Quick answer: Use ITR-1 (Sahaj) only if you satisfy all its eligibility conditions. If you are an individual or HUF without business/profession income but you are not eligible for ITR-1—for example because of short-term capital gains, foreign assets, total income above ₹50 lakh, or other exclusions—ITR-2 is generally the appropriate form.
This guide compares ITR-1 and ITR-2 for Assessment Year 2026–27 and helps you understand which return form may apply to your income. AY 2026–27 relates to income earned during FY 2025–26. Once you identify the correct form, follow our step-by-step ITR filing guide.
ITR-1 vs ITR-2 at a Glance
| Point | ITR-1 | ITR-2 |
|---|---|---|
| Who can file | Eligible resident individual (other than RNOR) | Individual or HUF not having business/profession income |
| Total income limit | Up to ₹50 lakh | No ₹50 lakh ceiling for eligibility |
| Salary / pension | Yes | Yes |
| House property | Up to two house properties, subject to conditions | Yes, including cases not eligible for ITR-1 |
| Other sources | Eligible income such as interest, family pension and dividend | Yes, including wider categories |
| Short-term capital gains | No | Yes |
| LTCG u/s 112A | Eligible up to ₹1.25 lakh, subject to conditions | Yes |
| Foreign assets / foreign income | No | ITR-2 may apply, subject to reporting requirements |
| Business/profession income | No | No |
When Can You File ITR-1?
For AY 2026–27, ITR-1 is intended for an eligible resident individual (other than Resident but Not Ordinarily Resident) with total income up to ₹50 lakh from permitted sources.
- Salary or pension
- Income from up to two house properties, subject to ITR-1 conditions
- Eligible income from other sources such as interest, family pension and dividend
- Agricultural income up to ₹5,000
- Eligible long-term capital gains under section 112A up to ₹1.25 lakh
Simple example
Salaried employee + bank interest + dividend + eligible house-property income, total income below ₹50 lakh → ITR-1 may apply if no exclusion condition is triggered.
When ITR-1 Cannot Be Used
- You have short-term capital gains
- Your LTCG under section 112A exceeds ₹1.25 lakh
- Your total income exceeds ₹50 lakh
- You are a director in a company
- You held unlisted equity shares during the year
- You have specified foreign assets, foreign signing authority or foreign-source income
- You have business or professional income
- You have brought-forward losses or losses to carry forward under a head of income
When Should You File ITR-2?
ITR-2 is generally applicable to individuals and HUFs who do not have income from profits and gains of business or profession and who are not eligible for ITR-1.
- Salary or pension with short-term or long-term capital gains
- Income from house property in cases outside ITR-1 eligibility
- Total income above ₹50 lakh
- Income from foreign sources or reportable foreign assets, where applicable
- Director of a company
- Holder of unlisted equity shares during the relevant year
- Lottery, betting or other income categories not allowed in ITR-1
Simple example
Salary + mutual fund sale resulting in short-term capital gain → ITR-1 cannot be used; ITR-2 is generally the relevant return if you have no business/profession income.
Practical Examples
| Income Situation | Likely Form |
|---|---|
| Salary + savings interest + dividend; total income ₹18 lakh | ITR-1, if all conditions are satisfied |
| Salary + STCG from shares | ITR-2 |
| Salary + LTCG u/s 112A of ₹90,000; otherwise eligible | ITR-1 may be available |
| Salary + LTCG u/s 112A of ₹2 lakh | ITR-2 |
| Salary + foreign bank account / foreign income | ITR-2 may apply, with relevant disclosures |
| Salary + business income | Not ITR-1 or ITR-2; examine ITR-3/ITR-4 eligibility |
| Total income ₹60 lakh with no business income | ITR-2 |
ITR-1 vs ITR-2: Decision Checklist
- Are you an individual resident (other than RNOR)? If not, ITR-1 is not available.
- Is your total income ₹50 lakh or less? If not, consider ITR-2 where there is no business/profession income.
- Do you have short-term capital gains? If yes, ITR-1 is not available.
- Do you have eligible LTCG under section 112A above ₹1.25 lakh? If yes, ITR-1 is not available.
- Do you have foreign assets, foreign-source income, unlisted equity holdings or company-director status? Check ITR-2 eligibility.
- Do you have business/profession income? Then ITR-2 is also not the correct form; review ITR-3 or ITR-4.
Frequently Asked Questions
Can I file ITR-1 if I sold shares?
It depends on the nature of the gain. Short-term capital gains make ITR-1 unavailable. Eligible LTCG under section 112A up to ₹1.25 lakh may be reported in ITR-1 for AY 2026–27, subject to all other conditions.
Can a person with income above ₹50 lakh file ITR-1?
No. The ₹50 lakh total-income ceiling is one of the ITR-1 eligibility limits. If there is no business/profession income, ITR-2 may be applicable depending on the facts.
Can an NRI file ITR-1?
No. ITR-1 is for an eligible resident individual other than RNOR. A non-resident individual without business/profession income generally examines ITR-2 eligibility.
I have salary, dividend and bond interest. ITR-1 or ITR-2?
Those income types alone do not automatically require ITR-2. ITR-1 may still be available if you satisfy every eligibility condition and none of the exclusions apply. If you also have disqualifying capital gains, foreign assets or other exclusions, ITR-2 may be required.
Related Guide
For the complete filing process, read our ITR Filing Step-by-Step Guide for AY 2026–27.
Official References
- Income Tax Department – Returns Applicable for Salaried Individuals, AY 2026–27
- Income Tax Department – ITR-1 FAQs
- Income Tax Department – ITR-2 FAQs
Disclaimer: This article is for general educational information. ITR eligibility depends on your complete facts, income sources, residential status and applicable law. Check the latest official instructions before filing or consult a qualified tax professional where required.
