Which ITR Form to File? ITR-1, ITR-2, ITR-3, ITR-4 Explained
Salaried with no capital gains? ITR-1. Have stocks or property sold? ITR-2. Business owner? ITR-3. Small business presumptive? ITR-4.
📊Which Form is For You?
| ITR Form | Who Should File | Income Sources |
|---|---|---|
| ITR-1 (Sahaj) | Salaried individuals, income < ₹50L | Salary + one house property + interest income + family pension |
| ITR-2 | Salaried with capital gains or multiple properties | All of ITR-1 + capital gains (stocks, mutual funds, property) + foreign income + multiple house properties |
| ITR-3 | Business owners, professionals | All of ITR-2 + business/professional income (non-presumptive) |
| ITR-4 (Sugam) | Small business, freelancers (presumptive) | Business under ₹2Cr turnover or profession under ₹50L using presumptive taxation (44AD/44ADA) |
⚠️Common Mistakes
Mistake 1: Filing ITR-1 when you have stock market gains. If you sold mutual funds or shares during the year, you have capital gains — you need ITR-2, not ITR-1. Even if you had a loss, you still need ITR-2 to report and carry forward the loss.
Mistake 2: Freelancers filing ITR-1. If you have freelance income (even alongside salary), you need ITR-3 or ITR-4. Freelance income is business/professional income, not salary.
Mistake 3: Not knowing about presumptive taxation. If your freelance/business turnover is below ₹2Cr (₹50L for professionals), you can use Section 44AD/44ADA and file simpler ITR-4 instead of ITR-3. This means no need to maintain detailed books of accounts — declare 50% (professionals) or 8% (business) of turnover as profit.
Filing the wrong ITR form can lead to: notice from Income Tax department, return being treated as defective, and having to re-file. Always choose correctly.