Which ITR Form Applies to You? Salary, Business, Capital Gains and NRI Cases
Filing the wrong ITR form is one of the most common reasons a return is treated as defective, which leads to a notice asking you to file again. The right form depends on who you are (resident or NRI, individual or firm) and what kind of income you have. Here is a simple guide for the forms notified for AY 2026-27, that is, income earned in FY 2025-26.
Quick selector
| Your situation | Form |
|---|---|
| Resident, salary/pension + up to two house properties + interest, total income up to ₹50 lakh, and LTCG on listed shares/equity funds up to ₹1.25 lakh | ITR-1 (Sahaj) |
| Capital gains beyond that (short-term gains, property sale, debt funds, crypto), income above ₹50 lakh, foreign assets or income, director of a company, unlisted shares, NRI or RNOR, no business income | ITR-2 |
| Business or professional income on regular books, including F&O trading, intraday trading, and partners in firms | ITR-3 |
| Presumptive income (44AD business at 6%/8%, 44ADA profession at 50%, 44AE transporters), resident, total income up to ₹50 lakh | ITR-4 (Sugam) |
| Firms, LLPs | ITR-5 |
| Companies | ITR-6 |
| Trusts, political parties, institutions | ITR-7 |
ITR-1 (Sahaj): who can and can’t use it
Can use (resident individuals only):
- salary or pension
- income from up to two house properties. This was one property until last year
- other sources: interest, dividends, family pension
- LTCG under section 112A up to ₹1.25 lakh (listed equity shares and equity mutual funds), with no capital losses carried forward
- agricultural income up to ₹5,000
- total income up to ₹50 lakh
Cannot use if you:
- are an NRI or RNOR
- are a director of a company or hold unlisted equity shares
- have any short-term capital gain, or gains from property, debt funds, gold or crypto
- have business or professional income
- have foreign assets or foreign income, or want to claim foreign tax credit
- have tax deferred on ESOPs from an eligible start-up
ITR-2
For individuals and HUFs without business income who don’t qualify for ITR-1. It is the usual form for:
- investors with capital gains (shares, mutual funds, property, crypto)
- NRIs
- high earners above ₹50 lakh
- people with foreign assets (Schedule FA), such as employees holding US RSUs
ITR-3
For individuals and HUFs with income from business or profession who are not using the presumptive scheme, or who want to declare a lower profit than the presumptive rate. This includes:
- F&O traders and intraday traders. F&O is treated as business income
- professionals keeping regular books
- partners receiving salary, interest or profit share from a firm
ITR-4 (Sugam)
For resident individuals, HUFs and firms (not LLPs) opting for presumptive taxation, with total income up to ₹50 lakh. Typical users:
- small traders and shopkeepers (6% of digital receipts / 8% of cash receipts)
- freelancers and professionals under the 50% presumptive scheme
- transporters with up to 10 goods vehicles
Directors, people holding unlisted shares, and anyone with foreign assets or short-term gains must use ITR-3 instead.
Common cases
| Case | Form |
|---|---|
| Salaried, sold equity mutual funds with LTCG of ₹80,000 | ITR-1 |
| Salaried, sold shares with a short-term gain of ₹5,000 | ITR-2 (any STCG takes you out of ITR-1) |
| Salaried + F&O trading (even at a loss) | ITR-3 |
| Freelance designer, 50% presumptive income | ITR-4 |
| NRI with rent and NRO interest | ITR-2 |
| Salaried with US RSUs from an employer | ITR-2 (Schedule FA) |
| Salaried + sold a flat | ITR-2 |
Looking ahead: tax year 2026-27
Income earned from 1 April 2026 falls under the Income-tax Act, 2025, and returns for it (filed in 2027) will use forms prescribed under the Income-tax Rules, 2026. The basic structure is expected to stay similar. We will update this guide when the new forms are notified.
Frequently asked questions
What happens if I file the wrong ITR form?
The tax department may treat the return as defective and ask you to correct it within a time limit, usually 15 days. If you don’t, the return can be treated as not filed.
I had an F&O loss. Do I still need ITR-3?
Yes. F&O is business income, so you need ITR-3. Filing it on time lets you carry the loss forward.
Can I file ITR-1 if my income is below ₹12 lakh but I have STCG?
No. Any short-term capital gain requires ITR-2 (or ITR-3 if you also have business income).
Unsure which form fits? Garvita Jain & Co. picks the right form, reconciles your AIS and Form 168 (formerly 26AS) and files your return. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.
This article is general information based on the law as of October 2026 and is not professional advice.
Sources
Official
Professional / CA publications