Which ITR Form Should You File? ITR-1 to ITR-7 Explained for AY 2026-27

Choosing the correct Income Tax Return (ITR) form is one of the first and most important steps in filing an income-tax return in India. The applicable ITR form depends on several factors, including taxpayer category, residential status, total income, sources of income, capital gains, business or professional income, foreign assets and whether the taxpayer is an individual, HUF, firm, LLP, company, trust or another entity.

For Assessment Year (AY) 2026-27, taxpayers may need to choose among ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 and ITR-7. Selecting an incorrect form may result in a defective return, processing issues or the need to correct and refile the return.

EzyBiz India Consulting LLP provides professional assistance with ITR form selection, tax computation, Form 26AS/AIS/TIS reconciliation and return preparation through our ITR Filing Services in India.

Why Choosing the Correct ITR Form Matters

Different Taxpayers Require Different ITR Forms

There is no single income-tax return form applicable to every taxpayer. The correct form depends on both the legal status of the taxpayer and the type of income earned during the relevant financial year.

For example, a salaried resident individual with relatively simple income may qualify for ITR-1, whereas an individual having business income may need ITR-3 or, where the prescribed conditions are satisfied, ITR-4.

Filing the Wrong ITR Form Can Create Problems

An incorrect return form may not contain the schedules necessary to disclose the taxpayer’s actual income, assets or transactions. This can lead to incomplete reporting or a defective return.

Taxpayers should therefore determine the applicable ITR form before beginning return preparation rather than selecting a form merely because it was used in the previous year.

Important AY 2026-27 Position Before Selecting an ITR Form

AY 2026-27 Relates to Income Earned During FY 2025-26

Assessment Year 2026-27 relates to income earned during Financial Year 2025-26.

Although the Income-tax Act, 2025 came into effect from 1 April 2026, the Income Tax Department has clarified that returns for income earned during FY 2025-26 and filed for AY 2026-27 continue to be governed by the Income-tax Act, 1961.

Taxpayers may refer to the Income Tax Department’s Income Tax Return FAQs for official transition guidance.

ITR Forms 1 to 7 Continue for AY 2026-27

The Income Tax Department has made available ITR-1 through ITR-7 for AY 2026-27. Taxpayers should select the form applicable to their category and sources of income.

The current return utilities and notified forms can be accessed from the Income Tax Department’s ITR Downloads page.

ITR-1 to ITR-7 – Quick Comparison

ITR Forms for Individuals and HUFs

ITR Form	Broad Applicability
ITR-1	Eligible resident individuals with relatively simple income and total income up to ₹50 lakh
ITR-2	Individuals and HUFs without business or professional income who are not eligible for ITR-1
ITR-3	Individuals and HUFs having business or professional income
ITR-4	Eligible resident individuals, HUFs and resident firms other than LLPs using presumptive taxation

ITR Forms for Firms, LLPs, Companies and Other Entities

ITR Form	Broad Applicability
ITR-5	Firms, LLPs, AOPs, BOIs and various other non-company taxpayers not required to file ITR-7
ITR-6	Companies other than companies claiming exemption under section 11
ITR-7	Persons required to file returns under specified provisions such as sections 139(4A) to 139(4D)

Do Not Select an ITR Only Based on Income Level

Income level is only one factor. A taxpayer earning below ₹50 lakh may still be ineligible for ITR-1 or ITR-4 because of capital gains, foreign assets, business income, directorship, unlisted shares, residential status or other conditions.

ITR-1 – Who Can File Sahaj?

Who Is Eligible for ITR-1 for AY 2026-27?

ITR-1, commonly known as Sahaj, is intended for an eligible resident individual other than a Resident but Not Ordinarily Resident (RNOR) having total income up to ₹50 lakh and income from permitted sources.

For AY 2026-27, eligible income can include salary or pension, income from up to two house properties, specified income from other sources, agricultural income up to ₹5,000 and long-term capital gains under section 112A up to ₹1.25 lakh, subject to the prescribed conditions.

Important Change – Two House Properties in ITR-1

For AY 2026-27, ITR-1 permits eligible taxpayers to report income from up to two house properties. This is an important change from the earlier limitation associated with the simplified form.

The current eligibility conditions are explained in the Income Tax Department’s ITR-1 FAQs.

Who Cannot Use ITR-1?

ITR-1 is not appropriate in several situations, including where the taxpayer has business or professional income, short-term capital gains, section 112A long-term capital gains exceeding the prescribed limit, total income exceeding ₹50 lakh, specified foreign assets or income, or other disqualifying circumstances.

Company directors and persons holding unlisted equity shares during the relevant year also need to carefully review their eligibility before choosing ITR-1.

ITR-2 – Who Should File It?

Individuals and HUFs Without Business Income

ITR-2 is generally applicable to individuals and Hindu Undivided Families who are not eligible to file ITR-1 and who do not have income chargeable under the head Profits and Gains of Business or Profession.

It is commonly used by taxpayers having salary, multiple house properties, substantial capital gains, foreign assets, foreign income or other sources of income requiring disclosures that cannot be made through ITR-1.

ITR-2 for Capital Gains

An individual with substantial capital gains from shares, mutual funds, property or other capital assets will generally need to evaluate ITR-2 if there is no business or professional income.

The return contains detailed schedules for reporting different categories of capital gains.

ITR-2 for NRIs

Non-resident individuals who do not have business or professional income generally use ITR-2, subject to their specific facts.

For dedicated assistance with non-resident returns, see our NRI Tax Return Filing Services in India.

ITR-3 – Who Should File It?

Individuals and HUFs Having Business or Professional Income

ITR-3 is generally applicable to individuals and HUFs having income from business or profession who are not eligible to use ITR-4.

It can accommodate salary, house property, business or professional income, capital gains and income from other sources, depending on the taxpayer’s circumstances.

Partners of Partnership Firms

An individual receiving taxable interest, salary, bonus, commission or remuneration from a partnership firm may need to use ITR-3 because such income can be taxable under the head Profits and Gains of Business or Profession.

Business Income Along With Capital Gains

Where an individual has both business or professional income and capital gains, ITR-3 is generally the relevant form unless another specific provision applies.

This is frequently relevant to business owners, professionals, consultants, traders and taxpayers carrying on independent commercial activities.

ITR-4 – Who Can File Sugam?

Presumptive Business and Professional Income

ITR-4, commonly known as Sugam, is a simplified return for eligible resident individuals, HUFs and resident firms other than LLPs having total income up to ₹50 lakh and eligible business or professional income computed on a presumptive basis under sections 44AD, 44ADA or 44AE.

ITR-4 is optional and can be used only where the prescribed eligibility conditions are satisfied.

Other Income Permitted in ITR-4

For AY 2026-27, eligible taxpayers may also report specified salary or pension income, income from up to two house properties, permitted other-source income, agricultural income up to ₹5,000 and section 112A long-term capital gains up to ₹1.25 lakh.

Who Cannot Use ITR-4?

ITR-4 cannot be used by a non-resident or RNOR and is not suitable where total income exceeds ₹50 lakh or where other disqualifying conditions apply, such as short-term capital gains, excessive section 112A gains, specified foreign assets or income, company directorship or unlisted equity holdings.

The current eligibility requirements can be checked in the Income Tax Department’s ITR-4 guidance.

ITR-5 – Who Should File It?

Partnership Firms, LLPs and Other Specified Persons

ITR-5 is broadly applicable to persons other than individuals, HUFs, companies and persons required to file ITR-7.

It is commonly used by:

• Limited Liability Partnerships;
• partnership firms not filing ITR-4;
• Association of Persons (AOP);
• Body of Individuals (BOI);
• certain trusts;
• co-operative societies;
• societies; and
• other eligible entities.

LLPs Normally Use ITR-5

An LLP cannot use ITR-4. LLPs generally file ITR-5, subject to the applicable provisions and facts.

Partnership firms may need to distinguish between ITR-4 and ITR-5 depending on whether they satisfy the specific presumptive-taxation and other eligibility requirements of ITR-4.

ITR-6 – Which Companies Should File It?

ITR-6 for Most Companies

ITR-6 is generally applicable to companies other than companies claiming exemption under section 11 of the Income-tax Act, 1961 for AY 2026-27.

This can include domestic companies as well as foreign companies having an Indian return-filing obligation, depending on the applicable facts.

Company Returns Can Require Extensive Disclosures

Corporate income-tax returns can involve detailed reporting relating to financial statements, depreciation, tax audit information, losses, deductions, related-party matters, foreign transactions and other tax schedules.

Companies should therefore reconcile the return with their audited financial statements, tax audit report and other statutory information before filing.

ITR-7 – Who Should File It?

Specified Trusts, Institutions and Other Persons

ITR-7 is intended for persons, including certain companies, that are required to furnish returns under specified provisions such as sections 139(4A), 139(4B), 139(4C) or 139(4D) of the Income-tax Act, 1961 for AY 2026-27.

These provisions broadly cover categories such as certain charitable or religious trusts, political parties, specified institutions and universities or educational institutions, depending on the relevant statutory provision.

ITR-7 Is Not a General Trust Return

Not every trust automatically files ITR-7. The applicable form depends on the nature of the trust, its tax status and the provision under which the return is required.

Some trusts that are not eligible or required to use ITR-7 may fall within ITR-5 instead.

Which ITR Form for Salary, House Property and Capital Gains?

Salaried Individual With Simple Income

An eligible resident individual with total income up to ₹50 lakh, salary or pension and other permitted income may be able to use ITR-1.

However, the taxpayer must review all eligibility restrictions before using the simplified form.

Salaried Individual With Significant Capital Gains

A salaried individual having short-term capital gains, section 112A gains beyond the simplified-form threshold or other capital gains not permitted in ITR-1 will generally need to consider ITR-2 if there is no business or professional income.

Individual With Multiple or Complex Income Sources

Where the taxpayer has foreign assets, substantial capital gains, multiple complex income sources or disclosures not supported by ITR-1, ITR-2 may be appropriate if there is no business or professional income.

For broader professional support, see our Income Tax Return Filing Services in India.

Which ITR Form for Business Owners, Freelancers and Professionals?

Regular Business or Professional Income

An individual or HUF having business or professional income generally considers ITR-3 where the simplified presumptive return is not available or is not chosen.

Professionals Using Section 44ADA

An eligible professional declaring income on a presumptive basis under section 44ADA may be able to use ITR-4 where all other eligibility conditions are satisfied.

Where the conditions for ITR-4 are not satisfied, ITR-3 may be required.

Eligible Small Businesses Using Section 44AD or 44AE

Eligible taxpayers declaring presumptive income under section 44AD or 44AE may also consider ITR-4, subject to the statutory conditions, residential status, income ceiling and other restrictions.

Which ITR Form Should an NRI or RNOR File?

NRI Without Business or Professional Income

A non-resident individual who has taxable Indian income but no profits or gains from business or profession generally considers ITR-2.

ITR-1 and ITR-4 are not available to non-resident individuals.

NRI With Business or Professional Income

A non-resident individual having business or professional income generally considers ITR-3, depending on the precise nature of the income.

For NRI-specific filing assistance, see our NRI Tax Return Filing Services in India.

RNOR and Foreign Asset Considerations

Resident but Not Ordinarily Resident taxpayers and taxpayers with foreign assets or foreign-source income should carefully review the applicable return form and reporting schedules.

Using ITR-1 or ITR-4 merely because total income is below ₹50 lakh may be incorrect where the taxpayer falls within an exclusion condition.

Check Form 26AS, AIS and TIS Before Selecting and Filing Your ITR

Review All Reported Income Sources

Before choosing and preparing the return form, taxpayers should review Form 26AS, AIS and TIS to identify salary, interest, dividends, securities transactions, TDS/TCS and other information reported to the Income Tax Department.

Capital Gains or Business Transactions Can Change the Applicable Form

A taxpayer who initially expects to file ITR-1 may discover capital-market transactions, business receipts or other information in AIS that requires a different ITR form.

The underlying transaction must be examined before deciding the correct tax treatment.

Reconcile Tax Data Before Filing

Our detailed guide on Form 26AS, AIS and TIS for ITR Filing in India explains how these statements should be reviewed and reconciled before return filing.

How to Choose the Correct ITR Form – Step-by-Step

Step 1 – Identify the Taxpayer Category

First determine whether the taxpayer is an individual, HUF, firm, LLP, company, trust, AOP, BOI or another category of person.

This immediately eliminates several forms that cannot apply to that taxpayer.

Step 2 – Identify Every Source of Income

Prepare a complete list of income from salary, house property, capital gains, business or profession, interest, dividends, foreign income and other sources.

Do not choose the ITR form based only on the taxpayer’s primary income source.

Step 3 – Check Eligibility Restrictions

After identifying the likely form, check restrictions relating to residential status, total income, house properties, capital gains, directorship, unlisted shares, foreign assets, foreign income, losses and other conditions.

The Income Tax Department also provides a Help Me Decide Which ITR Form to File facility for individual taxpayers.

Common Mistakes While Selecting an ITR Form

Using ITR-1 Only Because You Are Salaried

Being a salaried employee does not automatically mean ITR-1 is correct. Capital gains, foreign assets, directorship, unlisted shares and other factors may require ITR-2 or another form.

Using ITR-4 Without Checking Presumptive Tax Conditions

ITR-4 is not a general return form for every small business or freelancer. The taxpayer must satisfy the applicable presumptive-tax and other eligibility conditions.

Ignoring Residential Status or Foreign Assets

NRI, RNOR and foreign-asset situations can materially affect return-form selection and disclosure requirements.

If an incorrect return has already been filed and a notice or processing issue arises, our Income Tax Assessment and Litigation Services in India can assist with review and response.

Professional Assistance With ITR Form Selection and Filing

How EzyBiz India Can Assist

As part of our ITR Filing Services in India, we can assist with:

• selection of the correct ITR form;
• review of residential status;
• Form 26AS, AIS and TIS reconciliation;
• salary and house-property income;
• capital gain computation;
• business and professional income;
• NRI tax returns;
• tax computation and refund claims;
• foreign income and asset-related review;
• preparation and filing of the return; and
• post-filing tax issues and notices.

Complex Returns Should Be Reviewed Before Filing

Professional review can be useful where a return contains capital gains, business income, foreign assets, NRI income, substantial TDS mismatches, multiple house properties, carried-forward losses or other complex matters.

Taxpayers requiring wider tax advisory can also explore our Direct Tax Advisory Services in India.

Frequently Asked Questions on Choosing the Correct ITR Form

Can I File ITR-1 if I Have Capital Gains?

For AY 2026-27, an otherwise eligible ITR-1 taxpayer can report long-term capital gains under section 112A up to ₹1.25 lakh. However, short-term capital gains and section 112A gains exceeding the prescribed limit make ITR-1 unsuitable.

Can I File ITR-1 if I Own Two Houses?

For AY 2026-27, eligible taxpayers can report income from up to two house properties in ITR-1, provided all other eligibility conditions are satisfied.

What Is the Difference Between ITR-2 and ITR-3?

The major distinction is business or professional income. ITR-2 is generally for individuals and HUFs without business or professional income, whereas ITR-3 is generally used where such income exists.

What Is the Difference Between ITR-3 and ITR-4?

ITR-4 is a simplified optional form for eligible taxpayers declaring specified business or professional income on a presumptive basis and satisfying all other conditions. ITR-3 is broader and is commonly used where business or professional income exists but ITR-4 is not applicable.

Which ITR Form Should an NRI File?

An NRI without business or professional income generally considers ITR-2. An NRI having business or professional income generally considers ITR-3, depending on the precise facts.

For professional assistance, see our NRI Tax Return Filing Services in India.

Related Services and Guides

• ITR Filing Services in India
• Form 26AS, AIS and TIS for ITR Filing in India
• NRI Tax Return Filing Services in India
• NRI Taxation Services in India
• Who Is Required to File Income Tax Return in India?
• Direct Tax Advisory Services in India
• Income Tax Assessment and Litigation Services in India

Reviewed By

Anil Agrawal, Chartered Accountant
Founder, EzyBiz India Consulting LLP
More than 20 years of professional experience in Indian taxation, NRI taxation, international taxation, regulatory advisory and business consulting.

Last Reviewed: September 2026

Disclaimer

This article is intended for general informational and educational purposes only and should not be treated as tax, legal or professional advice for any particular taxpayer.

Eligibility for an ITR form depends on taxpayer status, residential status, income sources, capital gains, business or professional income, foreign assets, losses, statutory amendments and other transaction-specific facts. Taxpayers should review the latest notified return forms, instructions, rules and guidance issued by the Income Tax Department before filing.

For AY 2026-27, relating to income earned during FY 2025-26, the applicable income-tax return continues to be governed by the Income-tax Act, 1961. The Income-tax Act, 2025 applies from 1 April 2026 to subsequent tax periods in accordance with its provisions.