Which ITR Form to Choose for AY 2025-26? – A Simplified Comparison

Filing the correct Income Tax Return (ITR) form is a foundational step for accurate tax compliance in India. The Central Board of Direct Taxes (CBDT) has notified seven ITR forms (ITR-1 to ITR-7) for Assessment Year 2025-26 (Financial Year 2024-25). Using an incorrect form can lead to a defective return under Section 139(9) or even rejection of the filing. ITR-1 (Sahaj) is for individual residents with income up to ₹50 lakhs from salary, one house property, and other sources, but excludes those with capital gains or business income. ITR-2 caters to individuals and HUFs without business income, accommodating capital gains, foreign assets, or partner income. ITR-3 is designed for individuals and HUFs with income from a business or profession, including proprietorships and freelancers. ITR-4 (Sugam) is for individuals, HUFs, and firms (excluding LLPs) opting for presumptive taxation schemes, with specific income and turnover limits. ITR-5 is for entities like Firms, LLPs, AOPs, and BOIs. ITR-6 is for companies not claiming Section 11 exemption, while ITR-7 is designated for trusts, political parties, research institutions, and educational bodies required to file under specific sections like 139(4A) to 139(4D). Careful selection based on income sources and taxpayer type is essential to avoid compliance issues.  This guide breaks down the applicability of each form in a simplified and practical manner.

ITR-1 (Sahaj)

For whom?

Individual residents (other than not ordinarily resident) with:

• Income from Salary or Pension
• Income from One House Property (excluding brought forward loss)
• Income from Other Sources (excluding lottery, racehorses, etc.)
• Total Income up to ₹50 lakhs

Not applicable if:

• You have capital gains
• You have income from business or profession
• You are a director in a company or have unlisted equity shares
• You have foreign assets or foreign income

Most commonly used by salaried individuals.

ITR-2

For whom?

Individuals and HUFs not having income from business or profession.

Includes:

• Salary, House Property, Other Sources
• Capital Gains
• Foreign assets/income
• Income as a partner in a firm
• Agricultural income > ₹5,000

Not applicable if:
You have income from business or profession under any head.

Ideal for salaried individuals with capital gains or multiple properties.

ITR-3

For whom?
Individuals and HUFs having income from business or profession, including:

• Proprietorship income
• Freelancers/Consultants
• Income as a partner in a firm (including remuneration)
• Presumptive income under 44AD/44ADA/44AE (if not using ITR-4)

Comprehensive form for business owners and professionals.

ITR-4 (Sugam)

For whom?

Individuals, HUFs and Firms (other than LLPs) opting for presumptive taxation under:

• Section 44AD (Small Businesses)
• Section 44ADA (Professionals)
• Section 44AE (Goods Carriage Operators)

Conditions:

• Total income ≤ ₹50 lakhs (Professionals) / ₹2 crores (Business)
• No capital gains or foreign assets
• Resident only
• Not a director or shareholder in unlisted company

For small businesses and professionals under presumptive scheme.

ITR-5

For whom?

Applicable to:

• Firms
• LLPs
• Association of Persons (AOPs)
• Body of Individuals (BOIs)
• Estate of deceased
• Business trusts and investment funds

For entities not covered under ITR-7 (Trusts) or ITR-6 (Companies).

 ITR-6

For whom?

Companies other than those claiming exemption under Section 11 (charitable or religious trusts).

All taxable companies must file ITR-6.

ITR-7

For whom?

Persons including companies who are required to file return under:

• Section 139(4A): Charitable/religious trusts
• Section 139(4B): Political parties
• Section 139(4C): Research institutions, News agencies, etc.
• Section 139(4D): Universities, colleges, and educational institutions

Used primarily by trusts and institutions claiming exemption.