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Which ITR Form for a Salaried Person Handy Guide to Filing Returns
Last updated: Oct 2026
Which ITR for salaried person depends on 6 tests, and failing any one moves you to ITR-2. This page covers assessment year (AY) 2026-27, which is income earned in financial year (FY) 2025-26.
- ITR-1 income limit: total income up to Rs. 50 lakh
- Properties: up to 2 house properties
- Capital gains: only long-term gains under Section 112A, up to Rs. 1.25 lakh, with no brought-forward losses
- Other limits: agricultural income up to Rs. 5,000, and no foreign assets or directorship
ITR-2: everything else, but no business income
Run the 6 tests in order to decide which ITR for salaried person fits you. If you fail any one, file ITR-2, because the wrong form can make the return defective.
Which ITR form does a salaried person file?
A resident salaried individual files ITR-1 if all 6 tests pass, and ITR-2 if any fails. A salaried person with business income files ITR-3 instead.
| Test | ITR-1 passes if | If you fail |
|---|---|---|
| Residence | You are resident in India | ITR-2 |
| Total income | Up to Rs. 50 lakh | ITR-2 |
| House property | Up to 2 properties | ITR-2 |
| Capital gains | Only Section 112A gains up to Rs. 1.25 lakh, no brought-forward losses | ITR-2 |
| Foreign assets or income, directorship, unlisted shares | None | ITR-2 |
| Agricultural income | Up to Rs. 5,000 | ITR-2 |
These limits apply to returns for AY 2026-27. The Central Board of Direct Taxes (CBDT) notified the forms through Notification 45/2026 of 30 March 2026.
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What changed in ITR-1 for AY 2026-27?
Two limits widened: ITR-1 now takes up to 2 house properties, and it takes long-term capital gains under Section 112A up to Rs. 1.25 lakh.
Section 112A covers listed equity shares and equity mutual funds. The Rs. 1.25 lakh limit matches the exemption on such gains. Short-term gains, gains on property or gold, and gains above the limit still need ITR-2.
Earlier guides, including the guide to ITR-1 eligibility, may state one property and no capital gains. Check the year of any guide you read.
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When does a salaried person need ITR-2?
ITR-2 applies when any 1 of 6 conditions holds.
| Situation | Why ITR-1 fails |
|---|---|
| Shares or mutual funds sold with short-term gains | Only Section 112A long-term gains are allowed |
| Long-term gains above Rs. 1.25 lakh | Above the limit |
| Property or gold sold | Not a Section 112A gain |
| Foreign shares, accounts or stock units | Foreign assets are not allowed |
| Income above Rs. 50 lakh | Above the limit |
| Directorship or unlisted shares | Not allowed |
ITR-2 carries extra schedules for capital gains and foreign assets, as the guide to how to file ITR-2 explains. A salaried person who also earns business income files ITR-3.
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What happens if I pick the wrong form?
The department can treat the return as defective and ask you to correct it within a stated period. If you do not, it can treat the return as not filed.
Trade-off: ITR-2 takes longer than ITR-1, but it accepts every case that ITR-1 accepts. If you are unsure, file ITR-2 rather than risk a defect notice. File before the due date, because a belated return carries a fee under Section 234F.
The Income Tax Act, 2025 applies from Tax Year 2026-27. The forms for that year will be notified separately, and the numbered forms under the Income-tax Rules, 2026 do not replace ITR-1 to ITR-7.
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Home loan for professionals
A worked example: Rs. 18 lakh, two flats, small fund gains
Consider Vikas, a 34-year-old product manager in Bengaluru with a salary of Rs. 18 lakh a year, a household income of Rs. 1.5 lakh a month and a CIBIL Score of 768. He owns 2 flats, lives in one and rents the other. He sold equity mutual funds for a long-term gain of Rs. 80,000.
Formula used: Test each limit: income ≤ Rs. 50 lakh, properties ≤ 2, Section 112A gain ≤ Rs. 1.25 lakh.
| Test | Vikas | Result |
|---|---|---|
| Residence | Resident | Pass |
| Total income | Rs. 18 lakh plus rent | Pass |
| House property | 2 | Pass |
| Section 112A gain | Rs. 80,000 | Pass |
| Foreign assets | None | Pass |
Vikas files ITR-1. If he had also sold a flat or held foreign stock units, he would file ITR-2.
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Does my ITR form affect my home loan with Bajaj Finance?
Bajaj Finance reviews your income documents, including returns for the last 2 years, so a correctly filed and verified return supports your application.
| Loan feature | Detail |
|---|---|
| Interest rate | From 7.25% p.a.*, subject to credit assessment |
| Loan amount | Up to Rs. 15 crore* |
| Tenure | Up to 32 years |
Approval timelines can extend where returns show a defect or a missing year, and minimum income thresholds can differ by city. Check your home loan eligibility and read how to register for ITR filing.
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Frequently Asked Questions
Choosing the form
Deadlines and corrections
Can I file ITR-1 if I have income from two house properties?
Yes, for assessment year 2026-27, if every other test passes. Earlier years allowed only one property. Report each property's rent or deemed rent and the interest on any loan. If you own more than two properties, or have a loss from house property that needs to be carried forward, use ITR-2 instead.
Which form do I file if my employer gives me stock units abroad?
File ITR-2. Foreign shares and stock units create foreign assets and foreign income, which ITR-1 does not accept. ITR-2 has schedules for foreign assets and foreign source income. You may also need to claim a credit for tax paid abroad, which the guide to Form 67 explains. Keep the broker statements ready.
Which form do I use for the return due in 2027?
Returns for income earned from 1 April 2026 fall under the Income-tax Act, 2025, for Tax Year 2026-27. The department will notify those return forms separately. Do not assume that numbered forms under the new rules replace ITR-1 to ITR-7. Check the forms published on the e-filing portal before you file.
Can I switch from ITR-1 to ITR-2 after filing?
Yes. File a revised return on the correct form within the revised-return window, which runs to 31 March 2027 for AY 2026-27. A revised return replaces the earlier one. If the department already sent a defect notice, reply within the stated time and file the corrected return on the right form.
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