ITR-1 vs ITR-2: key differences

Use ITR-1 if you are a resident individual with income up to ₹50 lakh from salary or pension, one house and other sources like interest, with at most ₹1,25,000 of long-term gains on listed shares. Use ITR-2 if you have no business or profession income but fail any ITR-1 condition, for example because you have other capital gains, more than one house or foreign assets.

These are the rules TaxCare applies for the tax year 2025-26. TaxCare will update this guide for the tax year 2026-27 forms and rules once they are published.

Side-by-side comparison

A HUF never files ITR-1.

The conditions for ITR-1 in plain words

You can file ITR-1 only if all apply:

• You are a resident individual.
• Your total income is ₹50 lakh or less.
• Your income is only from salary or pension, one house property, and other sources such as interest.
• Your agricultural income is ₹5,000 or less.
• You have no lottery or race horse income.
• You have no loss to set off or carry forward.
• You have no foreign assets or foreign income.
• You are not a director in a company and hold no unlisted shares.
• No TDS was deducted on cash withdrawals, and you have no deferred tax on start-up ESOPs.
• No one else's income is added to yours.

If any one fails, you move to ITR-2, unless you have business or profession income, when you look at ITR-3 or ITR-4.

What ITR-2 adds

ITR-2 includes schedules that ITR-1 does not have:

• Capital gains from shares, mutual funds, property, gold and other assets, with short-term and long-term splits. See tax on selling shares and holding period rules.
• More than one house property, with rent and interest for each.
• Foreign assets and income, and resident status details.
• Brought-forward losses and set-off.
• Schedules for directors and unlisted shares.

Examples

• Salaried, one home loan, bank interest: ITR-1.
• Salaried, sold listed shares with long-term gain of ₹1,00,000 and no other gains: ITR-1.
• Same person, but long-term gain of ₹3,00,000: ITR-2.
• Salaried with a second house that earns rent: ITR-2.
• Salary plus a mutual fund sale with short-term gain: ITR-2.
• Salary plus freelance income: not ITR-1 or ITR-2. See how to file ITR for consultants.

Does your form change the regime or the tax?

No. The form is chosen from your facts; the tax is computed from your income. But the form does matter for the return: a return filed in the wrong form may be treated as defective, so choose the form from your facts. Compare regimes in old vs new tax regime.

Filing mechanics

• Filing dates are the same for both forms for people without audit. See ITR due dates for the tax year 2026-27.
• Both are e-verified within 30 days. See how to e-verify your ITR.

How TaxCare helps

TaxCare picks the form from your data. It starts at the simplest form the rules allow, and moves you to ITR-2 only when something requires it, such as capital gains over the ITR-1 limit. It shows the reason, for example "your capital gains move you to ITR-2". Your broker's capital gains statement can be uploaded and sorted for you. If your case is outside what guided filing covers, a Tax Expert can file it. See which ITR form should I file and Tax Experts.

This guide gives general information and is not professional tax advice.