ITR filing 2025 | ITR-1or 2: Which income-tax return form should salaried persons choose?

ITR filing 2025: Know how to choose between ITR-1 and ITR-2

The income-tax department has released the excel utilities for form ITR-2 for salaried taxpayers and chartered accountants to file returns for the financial year 2024-25 (assessment year 2025-26).

This year, ITR forms have seen a raft of changes, taking into account the announcements in Budget 2025 on tax slabs and capital gains across asset classes.

Until last year (assessment year 2024-25), ordinarily resident Indian tax-payers could use ITR-1 (Sahaj) only when their income sources were limited to salary/pension, one house property, interest from savings/fixed deposits, dividends and agricultural income of less than Rs 5,000.

This year, even taxpayers with long-term capital gains (LTCG) on sale of listed equity shares or equity mutual fund units can use this form, provided these do not exceed Rs 1.25 lakh in FY25.

For salaried taxpayers without any business income, including intra-day trading and futures & options income, ITR-1 and 2 would be the relevant forms. ITR-2 is for those with more diverse and complex financial dealings.

Also read | Income-tax filing 2025: Why verifying AIS is a must before submitting your ITR

Here’s a guide to selecting the right ITR form:

ITR-1 for simpler financial dealings 

ITR-1 (Sahaj) — Sahaj which loosely translates to simple or uncomplicated — is a form that salaried tax-payers or pensioners without any complex financial dealings can use.

The form is pre-filled with personal information, income details and financial transactions data to enable quick and easy filing. Individuals can verify the ITR data with their Form-16 and bank account statements, besides checking Form 26AS and the Annual Information Statement (AIS) and complete the process online.

It can be used only by resident (and ordinarily resident) individuals with income of not more than Rs 50 lakh. This includes salary/ pension, one house property (excluding cases where loss is brought forward), agriculture (up to Rs 5,000), and income from savings or fixed deposits, dividends, and family pension.

Taxpayers with LTCG of up to Rs 1.25 lakh under Section 112A from listed equity shares or equity mutual funds can also use this form.

Also read | ITR filing 2025: Preparing to file income tax returns? Keep these crucial documents handy

Select the right form

However, not everyone can file returns using this simple form. The income-tax department has listed several conditions that can make you ineligible for ITR-1.

You cannot use ITR-1 if:

• Your total income exceeds Rs 50 lakh

• Your capital gains under section 112A exceed Rs 1.25 lakh

• You are a director in a company

• You own unlisted equity shares

• Have drawn foreign income during the financial year

• Own any foreign accounts or assets (including financial interest in any entity)

• If payment or deduction of tax has been deferred on ESOP

• If you have brought forward loss or loss to be carried forward under any head of income

If you meet any of these criteria, ITR-2 is the form for you. The form is for individuals who do not have any income under the head "profits and gains from business or profession". It is for salaried individuals or pensioners who can't file returns using ITR-1.