ITR forms explained — ITR-1, ITR-2, ITR-3, and ITR-4: which one applies to you?
ITR-1 (Sahaj) is for salaried individuals with total income up to Rs 50 lakh, one house property, and no capital gains. ITR-2 is for individuals with capital gains, more than one house property, or foreign income/assets, but no business income. ITR-3 is for those with business or professional income under the regular scheme. ITR-4 (Sugam) is for individuals and firms (other than LLPs) opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE.
ITR-1 (Sahaj) — the simplest form
For resident individuals with total income up to Rs 50 lakh from salary or pension, one house property, and other sources like bank interest. ITR-1 cannot be used if you have capital gains, income from more than one house property, foreign income or assets, or are a director in a company or hold unlisted equity shares.
ITR-2 — for capital gains and multiple properties
Used by individuals and Hindu Undivided Families (HUFs) with capital gains (shares, mutual funds, property), income from more than one house property, foreign income or foreign assets, or agricultural income above Rs 5,000 — but without any business or professional income. This is the form most salaried employees with stock market activity or a second property actually need, rather than ITR-1.
Shunya's CA team prepares and files your ITR end-to-end, picks the right form and regime, and checks for refunds you might be missing.
Talk to a CA →ITR-3 — for business and professional income
For individuals and HUFs with income from business or profession computed under the regular (books-of-account) scheme, including freelancers and consultants who maintain proper books rather than opting for presumptive taxation. Also used by partners in a partnership firm to report their share of profit.
ITR-4 (Sugam) — for presumptive taxation
For resident individuals, HUFs, and firms (excluding LLPs) with total income up to Rs 50 lakh who opt for the presumptive taxation scheme under Section 44AD (business), Section 44ADA (specified professions), or Section 44AE (goods transport). This form is significantly simpler than ITR-3 since it doesn't require maintaining detailed books of account.
Why choosing the wrong form matters
Filing under the wrong ITR form can result in the return being treated as defective under Section 139(9), requiring a corrected return within a specified window, or in some cases the return not being processed at all until corrected. Getting the form right the first time avoids this back-and-forth with the department.
I'm salaried but also sold some mutual funds this year — can I still use ITR-1?
No. Any capital gains — even a small redemption of mutual funds or sale of shares — takes you out of ITR-1 eligibility and into ITR-2, regardless of how modest the gain is. This is one of the most common ITR form mistakes among salaried taxpayers who assume ITR-1 still applies simply because their primary income is salary.
This article is for general information only. For your specific situation, consult a practicing CA.
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