- Selecting correct ITR form ensures accurate, timely returns.
- ITR-1 now includes two properties, limited capital gains.
- Long-term capital gains taxation standardized for AY 2026-27.
ITR Filing 2026: Choosing the correct Income Tax Return (ITR) form is one of the first decisions taxpayers must make before filing their returns for Assessment Year (AY) 2026-27. Selecting the wrong form could delay the filing process or even require the return to be revised later.
The Central Board of Direct Taxes (CBDT) notified all ITR forms on March 31, paving the way for individuals, businesses and other entities to file returns for Financial Year (FY) 2025-26. While the income tax e-filing portal officially opens at the start of April, return filing typically gathers momentum only after the forms and backend systems are fully updated.
The form applicable to a taxpayer depends primarily on the nature of income rather than occupation alone. Salaried individuals, freelancers, professionals and business owners may all be required to use different forms based on their sources of income.
Why Picking The Correct ITR Form Matters
The Income Tax Department has prescribed seven different ITR forms, each designed for a specific category of taxpayers.
Factors such as salary income, freelance earnings, capital gains, foreign income, ownership of multiple house properties and eligibility under the presumptive taxation scheme determine which return form should be used.
Choosing the correct form at the outset can help avoid errors during processing and ensure a smoother filing experience.
Which ITR Form Should Salaried Taxpayers Use?
Resident salaried individuals with annual income of up to Rs 50 lakh are generally required to file ITR-1 (Sahaj), provided they meet the prescribed eligibility conditions.
The form covers income from salary, up to two house properties and income from other sources such as interest.
For AY 2026-27, the scope of ITR-1 has been widened following changes introduced under the new Income Tax Act, 2026.
One of the key changes allows taxpayers to report long-term capital gains (LTCG) arising from listed equity shares and equity-oriented mutual funds through ITR-1, provided the total LTCG does not exceed Rs 1.25 lakh. Taxpayers with gains above this threshold will need to file ITR-2 instead.
Another significant change is that taxpayers with income from two house properties can now use ITR-1, whereas earlier the form was restricted to those with income from only one house property.
Also Read : Gold Silver Rate Today (July 16): Metals Fall, Check Latest Rates In Delhi, Mumbai, Chennai, More
What About Long-Term Capital Gains?
Budget 2024-25 also revised the taxation of long-term capital gains.
Earlier, different categories of long-term gains attracted tax at separate rates of 10 per cent and 12.5 per cent.
The revised framework standardised taxation at 12.5 per cent without indexation and 20 per cent with indexation, depending on the nature of the asset.
These revised provisions will apply while filing returns for FY 2025-26 wherever applicable.
Interest Income Must Also Be Reported
Interest earned from fixed deposits continues to be taxed under the head “Income from Other Sources” at the applicable income tax slab rate.
Banks generally deduct tax at source (TDS) at 10 per cent if annual interest exceeds Rs 40,000, or Rs 50,000 for senior citizens.
Where a PAN is not furnished, higher TDS provisions may apply.
Which ITR Form Should Freelancers File?
Unlike salaried taxpayers, freelancers generally need to file either ITR-3 or ITR-4, depending on how they report their professional income.
According to tax platform ClearTax, freelancers who opt for the presumptive taxation scheme under Section 44ADA can declare 50 per cent of their gross professional receipts as taxable income under the head “Profits and Gains of Business or Profession”.
Freelancers typically include self-employed professionals who provide services independently, such as content writers, graphic designers and video editors.
TDS And Advance Tax Rules For Freelancers
ClearTax notes that payments made to freelancers and professionals for specified services attract tax deduction at source (TDS) under Section 194J at 10 per cent.
The TDS deducted can subsequently be claimed while filing the income tax return, either as tax credit against the final liability or as a refund where no tax is payable.
Freelancers whose annual tax liability exceeds Rs 10,000 are generally required to pay advance tax every quarter.
However, those opting for the presumptive taxation scheme under Section 44ADA can discharge their advance tax liability in a single instalment before March 15.
Also Read : SpaceX Just Hit A Milestone It Didn’t Want: Why The Stock Fell Below Its IPO Price
Complete List Of ITR Forms
The Income Tax Department has notified the following return forms for different categories of taxpayers:
ITR-1 (Sahaj): Resident salaried individuals with eligible income up to Rs 50 lakh.
ITR-2: Individuals with capital gains and other specified income not eligible for ITR-1.
ITR-3: Individuals and Hindu Undivided Families (HUFs) having income from business or profession.
ITR-4 (Sugam): Eligible taxpayers opting for presumptive taxation whose business or professional income falls within the prescribed limits.
ITR-5: Firms, LLPs, Associations of Persons (AOPs) and Bodies of Individuals (BOIs).
ITR-6: Companies.
ITR-7: Charitable and religious trusts and other specified entities.
Key ITR Filing Deadlines For AY 2026-27
For taxpayers who are not subject to audit, the due date for filing ITR-1 and ITR-2 is July 31, 2026.
For eligible taxpayers filing ITR-3 or ITR-4 who are not subject to audit, the due date is August 31, 2026.
Taxpayers who miss the applicable deadline can still file a belated return up to December 31, 2026, although late filing fees and interest may apply depending on the circumstances.
Filing Starts With Choosing The Right Form
While the online filing process has become increasingly streamlined, choosing the correct ITR form remains one of the most important steps before submitting a return.
Whether a taxpayer earns through a salary, freelance assignments or professional services, understanding the eligibility criteria for each form can help avoid filing errors and ensure timely processing of the return.
Also Read : Fake Tax Claims In ITR Filing Can Be Costly. Here’s What Taxpayers Should Know
