ITR filing Guide for Salaried Employees for FY 2025-26: How to Pick Between ITR 1 and ITR 2:

ITR filing Guide for Salaried Employees for FY 2025-26: How to Pick Between ITR 1 and ITR 2 The Income Tax Department has started the tax return filing season for 2025-26 by releasing all ITR forms earlier this month. Even though salaried people will have to wait until June to get their Form 16 from their employers, they can still start preparing for filing their tax returns. This process is usually seen as difficult and time-consuming, but understanding the changes in ITR forms can help. Most of these changes come from the new tax rules and capital gains tax changes announced in the July 2024 Budget. For example, until last year (for assessment year 2024-25), Indian taxpayers living in India could only use ITR-1 (Sahaj) if their income came from salary/pension, one house property, interest from savings/fixed deposits, dividends, and farm income less than Rs 5,000. This year, even taxpayers who made long-term capital gains (LTCG) from selling listed company shares or equity mutual fund units (taxed at 12.5 percent) can use this simple form. But their capital gains should not be more than Rs 1.25 lakh during the financial year 2025.

How to Choose between ITR 1 and ITR 2

Here's how salaried people can choose between ITR-1 and ITR-2 forms: ITR-1 (Sahaj) is Easy to Use ITR-1 (Sahaj)—Sahaj means simple or easy — is a basic form that salaried taxpayers or pensioners with simple finances can use. The form already has your personal details, income information and financial transaction data filled in to make filing returns quick and easy. You just need to check this information with your Form-16 and bank statements, and also verify Form 26AS and Annual Information Statement (AIS) before completing the process online. Only Indian residents with an income of not more than Rs 50 lakh can use this form. This includes salary/pension, one house property (except when you have losses to carry forward), farm income (up to Rs 5,000), and income from savings or fixed deposits, dividends, and family pension. Taxpayers who made LTCG of up to Rs 1.25 lakh under Section 112A from listed company shares or equity mutual funds can also use this form this year.

Who cannot Use ITR 1

You cannot use ITR-1 if:

•  Your total income is more than Rs 50 lakh
• Your capital gains under section 112A are more than Rs 1.25 lakh
•  You are a director in a company
•  You own unlisted company shares
•  You earned any foreign income during the financial year
•  You have any foreign bank accounts or assets (including financial interest in any foreign company)
•  You have deferred tax payment or deduction on ESOP (Employee Stock Options)
•  You have losses from previous years to carry forward, or current year losses to be carried forward under any income category

In such cases, you have to use ITR-2. This form is for individuals who do not have any income from a business or profession. Simply put, this form is for salaried individuals or pensioners who cannot file returns using ITR-1.