Answer the questions and you get the form, the rule that decided it, and your real deadline — which follows your audit position, not your form. Updated for the two AY 2026-27 changes most guidance still gets wrong.
Every condition that pushed you up from ITR-1 or ITR-4. Nothing listed means nothing did.
Four things decide it: whether you have business or professional income, your residential status, your total income, and whether any of a specific list of disqualifiers applies. A resident individual under ₹50 lakh with salary, up to two house properties and no disqualifier files ITR-1. Add capital gains beyond the s.112A allowance, foreign assets, a directorship or unlisted shares and it becomes ITR-2. Presumptive business or professional income inside the limits is ITR-4; business income outside them is ITR-3. Note what is not on that list: your profession, your employer, and whether you filed the same form last year.
First, ITR-1 and ITR-4 now accept up to two house properties. Both were restricted to one until AY 2025-26, in any mix of self-occupied and let-out. A great deal of material still online says one, which was right last year and is wrong now — and it pushes people onto ITR-2 unnecessarily.
Second, long-term capital gains under s.112A up to ₹1,25,000 can now be reported in ITR-1 and ITR-4. Previously any capital gain at all forced you out. For a salaried person who sold a small parcel of listed shares or redeemed an equity fund, that single change is often the difference between the simplest form and a considerably more involved one. In ITR-4 the allowance carries a condition: it holds only if you have no brought-forward or carry-forward capital losses.
The full list, as published by the department: total income above ₹50 lakh; RNOR or non-resident status; any business or professional income; more than two house properties; agricultural income above ₹5,000; capital gains beyond the s.112A allowance; being a director in a company; holding unlisted equity shares at any time in the year; foreign assets, foreign income or signing authority in a foreign account; lottery, racehorse or other special-rate income under s.115BBDA or s.115BBE; tax deducted under s.194N; ESOP tax deferred by an eligible start-up; and any brought-forward loss or loss to be carried forward under any head.
Two of those catch people who consider themselves ordinary salaried filers. Directorship covers any company, including a dormant family company you agreed to be named in years ago. Unlisted equity shares covers holding them at any point in the year, so shares bought and sold in April still disqualify you in March — and this now routinely catches employees of unlisted start-ups who exercised options.
Filing a simpler form than you are entitled to can render the return defective under s.139(9). The department issues a notice giving you fifteen days to correct it, and a defect left uncorrected can mean the return is treated as never filed — which pulls in the late fee, the interest, and the loss of carry-forward, on a return you believed was done.
The reverse error is not symmetric. Nothing stops you filing a fuller form than you strictly need: ITR-2 accepts everything ITR-1 does, and ITR-3 everything ITR-4 does. The cost is some extra schedules and a longer afternoon. This is why the tool above, where a case is genuinely borderline, points at the more detailed form — the two mistakes do not carry the same price, so the tie-break should not be neutral either.
No, and this is the most common misreading of the AY 2026-27 calendar. Your audit position decides it. Non-audit ITR-3 and ITR-4 filers have until 31 August 2026 under s.139(1) as amended by the Finance Act 2026. ITR-1 and ITR-2 filers faced 31 July 2026. Anyone liable to audit under s.44AB files by 31 October 2026 regardless of form. Two people filing an identical ITR-3 can therefore have due dates ten weeks apart, decided by turnover rather than by the form in front of them. The full calendar, including what filing late costs, is in the split ITR deadlines for AY 2026-27.
When the scheme stops applying, or an ITR-4 condition fails. Section 44AD stops above ₹2 crore of turnover — ₹3 crore where cash receipts are 5% or less of the total. Section 44ADA stops above ₹50 lakh of professional receipts, ₹75 lakh on the same cash test. Section 44AE stops above ten goods carriages. Separately, ITR-4 falls away if total income exceeds ₹50 lakh, if there are capital gains beyond the s.112A allowance, or if any standard disqualifier applies — so a consultant well inside the 44ADA limit who also holds unlisted shares still files ITR-3.
ITR-1, ITR-2 and ITR-3 are for individuals and Hindu Undivided Families only. A partnership firm files ITR-5 — except that ITR-4 is open to a firm other than an LLP on presumptive taxation, which is the one place a firm and an individual use the same form. An LLP is always excluded from ITR-4 and files ITR-5. Companies file ITR-6, and trusts, political parties and institutions claiming exemption file ITR-7. A HUF is also barred from ITR-1 outright, whatever its income looks like, which surprises people who assume it works like an individual.
| Form | Who files it | Ceiling |
|---|---|---|
| ITR-1 (Sahaj) | Resident individual — salary or pension, up to two house properties, other sources, s.112A LTCG within the allowance | ₹50 lakh |
| ITR-2 | Individual or HUF with no business or professional income who fails any ITR-1 condition | None |
| ITR-3 | Individual or HUF with business or professional income outside presumptive taxation | None |
| ITR-4 (Sugam) | Resident individual, HUF or firm other than an LLP, on presumptive taxation under s.44AD, s.44ADA or s.44AE | ₹50 lakh |
| ITR-5 | Firms, LLPs, AOPs and BOIs — everything a firm files that is not ITR-4 | None |
| ITR-6 | Companies, other than those claiming exemption under s.11 | None |
| ITR-7 | Trusts, political parties, research institutions and similar exempt entities | None |
Worked example: A salaried employee earning ₹18,00,000 owns a flat she lives in and a second she lets out, and sold listed shares during the year for a long-term gain of ₹90,000. On last year's rules she would have been pushed to ITR-2 twice over — a second house property and a capital gain. For AY 2026-27 both now sit inside the ITR-1 conditions, so ITR-1 is correct. Had the gain been ₹1,40,000, or had she held any unlisted shares, it would be ITR-2.
Your residential status is the first gate here and the one people get wrong — settle it with the Residential Status Calculator, since RNOR and non-resident both rule out ITR-1 and ITR-4. Once the form is settled, the dates and the cost of missing them are in the split ITR deadlines for AY 2026-27, and the regime choice you make while filing is worked out in the Old vs New Regime Calculator — or read where the crossover actually falls in the crossover study. Freelancers on presumptive taxation should also see the Freelancer Tax Calculator. Business and professional filers owe advance tax through the year as well as a return at the end of it — the Advance Tax Calculator works out the instalments and the s.234B/234C interest on anything deferred. India-specific money rules are worked through end to end in our book, Paisa Playbook.