Choose the return form using the taxpayer’s legal status, residential status and every income head. A form that leaves out a disqualifying income or status can result in a defective return. For Assessment Year 2026-27, meaning income earned in Financial Year 2025-26, the core decision is straightforward: ITR-1, ITR-2, ITR-3 and ITR-4 cover most individuals and HUFs, while ITR-5, ITR-6 and ITR-7 are used by firms, LLPs, companies, trusts and specified institutions depending on their legal character and the section under which they file.
This article focuses on the current AY 2026-27 position where the Income Tax Department’s portal reflects important scope changes, including up to two house properties in ITR-1 and ITR-4 and limited long-term capital gains under section 112A. Select AY 2026-27 for FY 2025-26 income; do not confuse it with income earned in FY 2026-27. The official AY-specific downloads page gives the form categories and current utilities.
Which ITR form broadly applies
| Form | Usually used by | Main trigger | Common exclusion or caution |
|---|---|---|---|
| ITR-1 (Sahaj) | Resident individual other than resident but not ordinarily resident (RNOR) | Total income up to Rs. 50 lakh from salary or pension, up to two house properties, other sources, agricultural income up to Rs. 5,000, and LTCG under section 112A up to Rs. 1.25 lakh | Not for RNORs, non-residents, company directors, business income, foreign assets or income, unlisted shares, or gains and losses outside the permitted scope |
| ITR-2 | Individual or HUF without business or profession income | Capital gains, more complex house property cases, foreign income or assets, agricultural income above Rs. 5,000, director or unlisted shareholding cases | Not for income chargeable under profits and gains of business or profession |
| ITR-3 | Individual or HUF with business or profession income | Regular business or professional income, or cases that do not fit ITR-1, ITR-2 or ITR-4 | If presumptive conditions are clean and the taxpayer wants the simplified form, ITR-4 may be available instead |
| ITR-4 (Sugam) | Resident individual, resident HUF, or resident firm other than LLP | Total income up to Rs. 50 lakh with presumptive income under sections 44AD, 44ADA or 44AE | Not for LLPs, RNORs, non-residents, short-term capital gains, income above Rs. 50 lakh, or income outside the permitted simplified basket |
| ITR-5 | LLP and several non-individual non-company persons | Firm, LLP, AOP, BOI, cooperative society, certain trusts, estates, business trust, investment fund and similar entities | Not for persons filing ITR-7, and not for individuals, HUFs or companies |
| ITR-6 | Company | Company return where section 11 exemption is not claimed | If the company is filing under the specified section 139(4A) to 139(4D) categories, ITR-7 may apply instead |
| ITR-7 | Specified trusts, political parties, research bodies, institutions, universities and similar persons including some companies | Return required under sections 139(4A), 139(4B), 139(4C) or 139(4D) | Applies because of the filing provision, not merely because the entity is a trust or company |
The forms most professionals choose between
ITR-1: the simplest individual return, but only inside a narrow boundary
For AY 2026-27, the Income Tax Department’s downloads page and ITR-1 FAQ show that ITR-1 is available to a resident individual other than RNOR with total income up to Rs. 50 lakh where income is limited to salary or pension, up to two house properties, other sources, agricultural income up to Rs. 5,000, and long-term capital gains under section 112A up to Rs. 1.25 lakh.
ITR-1 is unavailable to RNORs and non-residents. It is also ruled out for a company director or where the taxpayer has business or professional income, short-term capital gains, long-term capital gains beyond the allowed section 112A limit, more than two house properties, foreign assets or signing authority abroad, foreign income, unlisted equity shares, deferred tax on eligible start-up ESOPs, section 194N cases, brought-forward loss or a loss to carry forward, or total income above Rs. 50 lakh. Check the complete exclusions, including special income categories, in the Department’s ITR-1 FAQ.
Example: Assume an ordinarily resident employee, with no other ITR-1 exclusion, has salary of Rs. 18 lakh, bank interest of Rs. 45,000, long-term capital gains under section 112A of Rs. 90,000, and two self-occupied houses. On those facts, ITR-1 fits for AY 2026-27.
ITR-2: for individuals and HUFs without business income, but with more complexity
ITR-2 applies to individuals and HUFs whose income is not chargeable under profits and gains of business or profession. The official FAQ lists salary or pension, one or more house properties, capital gains whether short-term or long-term, other sources including lottery and racehorse income, and agricultural income above Rs. 5,000 as common triggers. It also specifically states that a director in a company, or a holder of unlisted equity shares during the relevant previous year, is required to file ITR-2 if business-income conditions do not push the case into ITR-3.
Example: Assume an individual has salary of Rs. 24 lakh, short-term listed equity gains of Rs. 1.8 lakh, interest income of Rs. 70,000 and no business income. ITR-2, not ITR-1, is the correct form because short-term capital gains fall outside ITR-1.
Important edge case: The ITR-2 FAQ states it cannot be used where total income includes profits and gains from business or profession, including interest, salary, bonus, commission or remuneration due from a firm and taxable under that head. That matters for working partners. A payment described as “salary” by a partnership is not automatically employment salary: classify it under the correct head before choosing the form. See the ITR-2 FAQ, questions 1 and 2.
ITR-3: the regular business or profession return for individuals and HUFs
The Department’s AY 2026-27 guidance for individuals with business or profession income describes ITR-3 as the form for individuals and HUFs having income under salary or pension, house property, profits or gains of business or profession, capital gains or other sources, and for those who are not eligible for ITR-1, ITR-2 or ITR-4.
In practice, ITR-3 is the form that catches cases such as non-presumptive professional income, proprietorship business income, partner remuneration taxable under business head, or presumptive cases that also carry disqualifying items for ITR-4. The Department’s business-income guidance explains the ITR-3/ITR-4 distinction.
Example: Assume a resident architect has gross professional receipts of Rs. 38 lakh, wants to maintain regular books instead of using section 44ADA presumptive income, and also has capital gains from mutual funds. ITR-3 is the appropriate form.
ITR-4: simplified presumptive return, but only if every condition aligns
For AY 2026-27, ITR-4 is available to a resident individual, resident HUF or resident firm other than LLP with total income up to Rs. 50 lakh and presumptive business or professional income under section 44AD, 44ADA or 44AE. The official FAQ also allows salary or pension, up to two house properties, agricultural income up to Rs. 5,000, other permitted sources, and long-term capital gains under section 112A up to Rs. 1.25 lakh.
The same FAQ and the Department’s business-income guidance make the main exclusions clear: RNOR and non-resident status, total income above Rs. 50 lakh, short-term capital gains, long-term capital gains under section 112A above Rs. 1.25 lakh, agricultural income above Rs. 5,000, more than two house properties, director status, unlisted equity shares, deferred ESOP tax, foreign assets or income, foreign signing authority, brought-forward losses or losses to carry forward, and special-rate income outside the expressly permitted section 112A category. The Department also states that ITR-4 is optional, not mandatory, even when the taxpayer is eligible.
A completed ITR-4 selection working
Hypothetical facts: Neha is an ordinarily resident individual practising architecture. For FY 2025-26 she has professional receipts of ₹32 lakh and chooses section 44ADA, declaring 50% as professional income. Bank interest is ₹60,000. Income from one let-out house, already computed after applicable house-property deductions, is ₹2.4 lakh. Assume no capital gains, foreign assets or income, directorship, unlisted shares, deferred ESOP tax, losses, other disqualifying facts or Chapter VI-A deductions.
| Item | Working |
|---|---|
| Professional income | ₹32,00,000 × 50% = ₹16,00,000 |
| Bank interest | ₹60,000 |
| Computed house-property income | ₹2,40,000 |
| Total income on these assumptions | ₹16,00,000 + ₹60,000 + ₹2,40,000 = ₹19,00,000 |
Selection: ITR-4 is available: the professional activity qualifies, receipts fit section 44ADA, total income is below ₹50 lakh and all other form conditions are assumed satisfied. If the same facts include ₹10,000 of short-term capital gain, she needs ITR-3. That form change does not by itself remove section 44ADA eligibility for her professional income.
“Freelancer” or “designer” alone does not establish eligibility for section 44ADA. Verify the actual profession against section 44AA(1) and applicable notifications. Also separate the presumptive receipts limit from ITR-4’s total-income limit. The ITR-4 FAQ, questions 1, 2, 13 and 16 supplies these tests; the figures above are an illustrative application.
How ITR-5, ITR-6 and ITR-7 differ
ITR-5
ITR-5 is the broad non-individual, non-company return. The Department’s AY 2026-27 guidance lists firms, LLPs, AOPs, BOIs, artificial juridical persons, local authorities, representative assessees, cooperative societies, societies, certain trusts, estates of deceased or insolvent persons, business trusts and investment funds. The same guidance also says that persons required to file under the ITR-7 categories should not use ITR-5. See the Department’s ITR-5 and ITR-7 applicability summary.
Practical shortcut: For an LLP, ITR-4 is unavailable; the Department’s guidance places LLPs in ITR-5. Do not assume that the presumptive provisions discussed for eligible individuals and non-LLP firms extend to an LLP.
ITR-6
ITR-6 is the standard company return for companies not claiming exemption under section 11. If the assessee is a company, that is usually the starting point unless the company falls into the special filing categories covered by ITR-7. Check the Department’s company-return guidance.
ITR-7
ITR-7 is driven by the filing section, not just the entity label. The Department’s guidance states that it applies to persons, including companies, required to furnish returns under sections 139(4A), 139(4B), 139(4C) or 139(4D). Those categories include property held under trust for charitable or religious purposes, political parties, specified research associations and similar section 10 entities, and certain universities, colleges or institutions.
Choose the form before importing prefilled data
- Start with the taxpayer category: individual, HUF, firm, LLP, company, trust, society or other person.
- Ask whether any income is chargeable under profits and gains of business or profession. If yes, individuals and HUFs usually move toward ITR-3 or ITR-4.
- If presumptive sections 44AD, 44ADA or 44AE are being used, test every ITR-4 condition, not just the turnover or receipt condition.
- If there is foreign income, foreign assets, unlisted shares, director status, capital gains outside the simplified limits, or losses to carry forward, treat ITR-1 and ITR-4 with caution.
- If the assessee is an LLP, move to ITR-5. If it is a company, test ITR-6 versus ITR-7. If filing is under sections 139(4A) to 139(4D), test ITR-7 first.
Two houses do not override the other exclusions
The most useful current change for many individual filers is that the Department’s AY 2026-27 material now reflects up to two house properties in ITR-1 and ITR-4, along with limited long-term capital gains under section 112A up to Rs. 1.25 lakh. That can keep some taxpayers in the simpler forms who would previously have moved to ITR-2 or ITR-3.
Even so, the simpler form should be chosen only when the full fact pattern fits. A salaried individual with two houses may still need ITR-2 because of foreign assets. A presumptive professional may still need ITR-3 because of short-term capital gains or other disqualifying income.
Checklist before finalising the form
- Confirm the assessee type and residential status.
- List every income head, not only the main one.
- Check whether any capital gain is short-term, special-rate, or above the simplified form limit.
- Check foreign assets, foreign income, signing authority abroad, unlisted equity shareholding and director status.
- Check whether any loss is being carried forward or set off.
- For presumptive cases, confirm that every ITR-4 eligibility condition is satisfied and that the assessee is not an LLP.
- Where the assessee is a trust, institution or company with a special filing obligation, test ITR-7 before defaulting to ITR-5 or ITR-6.
Keep the selected form and the reason for selecting it with the computation. Reconcile the income list against AIS, Form 26AS, relevant certificates and your own records before submission. A prefilled return does not establish that every source of income or disqualifying fact has been captured.
