Choose the correct ITR form for FY 2025-26 and FY 2026-27 with this 2026 guide to ITR-1 to ITR-7, including new regime defaults and disqualifications.
Although the original blog covered ITR forms for FY 2021-22, the framework has evolved materially. For FY 2026-27 returns filed in AY 2027-28 (and the FY 2025-26 returns due in AY 2026-27), CBDT has notified updated ITR-1 through ITR-7, integrated AIS-driven prefill, and fully embedded the new tax regime as default. Choosing the right form is the foundation of error-free filing.
ITR-1 (Sahaj): for resident salaried individuals
ITR-1 is for resident individuals (other than not ordinarily resident) with total income up to ₹50 lakh, where income includes salary, one house property, family pension, agricultural income up to ₹5,000, and other sources excluding lottery and racehorses. Capital gains, foreign assets, directorship, unlisted shares, and brought-forward losses disqualify the taxpayer from ITR-1.
ITR-2: for individuals and HUFs without business income
ITR-2 is used by individuals and HUFs whose income includes capital gains, more than one house property, foreign income, foreign assets, directorship in any company, holdings in unlisted equity, or income exceeding ₹50 lakh. From AY 2026-27 onwards, ITR-2 has a separate schedule for crypto and other virtual digital assets, marked-to-market disclosures and Section 89A relief on retirement funds in notified jurisdictions.
ITR-3: for individuals and HUFs with business or professional income
ITR-3 covers taxpayers carrying on a proprietary business or profession, partners in partnership firms with remuneration or interest income, F&O traders, and intraday equity traders. Audit applicability, presumptive opt-outs, balance sheet and P&L schedules, and depreciation tables all live in ITR-3.
ITR-4 (Sugam): presumptive taxation
ITR-4 is for resident individuals, HUFs, and firms (other than LLPs) with presumptive income under Sections 44AD, 44ADA, and 44AE and total income up to ₹50 lakh. Budget 2023 had raised presumptive turnover thresholds where digital receipts are 95% or more — those higher thresholds continue to apply. Crypto income and foreign asset holders cannot use ITR-4.
ITR-5, ITR-6 and ITR-7: for entities
- ITR-5: firms, LLPs, AOPs, BOIs, business trusts, investment funds
- ITR-6: companies other than those claiming exemption under Section 11
- ITR-7: trusts, political parties, research associations, universities under Sections 139(4A) to 139(4D)
New tax regime as the default
From AY 2024-25 onwards, the new tax regime under Section 115BAC is the default. Individuals with business income must use Form 10-IEA to opt out, and the choice has limited reversibility. Salaried taxpayers can switch between regimes year on year by selecting the option in the ITR form itself. Standard deduction of ₹75,000 and Section 87A rebate up to ₹7 lakh of total income are available under the default regime.
Common selection errors
Frequent mistakes include using ITR-1 when capital gains exist (even small mutual-fund redemptions), using ITR-4 when income exceeds ₹50 lakh or foreign assets exist, filing ITR-2 when business or professional income is present (requiring ITR-3), and using ITR-6 when claiming exemption under Section 11 (which mandates ITR-7). The CPC's defective-return notices under Section 139(9) typically arrive within weeks, with a fifteen-day response window.
Verification options
- Aadhaar OTP for individuals with Aadhaar-linked mobile
- Net-banking pre-validated bank account
- Demat-account-based EVC
- Digital Signature Certificate — mandatory for companies, LLPs, and audit cases
- Physical ITR-V sent to CPC Bengaluru within thirty days where electronic verification is not done
Pre-filled data and validation
The income-tax e-filing portal pre-fills salary, TDS, capital gains, dividend, and interest data from AIS, TIS, and Form 26AS. Always reconcile pre-filled values with your own records before accepting them; pre-fill is not infallible. Use the offline JSON utility for complex cases (capital gains with multiple property sales, business income with depreciation, foreign assets), validate the JSON, and upload only after error-free validation.
Filing for special cases
Special situations demand specific attention. Returning NRIs in their year of return must choose the form aligned with their residential status under Section 6. Tax residents with foreign assets must complete Schedule FA fully and declare even small foreign bank accounts and ESOP holdings. Senior citizens above 75 with only pension and interest income from a specified bank can use Form 12BBA for tax-deduction relief and may not need to file ITR separately under Section 194P.
Common defective return triggers
- Mismatch between tax payable and tax paid
- Schedule mismatch — for example, capital gains in Schedule CG not summing to total income
- Audit details missing where Section 44AB applies
- Bank account not pre-validated for refund
- Form 10-IEA not filed where new regime opt-out is claimed by business income earner
Conclusion
Pick the right ITR form before you start data entry. Misuse leads to defective return notices under Section 139(9) and avoidable rework. For FY 2025-26 and FY 2026-27, double-check AIS, TIS, and Form 26AS prefill, confirm regime selection, and validate the ITR JSON before upload to avoid processing delays.
