed |
| Agricultural income | Up to ₹5,000 | No limit |
| Business income | Not allowed | Not allowed (use ITR-3) |
| Foreign assets | Not allowed | Allowed |
ITR-1 Disqualifiers
The following conditions disqualify you from using ITR-1 (you must use ITR-2 or ITR-3 instead):
Key Differences
ITR-1 is the simpler, shortened form specifically designed for individuals with straightforward income profiles. ITR-2 is more detailed and covers additional schedules for foreign income, capital gains, and other complex scenarios.
ITR-1 is limited to basic income details. ITR-2 requires additional disclosures such as foreign asset details, unlisted share holdings, and detailed capital gains calculations.
ITR-1 is restricted to specific income types within defined limits. ITR-2 accommodates all income types under heads other than business/profession, with no upper income limit.
ITR-1 is only for residents. ITR-2 can be filed by non-resident individuals and those with foreign income or assets.
Quick Decision Guide
Follow this step-by-step guide to determine which ITR form applies to you:
Are you a Resident Individual? If NO (Non-Resident or RNOR), use ITR-2. If YES, proceed to Step 2.
Is your total income up to ₹50 lakh (excluding permitted LTCG)? If NO, use ITR-2. If YES, proceed to Step 3.
Do you have income only from salary/pension, one house property, other sources, agricultural income up to ₹5,000, and LTCG u/s 112A up to ₹1,25,000? If YES, you can use ITR-1. If NO, proceed to Step 4.
Do ANY of these apply: Director, unlisted shares, foreign assets/income, section 194N TDS, ESOP, brought forward losses? If YES to any, use ITR-2. Otherwise, ITR-1 applies.
Do you have income from business or profession? If YES, use ITR-3 (not ITR-2). The decision process ends here.
Other ITR Forms
If you have income from Profits and Gains of Business or Profession, you must file ITR-3 (not ITR-1 or ITR-2). ITR-3 is applicable for individuals and HUFs who have:
Note: ITR-3 covers the broadest range of income scenarios for individual taxpayers. If you are unsure which form applies, review the ITRHelper on the home page or consult a tax professional.
Other ITR Forms
ITR-4 (SUGAM) is a simplified form for individuals, HUFs and firms who have business income computed on a presumptive basis under sections 44AD, 44ADA or 44AE. Key features:
Note: If you opt for presumptive taxation under sections 44AD, 44ADA or 44AE, you can use ITR-4 instead of ITR-3. This is a simpler form that reports business income at prescribed percentages rather than detailed accounts.
Frequently Asked Questions
ITR-1 can be filed by a Resident Individual (other than Not Ordinarily Resident) with total income up to ₹50 lakh from salary/pension, one house property, other sources, agricultural income up to ₹5,000, and capital gain income u/s 112A up to ₹1,25,000.
The total income must not exceed ₹50 lakh, excluding permitted LTCG under section 112A up to ₹1,25,000. This means if your income excluding LTCG is below ₹50 lakh, you can still use ITR-1 even if including the LTCG it exceeds ₹50 lakh.
Yes, ITR-1 allows income from one house property. However, if you have income from more than one house property, you must file ITR-2 or ITR-3.
Use ITR-2 when: total income exceeds ₹50 lakh, you have capital gains other than section 112A, you hold unlisted shares, you have foreign assets or income, you are a director in a company, or when any ITR-1 disqualifier applies.
No, if you are a director in a company at any time during the previous year, you cannot file ITR-1. You must file ITR-2 or ITR-3.
No, ITR-1 is only for Resident Individuals. Non-Residents and Resident but Not Ordinarily Resident (RNOR) individuals must file ITR-2 or ITR-3.
ITR-1 allows LTCG under section 112A up to ₹1,25,000 only. For short-term capital gains or LTCG above this limit, you must file ITR-2 or ITR-3.
ITR-1 allows agricultural income up to ₹5,000. If agricultural income exceeds ₹5,000, you must file ITR-2 or ITR-3.