Filing your Income Tax Return (ITR) can be confusing, but choosing the correct form is essential to avoid penalties. Making a mistake can lead to a defaulted ITR and a potential tax notice. To simplify the process, here is a breakdown of the most common ITR forms—ITR-1, ITR-2, ITR-3, and ITR-4—and who should use them.
ITR-1 (Sahaj)
This form is for resident individuals whose total income is ₹50 lakh or less. Your income can come from a salary, pension, one house property, other sources like interest or dividends, or agricultural income up to ₹5,000.
You cannot use ITR-1 if you have short-term capital gains, are a company director, hold unlisted equity shares, or have financial assets outside India.
ITR-2
ITR-2 is for individuals and Hindu Undivided Families (HUFs) who don’t qualify for ITR-1. This form is for taxpayers who do not have income from a business or profession. It’s typically used by those with capital gains, income from more than one house property, or foreign assets/income.
ITR-3
This form is for individuals and HUFs who have income from a business or a profession. You must maintain books of accounts and can also use this form if you have investments in unlisted equity shares.
ITR-4 (Sugam)
ITR-4 is for individuals, HUFs, and firms (excluding LLPs) who have opted for the presumptive income scheme under specific sections of the Income Tax Act.
You cannot use ITR-4 if your total income is more than ₹50 lakh, you are a company director, have capital gains, hold unlisted equity shares, or have any assets or signing authority located outside India.
By understanding the criteria for each form, you can confidently choose the right one for your tax filing. The deadline to file ITR for the 2025-26 tax season is September 15.