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

Why the Correct Form Matters

The Central Board of Direct Taxes (CBDT) notified all ITR forms, ITR-1 to ITR-7, along with ITR-V and ITR-U, for Assessment Year 2026-27 on 30 March 2026, followed by a corrigendum on 10 April 2026 correcting technical errors. These forms apply to income earned during FY 2025-26 and are filed under the Income-tax Act, 1961, since the Income-tax Act, 2025 applies only from Tax Year 2026-27 onwards. For step-by-step instructions on filing your return, see our complete ITR filing guide for AY 2026-27.

Filing the wrong ITR form is not a cosmetic error. Under Rule 12 of the Income-tax Rules, 1962, each form is tied to specific categories of taxpayers and income heads. A mismatched form can be treated as a defective return under Section 139(9), and if not corrected within the time allowed, the return may be treated as never filed, which affects loss carry-forward, refunds, and Section 234F late-fee exposure.

ITR-1 (Sahaj): For Simple Salaried Profiles

ITR-1 is meant for resident individuals (other than not-ordinarily-resident) with total income up to Rs 50 lakh. Eligible sources are salary or pension, income from up to two house properties, other sources such as interest, and long-term capital gains under Section 112A up to Rs 1.25 lakh, provided there is no brought-forward or carry-forward loss under the capital gains head.

A salaried employee earning Rs 12 lakh, owning two self-occupied or let-out flats, with Rs 40,000 savings bank interest and no capital market activity beyond a small equity mutual fund redemption, comfortably fits ITR-1.

ITR-2: For Capital Gains, Foreign Assets and Multiple Properties

ITR-2 suits individuals and HUFs who do not have business or professional income but whose profile exceeds ITR-1's limits: capital gains (short or long term), more than two house properties, foreign assets or foreign income, agricultural income above Rs 5,000, virtual digital asset (crypto) income, or total income above Rs 50 lakh.

For AY 2026-27, the earlier requirement to separately report capital gains arising before and after 23 July 2024 has been removed, and the revised capital gains rates now apply uniformly for FY 2025-26. A resident individual holding a US brokerage account, three residential flats, and listed share sale gains of Rs 3 lakh would file ITR-2, not ITR-1.

ITR-3: For Business and Professional Income

ITR-3 applies to individuals and HUFs earning income from business or profession that is not covered by the presumptive scheme, along with any salary, house property, capital gains, or partner's remuneration and interest received from a partnership firm. It requires disclosure of balance sheet and profit and loss particulars under Schedule BP, and Schedule FA for foreign assets where applicable.

A practising chartered accountant maintaining regular books of account, or a trader with intraday and F&O income who does not opt for presumptive taxation, must use ITR-3. Non-residents with business income can also file ITR-3. Before filing, perform a reconciliation using our AIS vs Form 26AS vs TIS mismatch guide to prevent income under-reporting notices.

ITR-4 (Sugam): For Presumptive Taxation

ITR-4 is for resident individuals, HUFs and partnership firms (excluding LLPs) with total income up to Rs 50 lakh, opting for presumptive taxation under Section 44AD (business, turnover up to Rs 3 crore, or Rs 2 crore where cash receipts exceed 5%), Section 44ADA (specified professions, gross receipts up to Rs 75 lakh, or Rs 50 lakh where cash receipts exceed 5%), or Section 44AE (goods carriages, up to 10 vehicles).

A freelance graphic designer billing Rs 30 lakh a year, declaring 50% of gross receipts as profit under Section 44ADA, with salary and one house property and no capital gains, is a textbook ITR-4 filer.

ITR-5: For Firms, LLPs, AOPs and Similar Entities

ITR-5 is used by partnership firms, LLPs, AOPs, BOIs, business trusts, investment funds, co-operative societies and local authorities. It is not for individuals, HUFs, companies, or entities required to file ITR-7. Business income, capital gains and other sources are all reported at the entity level, with Schedule BP reconciled against Form 3CD where a tax audit applies.

ITR-6: For Companies

ITR-6 is filed by every company registered under the Companies Act, except a company claiming exemption under Section 11 for income from property held for charitable or religious purposes. It must be filed electronically under digital signature and includes detailed disclosures on shareholding, MAT computation under Section 115JB, and transfer pricing under Section 92E where applicable.

ITR-7: For Trusts, Political Parties and Institutions

ITR-7 is filed by persons, including companies, required to furnish a return under Section 139(4A), 139(4B), 139(4C) or 139(4D). This covers charitable and religious trusts claiming exemption under Sections 11 and 12, political parties and electoral trusts, scientific research associations and news agencies, and universities, colleges or institutions including Khadi and Village Industries bodies.

Under Section 139(4B), a political party must file ITR-7 once its total income, computed without giving effect to Section 139A, exceeds the basic exemption limit, failing which the Section 13A exemption itself can be denied.