25 March 2026 · 49Tax
ITR-1 vs ITR-2: Which Form Should You File?
Confused between ITR-1 and ITR-2? This guide explains who should file which form, the key differences, and how to decide based on your income sources.
Quick Answer
- File ITR-1 if you are salaried with income up to Rs 50 lakh, one house property, and no capital gains.
- File ITR-2 if you have capital gains (stocks, mutual funds, property), multiple house properties, foreign income, or income above Rs 50 lakh.
ITR-1 vs ITR-2: Side-by-Side Comparison
| Criteria | ITR-1 (Sahaj) | ITR-2 |
|---|---|---|
| Income limit | Up to Rs 50 lakh | No limit |
| Salary/pension | Yes | Yes |
| House properties | One only | Multiple |
| Capital gains | Not allowed | Stocks, mutual funds, property, crypto |
| Foreign income/assets | Not allowed | Allowed |
| Dividends above Rs 5,000 | Not allowed | Allowed |
| Agricultural income above Rs 5,000 | Not allowed | Allowed |
| Business/professional income | Not allowed | Not allowed (use ITR-3) |
| Complexity | Simple | More detailed |
When You Must Use ITR-2
You cannot use ITR-1 and must file ITR-2 if any of these apply:
1. You Have Capital Gains
If you sold shares, mutual funds, property, or any capital asset during the year, you need ITR-2. This includes:
- Short-term capital gains (STCG) from equity sold within 12 months
- Long-term capital gains (LTCG) from equity exceeding Rs 1.25 lakh
- Property sale gains
- Debt mutual fund gains
Even if you made a capital loss, you still need ITR-2 to carry it forward.
For a detailed guide on reporting capital gains, see: Capital Gains Tax on Stocks & Mutual Funds
2. Your Income Exceeds Rs 50 Lakh
If your total gross income from all sources is above Rs 50 lakh, ITR-1 is not available. You must use ITR-2 (or ITR-3 if you have business income).
3. You Have Multiple House Properties
ITR-1 allows income from only one house property. If you own and rent out more than one property, use ITR-2.
4. You Have Foreign Income or Assets
If you hold bank accounts, property, or financial assets outside India, or earn income from abroad, ITR-2 is mandatory. This includes foreign equity investments and RSUs from foreign employers.
5. You Are a Director in a Company
Company directors must file ITR-2 regardless of their income level.
Common Scenarios
Scenario 1: Salaried + SIP in mutual funds (no redemptions) → File ITR-1. Owning mutual funds does not require ITR-2 — only selling them does.
Scenario 2: Salaried + sold ELSS after 3 years → File ITR-2. The redemption triggers LTCG, even if it is within the Rs 1.25 lakh exemption limit.
Scenario 3: Salaried + Rs 8,000 in dividends → File ITR-2. Dividend income above Rs 5,000 requires ITR-2.
Scenario 4: Salaried at Rs 48 lakh + Rs 3 lakh savings interest → File ITR-2. Total income exceeds Rs 50 lakh.
What If You File the Wrong Form?
Filing the wrong ITR form can lead to:
- A defective return notice under Section 139(9)
- You get 15 days to correct and re-file
- If you do not correct it, the return is treated as invalid
It is better to pick the right form upfront.
How 49Tax Helps
49Tax supports both ITR-1 and ITR-2. When you start a session, you select your ITR type based on your income sources. The tool then generates the correct JSON format for upload to the income tax portal.
Not sure which one? Start with the eligibility check on the filing page — it will guide you to the right form.