Which ITR Form to File? Your Ultimate Guide for AY 2025-26 (India)
Confused about which ITR form to file for Assessment Year 2025-26? This comprehensive guide helps Indian taxpayers (salaried, freelancers, and business owners) choose the correct form between ITR-1, ITR-2, ITR-3, and ITR-4, explaining key differences, presumptive taxation, and the latest ITR filing last date.
ITR Filing Last Date Extended!
September 15, 2025
For taxpayers not requiring an audit (AY 2025-26).
A Visual Guide: Which ITR Form Should You File?
ITR-1 (Sahaj)
For: Salaried Individuals
Allows: Total Income up to ₹50 Lakh. One House Property, Interest Income, Agri Income up to ₹5k, Simple LTCG up to ₹1.25L.
Not for: Directors or those with foreign assets.
ITR-2
For: Individuals & HUFs
Used for: Income over ₹50 Lakh OR Complex Income like Multiple House Properties, All types of Capital Gains, Foreign Assets/Income.
Cannot be used if you have Business/Professional Income.
ITR-3
For: Professionals & Business Owners
Calculating income under Normal Provisions.
Required If: You have Business/Professional income but are ineligible for ITR-4, or have business losses to report.
Mandatory for F&O and intraday traders reporting losses.
ITR-4 (Sugam)
For: Small Business/Professionals
Using the Presumptive Scheme (Sec 44AD, 44ADA, 44AE). Total Income up to ₹50 Lakh.
Strict eligibility: Not for Directors, foreign asset holders, or complex capital gains.
The First Step: Identify Your Main Income Source
The first and most important question is whether you earn income from a business or profession in India. This determines your ITR filing path.
No Business or Professional Income
This path is for salaried individuals, pensioners, and those with income from rent, interest, or capital gains. Your choice is between ITR-1 and ITR-2.
Business or Professional Income
This path is for freelancers, consultants, shop owners, and business proprietors. Your choice is between ITR-4 (Presumptive) and ITR-3 (Normal).
For Salaried Employees & Pensioners: ITR-1 vs. ITR-2
If you don’t have business income, your choice between ITR-1 (Sahaj) and ITR-2 depends on the complexity of your finances.
ITR-1 (Sahaj): For Simple Salary & Interest Income
Choose ITR-1 if ALL of the following conditions are met:
- ✅Total Income: Up to ₹50 Lakh.
- ✅House Property: Income from ONE house property.
- ✅Capital Gains (New!): Only Long-Term Gains from equity (Sec 112A) up to ₹1.25 Lakh, with no losses.
- ✅Agricultural Income: Up to ₹5,000.
- ✅Residential Status: Must be a Resident (not RNOR).
ITR-2: For Foreign Income, Capital Gains & Multiple Properties
You MUST file ITR-2 if you have ANY of the following:
- ❌Total Income: More than ₹50 Lakh.
- ❌House Property: Income from more than one house property.
- ❌Capital Gains: Any other type of capital gain (from property, debt funds, etc.) or equity LTCG > ₹1.25 Lakh.
- ❌Foreign Assets/Income: Any asset or income source from outside India (includes RSUs, foreign ETFs).
- ❌Company Directorship: You are a director in any company.
- ❌Unlisted Shares: You hold unlisted equity shares (common in startups).
For Business Owners & Freelancers: ITR-3 vs. ITR-4
For those with business or professional income, the government offers a “simplified route” called the Presumptive Taxation Scheme.
Understanding Presumptive Taxation
Sec 44ADA: Presumptive Tax for Doctors, Lawyers & Freelancers
Declare 50% of gross receipts as income. Turnover limit up to ₹75 Lakh (if cash receipts ≤ 5%).
✓ No 5-year lock-in. Switch annually.
Sec 44AD: Presumptive Tax for Small Business Owners
Declare 6%/8% of turnover as income. Limit up to ₹3 Crore (if cash receipts ≤ 5%).
✗ 5-year lock-in if you opt out.
New Presumptive Tax Limits for AY 2025-26
To encourage digital payments, the turnover limits to be eligible for the scheme have been increased for AY 2025-26, provided cash receipts are 5% or less of total turnover.
This chart compares the standard turnover limits with the enhanced limits for digital-first businesses and professionals.
How is Presumptive Income Calculated?
Instead of tracking every expense, your profit is ‘presumed’ to be a fixed percentage of your turnover/receipts. This makes compliance incredibly simple.
For specified professionals, 50% of receipts are treated as profit. For businesses, the rate is 6% for digital turnover and 8% for cash.
ITR-4 vs. ITR-3: A Strategic Choice for Your Business
Why Choose ITR-4 (Sugam) for Simple Compliance?
- ✓Your profit margin is high and expenses are low.
- ✓You want to avoid maintaining detailed account books.
- ✓Your total income is under ₹50 Lakh.
When is Filing ITR-3 Mandatory for Businesses?
- ✗You have business losses to report and carry forward.
- ✗Your actual profit is lower than the presumptive rate.
- ✗You are ineligible for ITR-4 for any reason (e.g., director, foreign assets).
Critical Lock-in Rule for Businesses (Sec 44AD): If you opt for the presumptive scheme and then opt out in any of the next 5 years, you are barred from re-entering the scheme for 5 years. This rule does not apply to professionals (Sec 44ADA).
ITR Selection Flowchart: Find Your Form in Seconds
Follow these steps to find your correct ITR form for AY 2025-26.
START HERE
Do you have any income from a Business or Profession?
NO
- Total Income > ₹50 Lakh
- > 1 House Property
- Any Capital Gains (except limited Sec 112A)
- Foreign Assets / Income
- Company Directorship or Unlisted Shares
YES
File ITR-2
NO
File ITR-1
YES
NO
File ITR-3
YES
File ITR-4
