Which ITR to File in FY 2025-26 (AY 2026-27)? Types of ITR Forms and Applicability

Choosing the correct ITR form for AY 2026–27 is essential for accurate income tax filing and smooth compliance. Understanding the different types of ITR forms and their applicability based on income source, profession, and taxpayer category helps avoid errors, notices and filing delays.

Sneha Das

5/26/20264 min read

Filing your Income Tax Return (ITR) doesn't have to be a daunting task. The Central Board of Direct Taxes (CBDT) has officially notified ITR forms 1 through 7 for FY 2025-26 (Assessment Year 2026-27). Identifying which form matches your specific financial profile is the most critical step of the tax season. Selecting the wrong form can lead to unwanted hassles, a "defective return" status, or non-disclosure notices from the Income Tax Department.

Understanding the Different ITR Forms

(ITR-1 to ITR-7)

The ITR form you need depends strictly on your sources of income, the total amount earned, and your legal filing status (such as an individual, HUF, firm, or company).

ITR-1 (Sahaj): For Salaried Individuals & Small Landlords

ITR-1 is the most common form, designed for resident individuals with a relatively straightforward income structure.

Who can file: Resident individuals with a total income up to ₹50 lakh deriving income from salary or pension, up to two house properties, and other sources like interest or dividends.
The Big Update: In a massive relief for small landlords, the CBDT has expanded ITR-1 to allow income from two house properties (up from just one in previous years). Additionally, you can now report Long-Term Capital Gains (LTCG) under Section 112A up to ₹1.25 lakh, provided you have no brought-forward or carry-forward losses.
Who cannot file: You cannot use ITR-1 if you are a director of a company, hold unlisted equity shares, have agricultural income exceeding ₹5,000, or have income from a business or profession.

ITR-2: For Capital Gains and High Net-Worth Individuals

If your tax profile is complex but you do not earn any business income, ITR-2 is your match.

Who can file: Individuals and Hindu Undivided Families (HUFs) who have income from capital gains (stocks, mutual funds, crypto, or property), multiple house properties (three or more), or foreign income and assets.
Additional Eligibility: This form is mandatory for Non-Resident Indians (NRIs), Resident But Not Ordinarily Residents (RNORs), and company directors who are ineligible for ITR-1.

ITR-3: For Business and Professional Income

This form is specifically built for entrepreneurs, traders and independent professionals who maintain formal books of accounts.

Who can file: Individuals and HUFs deriving income from a proprietary business, profession, or those who are partners in a partnership firm.
Flexibility: It is an all inclusive form that covers all other income heads including salary, multiple house properties, and capital gains alongside business turnover.

ITR-4 (Sugam): For Small Businesses and Freelancers

ITR-4 is a simplified, fast track form for those opting for the presumptive taxation scheme under Sections 44AD, 44ADA, or 44AE.

Who can file: Resident individuals, HUFs, and partnership firms (excluding LLPs) with a total income up to ₹50 lakh.
Turnover Limits: It applies to eligible retail/trading businesses with a turnover up to ₹2 crore (or ₹3 crore if cash transactions are limited) and professionals/freelancers with gross receipts up to ₹50 lakh.
Property Limit: Aligned with the new updates, ITR-4 also accommodates income from up to two house properties.

ITR-5, 6 and 7: For Corporate Entities and Trusts

ITR-5: For partnership firms, Limited Liability Partnerships (LLPs), Association of Persons (AOPs), and Body of Individuals (BOIs).
ITR-6: For corporate companies other than those claiming exemptions under Section 11.
ITR-7: For charitable and religious trusts, political parties, scientific research associations, and universities.

New Disclosures and Statutory Form Changes

The forms for AY 2026-27 require more granular data to ensure absolute transparency. Furthermore, under the new 2026 transition, familiar tax documents are tracking under updated statutory form numbers:

The New Form Names: Form 16 is transitioning to Form 130 (Employer TDS Certificate), and Form 26AS is transitioning to Form 168 (Tax Credit Statement).
Schedule 24(b) Mandate: If you are claiming a deduction on home loan interest on borrowed capital, you must now explicitly disclose the bank's name, loan account number, and the official loan sanction date.
Deduction Details: To claim standard deductions under Section 80C, you must provide the specific policy or investment number. For Section 80CCD (NPS) claims, the Permanent Retirement Account Number (PRAN) is completely mandatory.
Secondary Contact Fields: To prevent communication gaps, all forms now capture secondary addresses, secondary mobile numbers, and secondary email IDs.
Valid Aadhaar Only: The old 28 digit Aadhaar Enrollment ID is no longer accepted in the filing utility; a valid 12-digit Aadhaar Number must be provided.

Essential Documents for a Hassle-Free Filing

Before you log into the e-filing portal, ensure you have these documents systematically arranged:

Form 130 (Formerly Form 16): Provided by your employer, detailing your salary breakdown and TDS.
Form 168 (Formerly Form 26AS): Your consolidated tax credit statement showing advance tax and TDS deducted against your PAN.
Annual Information Statement (AIS) & TIS: A comprehensive digital record of all financial footprints, including stock market trades, mutual fund redemptions, high-value expenditures, and dividends.

Frequently Asked Questions (FAQs)

Q1. Is ITR-1 applicable if I have two house properties?

Yes. Starting from AY 2026-27, the Income Tax Department has simplified eligibility rules, allowing individual taxpayers who own up to two house properties (such as one self-occupied and one let-out property) to file using the simpler ITR-1 (Sahaj) form, provided their total income is within ₹50 lakh.

Q2. Which ITR should I file if I have income from freelancing?

If you are a freelancer or independent professional with gross receipts up to ₹50 lakh and want to opt for the presumptive taxation scheme (paying tax on a fixed percentage of income), you can file ITR-4. If your receipts exceed ₹50 lakh or you wish to claim actual business expenses by maintaining books, you must use ITR-3.

Q3. Can I file ITR for previous years now if I missed the deadline?

Yes, you can file an Updated Return using Form ITR-U to correct errors or report missed income. Under standard tax regulations, an ITR-U can be filed within 48 months from the end of the relevant assessment year, subject to payment of additional tax and late fees.

Q4. What is the deadline to file ITR for FY 2025-26?

For salaried individuals, pensioners, and non-audit taxpayers filing ITR-1 and ITR-2, the deadline is 31st July 2026. For non-audit business or professional taxpayers filing ITR-3 and ITR-4, the deadline is 31st August 2026.

Conclusion

Selecting the correct ITR form is paramount to avoiding unnecessary tax notices and penalties. With the Income Tax Department relying heavily on pre-filled data via the AIS and introducing new granular reporting for home loans and deductions, verifying your data before submission is non-negotiable.

If you find the new form rules or the shifting transitions of Form 130 and Form 168 confusing, let the experts handle it for you. At Filing4U, we ensure an error-free, optimized tax filing experience tailored to maximize your tax savings.