Which ITR Form Should You File? ITR-1 vs 2 vs 3 vs 4
Salary only → ITR-1. Any capital gains/crypto/foreign asset → ITR-2. Business, F&O or profession → ITR-3. Presumptive income → ITR-4. Wrong form = defective return u/s 139(9).
60-second decision table
| Your situation | File |
|---|---|
| Resident, salary/pension + interest, ≤2 house properties, income ≤₹50L, equity LTCG ≤₹1.25L, no STCG/business/crypto | ITR-1 (Sahaj) |
| Any capital gains, >2 properties, foreign assets, NRI/RNOR, director, unlisted shares, crypto (VDA), income >₹50L — no business income | ITR-2 |
| Business/profession with books (incl. F&O + intraday), firm partner, salary + business together | ITR-3 |
| Presumptive income (44AD/44ADA/44AE), total income ≤₹50L | ITR-4 (Sugam) |
Traps that push you to a harder form
- One equity sale with STCG — even ₹500 — disqualifies ITR-1. Small 112A LTCG (≤₹1.25L, no loss set-off) is now allowed in ITR-1/ITR-4.
- Crypto of any amount needs ITR-2 (Schedule VDA) — never ITR-1.
- NRIs can never use ITR-1 or ITR-4 — salary-only NRIs file ITR-2.
- F&O or intraday is business income — ITR-3, even if you also have salary. Trading taxation →
- Freelancers: receipts within 44ADA limits → ITR-4; above limits or with books → ITR-3. 44AD/44ADA limits →
Presumptive limits to remember
| Scheme | Turnover/receipt cap | Deemed profit |
|---|---|---|
| 44AD (business) | ₹2 cr (₹3 cr if ≥95% digital receipts) | 8% (6% on digital receipts) |
| 44ADA (profession) | ₹50L (₹75L if ≥95% digital) | 50% of receipts |
By TaxSetu Editorial Team · Last reviewed: 7 October 2026
Based on the Income-tax Act 2025, Income Tax Rules 2026 and CBDT notifications; sections per the Income-tax Act 1961 (as amended) with 2025-Act mappings where notified · Verify on the official portal: incometax.gov.in
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Frequently Asked Questions
Resident individuals with salary/pension + interest, up to 2 house properties, income up to ₹50L and small 112A LTCG only — no STCG, business, crypto or carried-forward losses.
ITR-2 with Schedule VDA — crypto of any amount disqualifies ITR-1. If you trade crypto as a business, it goes to ITR-3.
No — NRIs can never use ITR-1 or ITR-4. Salary-only NRIs file ITR-2; NRIs with Indian business income file ITR-3.
Your return becomes defective under Section 139(9) — you get 15 days to fix it, failing which the return is treated as invalid and refunds get stuck.