ITR-1 vs ITR-2: Which Form Should You File? (FY 2025–26 Guide)
Choosing the wrong ITR form is a common mistake that triggers defective return notices. This comparison explains exactly when to use ITR-1 vs ITR-2 for FY 2025–26.
Last updated: 2026-05-10 · CA-reviewed
ITR-1 (Sahaj)
Simplest ITR for pure salaried taxpayers
- Simplest, shortest form — fewer fields
- Pre-filled data from employer reduces manual entry
- Can be filed entirely online in 10–15 minutes
- Lower risk of errors due to simple structure
- Not for capital gains (even short-term from stocks)
- Not for foreign assets or foreign income
- Not for agricultural income above ₹5,000
- Not for directorship in any company
- Not for income > ₹50 lakh
Salaried employees with only salary + bank interest + one house property income, total income ≤ ₹50 lakh, no investments in stocks/MF, no foreign assets.
ITR-2
For salaried individuals with investments and assets
- Handles capital gains — stocks, MF, property, crypto
- Handles foreign assets and foreign income
- Handles multiple house properties
- No income upper limit
- Can report directorship in company
- Can carry forward capital losses
- More complex — requires Schedule CG, Schedule FA, etc.
- Takes longer to fill (especially with many transactions)
- Not for business/professional income (use ITR-3)
Salaried employees/pensioners with capital gains (stocks, MF, property), rental income from multiple properties, foreign assets/income, income above ₹50 lakh, or directorship.
ITR-1 (Sahaj) vs ITR-2: Feature Comparison
| Parameter | ITR-1 (Sahaj) | ITR-2 |
|---|---|---|
| Who can use | Resident individuals/HUFs | Resident + NRI individuals/HUFs |
| Salary income | ✓ Yes | ✓ Yes |
| One house property | ✓ Yes | ✓ Yes |
| Multiple house properties | ✗ No | ✓ Yes |
| Capital gains (stocks/MF/property) | ✗ No | ✓ Yes |
| Crypto / VDA income | ✗ No | ✓ Yes |
| Foreign income / assets | ✗ No | ✓ Yes |
| Agricultural income > ₹5,000 | ✗ No | ✓ Yes |
| Business / professional income | ✗ No | ✗ No (use ITR-3/4) |
| Directorship in company | ✗ No | ✓ Yes |
| Income limit | ≤ ₹50 lakh only | No limit |
Expert Verdict: Which Should You Choose?
Use ITR-1 only if you have salary income, one house property, bank interest, and absolutely nothing else — income below ₹50 lakh, no stocks, no MF, no foreign accounts. If you have even one equity mutual fund SIP, you must use ITR-2 (because redemption creates capital gains). When in doubt, ITR-2 is always safer — a CA can pre-check your profile and confirm the correct form.
Frequently Asked Questions
Yes. ITR-1 covers income under 'Income from Other Sources' which includes bank savings account interest (Section 80TTA deduction available up to ₹10,000) and FD interest. You do NOT need ITR-2 just because of bank interest.
Yes. Any capital gain — even ₹1 of LTCG on equity mutual funds — requires ITR-2 (Schedule 112A). ITR-1 cannot accept capital gains from securities. This is one of the most common mistakes: people redeem an SIP and think they can still use ITR-1.
You will receive a defective return notice under Section 139(9) asking you to revise your return with the correct form. You have 15 days to respond. If ignored, the return is treated as invalid — meaning you might lose refunds and face penalties for non-filing.