Which ITR Form to Use — Complete Guide to Choosing the Right Form & Avoiding Mistakes

Why Choosing the Right ITR Form Matters

Filing your Income Tax Return with the wrong form is one of the most common reasons for ITR rejection by the Income Tax Department. India has seven ITR forms (ITR-1 through ITR-7), each designed for specific taxpayer categories and income types. Selecting the correct form ensures smooth processing, faster refunds, and zero compliance issues.

If you're new to filing, start with our step-by-step e-filing guide first, then come back here to pick the right form.

All 7 ITR Forms — Who Should File Which

ITR-1 (Sahaj) — For Most Salaried Individuals

Use ITR-1 if ALL of the following apply:

• You are a resident individual (not HUF)
• Total income is up to ₹50 lakh
• Income sources are limited to:
  • Salary or pension
  • One house property
  • Interest income, family pension, agricultural income up to ₹5,000
• You do NOT have capital gains, foreign income, or foreign assets

Cannot use ITR-1 if you:

• Are a director in a company
• Hold unlisted equity shares
• Have income from more than one house property
• Are a non-resident or RNOR

Quick tip: If you're a salaried employee with just salary, bank FD interest, and no stock market activity — ITR-1 is your form.

ITR-2 — Individuals & HUFs Without Business Income

Use ITR-2 if you:

• Have capital gains (stocks, mutual funds, property sale)
• Own more than one house property
• Have foreign income or foreign assets (including foreign bank accounts)
• Are a non-resident or RNOR
• Are a director in a company
• Hold unlisted equity shares
• Have total income above ₹50 lakh
• Have agricultural income above ₹5,000

Key point: ITR-2 covers everything ITR-1 covers, plus capital gains and foreign income — but no business/profession income.

ITR-3 — Business or Professional Income (Individuals & HUFs)

Use ITR-3 if you:

• Have income from a business or profession (not opting for presumptive taxation)
• Are a partner in a firm (receiving salary, bonus, interest, or profit share)
• Have business income along with salary, capital gains, house property, or other sources

Common filers: Freelancers with high turnover, consultants not using presumptive scheme, professionals (doctors, lawyers, CAs) maintaining books of accounts.

ITR-4 (Sugam) — Presumptive Taxation Scheme

Use ITR-4 if:

• You are an individual, HUF, or partnership firm (not LLP)
• You opt for presumptive taxation under:
  • Section 44AD — Business with turnover up to ₹3 crore (if digital receipts are 95%+, else ₹2 crore)
  • Section 44ADA — Professionals with gross receipts up to ₹75 lakh (if digital receipts are 95%+, else ₹50 lakh)
  • Section 44AE — Goods carriage owners (up to 10 vehicles)
• Total income is up to ₹50 lakh

Cannot use ITR-4 if you:

• Have capital gains, foreign income, or foreign assets
• Own more than one house property
• Are a director in a company or hold unlisted shares
• Have brought-forward/carry-forward losses

ITR-4 is simpler than ITR-3 — you declare a presumptive profit percentage and skip detailed books of accounts.

ITR-5 — Firms, LLPs, AOPs, BOIs

Use ITR-5 if you are:

• A partnership firm or LLP
• An Association of Persons (AOP) or Body of Individuals (BOI)
• A cooperative society, local authority, or artificial juridical person

Not for: Individuals, HUFs, or companies.

ITR-6 — Companies (Other Than Section 11 Exemption)

Use ITR-6 if you are:

• A company registered under the Companies Act
• Not claiming exemption under Section 11 (charitable/religious trusts)

ITR-6 must be filed electronically — no paper filing allowed.

ITR-7 — Trusts, Political Parties, Institutions

Use ITR-7 if you are:

• A charitable or religious trust (Section 139(4A))
• A political party (Section 139(4B))
• A scientific research institution (Section 139(4C))
• A university, college, or institution under Section 139(4D)

Quick Form Selection Flowchart

New Tax Regime vs Old Tax Regime — Which to Choose

The tax regime you choose affects your ITR filing. Under the new regime (default from FY 2023-24 onwards), tax rates are lower but most deductions and exemptions are not available.

Tax Slab Comparison (FY 2025-26)

Standard deduction: ₹75,000 (new regime) | ₹50,000 (old regime)

When Old Regime May Be Better

• You claim HRA exemption (high rent in metro cities)
• You have heavy Section 80C investments (₹1.5 lakh PPF, ELSS, etc.)
• You claim home loan interest deduction (Section 24)
• You have Section 80D medical insurance premiums
• Total deductions exceed ₹3–4 lakh

When New Regime May Be Better

• You have few or no deductions to claim
• You prefer simplicity — no investment proofs needed
• Your income is above ₹15 lakh with limited deductions

Important: New regime is the default. To use the old regime, you must explicitly opt out by filing Form 10-IEA before the due date. Salaried individuals can switch every year; business/profession taxpayers get one switch.

Common ITR Filing Mistakes to Avoid

1. Filing the Wrong ITR Form

The mistake: A salaried person who sold mutual funds files ITR-1 instead of ITR-2 (which requires capital gains reporting).

The consequence: Your return may be treated as defective under Section 139(9). You'll get a notice to correct it within 15 days.

How to avoid: Use the flowchart above. If you have ANY capital gains — even ₹500 from an equity fund — you need ITR-2 or higher.

2. Not Verifying Form 26AS / AIS

The mistake: Filing without cross-checking your Form 26AS and Annual Information Statement (AIS) on the income tax portal.

The consequence: TDS mismatch leads to demand notices. Unreported income flagged in AIS triggers scrutiny.

How to avoid: Before filing, download both 26AS and AIS from the income tax portal. Match every TDS entry with your Form 16 and bank TDS certificates. Report any discrepancy via the AIS feedback mechanism.

Learn more about TDS in our TDS return filing guide.

3. Missing or Incorrect Income Reporting

The mistake: Forgetting to report:

• Savings account interest from all bank accounts
• FD interest (even if TDS was deducted)
• Interest from tax-saving FDs
• Dividend income from shares and mutual funds
• Freelance or side income

The consequence: The department has all this data via AIS. Mismatches trigger automated notices under Section 143(1).

4. Wrong Bank Account for Refund

The mistake: Providing an inactive or incorrect bank account, or not pre-validating it on the portal.

The consequence: Refund failure and delays of months.

How to avoid: Pre-validate your bank account on the income tax portal before filing. Ensure the PAN is linked to the account.

5. Not E-Verifying the Return

The mistake: Filing the return but forgetting to e-verify it within 30 days.

The consequence: Your return is treated as never filed. All your effort is wasted.

How to verify: Use Aadhaar OTP (fastest), net banking, bank ATM, or send a signed ITR-V to CPC Bengaluru.

6. Choosing the Wrong Tax Regime

The mistake: Not calculating tax under both regimes before filing and accidentally staying on the default new regime when old regime would save more tax.

How to avoid: Use the income tax portal's tax calculator or any online tax comparison tool before filing. File Form 10-IEA if old regime is better.

ITR Filing Due Dates

Penalty for Late Filing

Additional consequences of late filing:

• Interest under Section 234A (1% per month on unpaid tax)
• Cannot carry forward certain losses (capital loss, business loss)
• No revised return option if you miss the belated deadline

Documents Checklist Before Filing

• Form 16 from employer
• Form 26AS and AIS/TIS from income tax portal
• Bank statements (all accounts — for interest income)
• Capital gains statement from broker/AMC
• Investment proofs (80C, 80D, 80E, 80G, etc.) — if using old regime
• Home loan certificate (interest + principal)
• Rent receipts (for HRA, if old regime)
• PAN linked to Aadhaar — mandatory for filing

Need a PAN card? See our PAN card application guide.

Frequently Asked Questions

Can I change my ITR form after filing?

Yes, you can file a revised return (under Section 139(5)) with the correct form before 31 December of the assessment year. The revised return replaces the original.

I sold mutual funds this year. Can I still use ITR-1?

No. Any capital gains — short-term or long-term — from mutual funds, stocks, or property require ITR-2 (or ITR-3 if you also have business income).

What happens if I file the wrong ITR form?

The Income Tax Department will issue a defective return notice under Section 139(9). You'll have 15 days to file a corrected return. If you don't respond, the return is treated as invalid.

Is ITR-4 (Sugam) better than ITR-3 for freelancers?

If your gross receipts are within the presumptive limits (₹75 lakh for professionals, ₹3 crore for businesses with 95%+ digital receipts), ITR-4 is simpler — you declare a minimum profit percentage and skip detailed bookkeeping. But if your actual expenses are higher than the presumptive profit, ITR-3 with proper books may result in lower tax.

Do I need to file ITR if my income is below the exemption limit?

It's not mandatory if income is below the basic exemption limit, but filing is recommended if you want to claim a TDS refund, apply for a loan or visa, or build a compliance history.

Can salaried employees switch between old and new tax regime every year?

Yes. Salaried individuals (with no business income) can choose between the old and new regime each year at the time of filing. Those with business/profession income can switch only once.

What is the difference between Form 26AS and AIS?

Form 26AS shows TDS/TCS credits, advance tax, and refunds. AIS (Annual Information Statement) is more comprehensive — it includes mutual fund purchases, property transactions, high-value spending, interest income, dividends, and more. Always check both before filing.

Related Guides

• How to File ITR Online — Step-by-Step Guide
• TDS Return Filing Online
• GST Return Filing Online
• How to Apply for PAN Card Online