Two significant changes for AY 2026-27 have expanded the eligibility for the simplest ITR form, ITR-1 (Sahaj). According to the CBDT notification on March 30, 2026, up to two house properties can now be reported in ITR-1, whereas previously owning more than one house pushed taxpayers into ITR-2. Additionally, small long-term capital gains under Section 112A from listed shares or equity mutual funds up to ₹1.25 lakh are now allowed in ITR-1, provided there are no capital losses to carry forward. This eliminates the blanket rule that any capital gains forced taxpayers to ITR-2. Budget 2026 has introduced a revised ITR filing deadline structure, with salaried individuals filing ITR-1 or ITR-2 required to file by July 31, 2026, while non-audit business taxpayers filing ITR-3 or ITR-4 have an extended deadline of August 31, 2026.
ITR-1 (Sahaj) is the simplest form designed for resident individuals with straightforward finances. As reported by tax experts, you can use ITR-1 if you are a resident individual with total income up to ₹50 lakh from salary or pension, up to two house properties, and other sources such as interest. The form allows limited reporting of long-term capital gains under Section 112A from listed equity or equity mutual funds up to ₹1.25 lakh with no capital losses to carry forward. However, ITR-1 cannot be used if you have business or professional income, more than two house properties, any short-term capital gains, long-term gains above ₹1.25 lakh from property/gold/other assets, foreign income, or if you are a company director or hold unlisted equity shares. For AY 2026-27, the relaxation applies only to up to two properties - owning three or more properties requires filing ITR-2. The form also covers agricultural income up to ₹5,000 and allows deductions under Sections 80C to 80U.
ITR-2 is designed for individuals and Hindu Undivided Families (HUFs) whose finances are more complex than ITR-1 allows, but who do not run a business or profession. According to tax guidance, you should file ITR-2 if you have capital gains beyond the small LTCG exception, such as short-term gains, larger long-term gains, or gains from selling property, gold, or unlisted shares. The form is also used if you have more than two house properties, total income above ₹50 lakh, foreign income or foreign assets, or if you are claiming relief under a tax treaty. Additionally, ITR-2 is required if you have a directorship in a company, holdings of unlisted equity shares, or losses to carry forward. If you also have business or professional income, ITR-2 is not suitable - you need ITR-3 instead.
ITR-3 is for individuals and HUFs earning income from a business or profession where you maintain regular books of accounts. As reported by tax experts, it is the most detailed of the individual forms because it captures everything ITR-2 does plus the profit-and-loss and balance-sheet details of your business. Partners earning income from a partnership firm also use ITR-3. The form is suitable for taxpayers with business or professional income who maintain regular books of accounts, such as traders running a proprietorship, doctors or lawyers in independent practice, or those with significant trading activity treated as business income. For FY 2025-26, the government has introduced staggered filing deadlines, with ITR-3 filing due by August 31, 2026 for non-audit business taxpayers.
ITR-4 (Sugam) is the simplified route for small businesses and professionals who opt for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE. According to tax guidance, you can use ITR-4 if you are a resident individual, HUF, or firm (other than an LLP) with total income up to ₹50 lakh and your business or professional income is declared on a presumptive basis. Under presumptive tax, your income is taken as a fixed percentage of your turnover or receipts, so you don't have to maintain detailed books. The form also allows limited reporting of long-term capital gains under Section 112A up to ₹1.25 lakh with no losses carried forward. However, ITR-4 cannot be used if your income exceeds ₹50 lakh, you are a company director, you hold unlisted shares, you are an NRI or RNOR, or you are required to maintain audited books of accounts. For FY 2025-26, the government has introduced staggered filing deadlines, with ITR-4 filing due by August 31, 2026 for non-audit business taxpayers.
