Which ITR Form Should You File?
The correct ITR form depends on your income sources and total income. Most salaried employees fall into one of three categories:
| Form | Who Should File | Key Condition |
|---|---|---|
| ITR-1 (Sahaj) | Most salaried employees | Total income up to Rs 50 lakh, salary + one house property + other sources (interest, dividends). No capital gains. Not a director or unlisted equity shareholder. |
| ITR-2 | Salaried with capital gains or multiple properties | Capital gains from shares/MFs, more than one house property, foreign assets or income, directorship in a company. |
| ITR-3 | Salaried + business income | Any business or professional income in addition to salary (freelancing, consultancy, rental from commercial property). |
If you sold mutual funds or shares during the year, you must file ITR-2 even if your capital gains are small. ITR-1 does not have a capital gains schedule.
Documents Needed Before You File
- Form 16 (Part A and Part B) — issued by your employer by 15 June. Part A shows TDS deducted and deposited. Part B shows salary details and exemptions claimed.
- Annual Information Statement (AIS) — download from the income tax portal (incometax.gov.in). Shows all income reported against your PAN: salary, interest, dividends, securities transactions, rent received. Cross-check AIS with your own records before filing.
- Form 26AS — TDS credit statement. Verify that TDS deducted by your employer matches what appears in 26AS; discrepancies cause refund delays.
- Bank account statements — full year, for reporting interest income and verifying savings account interest under Section 80TTA.
- Investment proofs for 80C — LIC premium receipts, PPF passbook, ELSS statement, home loan principal repayment certificate, children's tuition fee receipts.
- Health insurance receipts for 80D — premium paid for self, spouse, children, and parents.
- Home loan interest certificate — from your bank or NBFC, for deduction under Section 24(b).
- HRA documents — rent agreement and rent receipts if claiming House Rent Allowance exemption (old regime only).
New Tax Regime vs Old Tax Regime — Which Is Better for You?
From FY 2023–24, the new tax regime is the default. You must actively opt for the old regime when filing. The new regime cannot be changed mid-year if you are a salaried employee.
| Income Slab | New Regime Rate | Old Regime Rate |
|---|---|---|
| Up to Rs 3 lakh | Nil | Nil |
| Rs 3–7 lakh | 5% | 5% (up to 5L) |
| Rs 7–10 lakh | 10% | 20% |
| Rs 10–12 lakh | 15% | 30% |
| Rs 12–15 lakh | 20% | 30% |
| Above Rs 15 lakh | 30% | 30% |
New regime advantages: Standard deduction of Rs 75,000 (enhanced from FY 2024–25), lower rates in middle slabs, no paperwork for deductions, rebate under Section 87A up to Rs 7 lakh income (zero tax).
Old regime advantages: All deductions available — 80C (up to Rs 1.5 lakh), 80D health insurance, HRA, LTA, home loan interest (Section 24), NPS employer contribution (Section 80CCD(2)). The old regime beats the new regime only when total eligible deductions are large enough to overcome the slab rate difference.
A simple rule: calculate your tax under both regimes using any online calculator (the income tax portal has one). The new regime is better for most employees earning below Rs 15 lakh who do not have a home loan and large 80C investments.
Key Deductions Under the Old Regime
- Section 80C — up to Rs 1,50,000: LIC premiums, PPF, ELSS (tax-saving mutual funds), EPF employee contribution, 5-year bank FD, Sukanya Samriddhi, NSC, home loan principal, children's tuition.
- Section 80D — health insurance: Rs 25,000 for self/spouse/children; additional Rs 25,000 for parents (Rs 50,000 if parents are senior citizens). Total possible: Rs 1,00,000.
- Section 24(b) — home loan interest: Up to Rs 2,00,000 per year for a self-occupied property. No cap for let-out property (but overall loss cap applies).
- HRA exemption: Lowest of: (a) actual HRA received, (b) rent paid minus 10% of salary, (c) 50% of salary (metro) or 40% (non-metro).
- Section 80TTA: Up to Rs 10,000 interest from savings bank accounts (available under both regimes for non-senior citizens).
- Section 80CCD(1B) — NPS: Additional Rs 50,000 over and above the 80C limit, for voluntary NPS contributions.
How to File ITR — Step by Step
- Log in to incometax.gov.in with your PAN and password.
- Go to e-File → Income Tax Returns → File Income Tax Return.
- Select AY 2026–27, Filing type: Original, Mode: Online.
- Choose the correct ITR form (ITR-1 for most salaried employees).
- Pre-filled data will load from AIS and Form 26AS. Verify each entry — correct any errors before proceeding.
- Enter all income details, deductions, and tax paid (TDS).
- Choose new or old regime (new is default — actively select old if switching).
- Verify tax computation. If a refund is due, confirm bank account details (must be pre-validated).
- Submit and e-verify using Aadhaar OTP, net banking, or DSC. E-verify within 30 days of filing — unverified returns are treated as not filed.
About This Article
Written by Sharma Jyoti, CA (ICAI) — Founder, Sharma Jyoti and Co. We are an ICAI-registered Chartered Accountant firm. Learn more about our firm →
Written by Sharma Jyoti, CA (ICAI) — Founder, Sharma Jyoti and Co. We are an ICAI-registered Chartered Accountant firm. Learn more about our firm →
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Frequently Asked Questions
Most salaried employees file ITR-1 (Sahaj) if their total income is up to Rs 50 lakh, they have salary income, one house property, and no capital gains. File ITR-2 if you have capital gains, more than one house property, foreign income, or directorship in a company. File ITR-3 if you also have business or professional income.
The standard deadline for salaried employees is 31 July of the assessment year. For FY 2025–26, the deadline is 31 July 2026. Filing after this date is possible (until 31 December) as a belated return, but you will pay a late fee of Rs 5,000 (Rs 1,000 if total income is below Rs 5 lakh) and lose the ability to carry forward capital losses.
TDS deducted by your employer does not eliminate the obligation to file ITR. Filing is mandatory if your gross total income before deductions exceeds the basic exemption limit. Filing is also mandatory regardless of income level if you have foreign assets, want a refund, or have carried forward losses.
The new tax regime (default from FY 2023–24) has lower slab rates but does not allow most deductions — no 80C, 80D, HRA, or LTA. The old regime allows all deductions. The new regime is better if your total eligible deductions are below Rs 3.75 lakh. The old regime is better if you have significant investments, home loan interest, and HRA.
Form 16 (Part A and Part B) from your employer, Annual Information Statement (AIS) from the income tax portal, bank account statements for the full year, PAN and Aadhaar, investment proofs for 80C (LIC, PPF, ELSS), health insurance premium receipts for 80D, and home loan interest certificate if claiming deduction under Section 24.