Which ITR Should I File? Understanding Types for FY 2025-26 (AY 2026-27)

Taxation plays a crucial role in every individual's financial journey, influencing income management and long-term wealth planning. From calculating taxable income to determining tax liability and filing returns, understanding the process is essential. Among these, filing Income Tax Returns (ITR) is often seen as one of the most technical and complex steps.  

In this blog, we simplify the tax filing process by exploring different types of ITR forms, their eligibility criteria, key components, and step-by-step filing procedures. Whether you're a first-time filer or looking to refine your tax planning strategy, this guide will help you navigate the process with confidence.

What Is ITR (Income Tax Return)? Purpose, Meaning and Components

An Income Tax Return (ITR) is a formal declaration of a taxpayer's financial transactions, assets, and tax payments for a specific financial year. It is filed during the tax payment process.

This return provides a comprehensive record of a taxpayer's financial transactions for the relevant financial year. With the advent of digitalization, taxpayers can now file ITRs online, making the process more efficient. The ITR serves as an important financial document, reflecting a taxpayer's income, tax liability, and overall financial standing.
For every financial year, eligible taxpayers calculate their tax liability and file the income tax return in the following year, called the Assessment Year (AY). For example, income earned in FY 2025-26 (April 1, 2025 – March 31, 2026) is assessed and filed in AY 2026-27. The ITR form captures comprehensive details to report tax liability, income components, and payments of the taxpayer.

Components Of An Income Tax Return

An Income Tax Return (ITR) form consists of several key components that help determine a taxpayer's tax liability, eligible deductions, and overall financial planning. 

Understanding these elements is crucial for accurate tax filing. Here are the main components of an ITR:

1. Taxpayer Details: PAN, Aadhaar number (mandatory for e-filing), name, opted tax regime (new or old), type of taxpayer (individual, HUF, firm, etc.), and type of return (original, revised, or belated). For FY 2025-26, the New Tax Regime is the default, taxpayers must actively opt for the old regime to claim deductions like 80C, 80D, and HRA.

2. Gross Total Income: Calculation under different income tax heads and exemptions like agriculture income.

3. Total Deductions: It will differ based on the regime. Aspects like deduction under different sections and their proofs are considered here.

4. Tax Paid During the Financial Year: It usually includes the tax deducted at source statements, self-assessment tax, advance tax, and more. 

5. Total Tax Liability: It will be calculated based on the tax regime and applicable tax rates on the final taxable income. A surcharge will also be charged on the tax liability.

Apart from these regular components, the required details for income tax forms may differ based on the type of ITR.

Why Should You File An ITR?

Filing an Income Tax Return (ITR) is more than just a legal requirement—it is a crucial step in maintaining financial transparency and discipline. It serves as an official record of your income and tax payments, offering several benefits beyond compliance.

Here’s why filing an ITR is important:

1. Proof of Income

An ITR serves as documented proof of income, which is often required when applying for:

• Bank loans (home loans, car loans, personal loans, etc.)
• Credit cards and financial investments
• Visa applications for international travel

2. Legal Compliance & Avoiding Penalties

Filing an ITR ensures compliance with tax laws and helps avoid penalties under Section 234F of the Income Tax Act. Failure to file on time attracts a late fee of:

• INR 1,000 - if your total income does not exceed INR 5 lakh
• INR 5,000 - if your total income exceeds INR 5 lakh

Additionally, interest at 1% per month on unpaid tax is levied under Section 234A from the due date until the date of actual filing

3. Claiming Income Tax Refunds

Once the ITR is filed, e-verification is mandatory, the refund will not be processed if e-verification is pending. Taxpayers should also ensure that their TDS figures match Form 26AS and the Annual Information Statement (AIS) to avoid refund delays.

4. Carrying Forward Losses

Filing an ITR allows you to carry forward capital losses (e.g., from stock market investments or property sales) to offset future gains, reducing tax liability in subsequent years.

5. Maintaining a Strong Financial History

A consistent ITR filing record builds financial credibility, making it easier to:

• Secure higher loan approvals
• Establish financial discipline
• Show a trackable financial history for future investments

ITR Filing Deadlines

To ensure timely tax compliance, taxpayers must adhere to the ITR filing deadlines¹:

The government may extend these deadlines if necessary. For example, for FY 2024-25 (AY 2025-26), the original deadline of July 31, 2025 was extended to September 15, 2025 for non-audit taxpayers.

Missed the deadline? You can still file a belated return by December 31, 2026, but late fees under Section 234F and interest under Section 234A will apply

Filing your ITR on time ensures a smooth tax filing process and helps you avoid last-minute hassles.

When Is Income Tax Return (ITR) Filing Mandatory In India?

ITR filing is mandatory based on your gross total income, before deductions and rebates, not your final tax payable. This means even if your net tax liability is zero (for example, due to the Section 87A rebate), you are still required to file if your income crosses the basic exemption limit.

Basic Exemption Limits for FY 2025-26

The New Tax Regime is the default regime for FY 2025-26. Taxpayers must actively opt for the Old Regime to claim deductions under Sections 80C, 80D, HRA, etc. Under the new regime, income up to INR 12 lakh is effectively tax-free due to the enhanced Section 87A rebate of INR 60,000 but ITR filing is still mandatory if gross income exceeds INR 4 lakh.

Other Criteria That Make ITR Filing Compulsory
Even if your income is below the exemption limit, ITR filing becomes mandatory if any of the following conditions are met:

Source: Income Tax Department³

Which ITR To File?

There are mainly 7 types of ITR forms, which are discussed below for a better understanding of their suitability:

1. ITR-1 (Sahaj)

For resident individuals with total income up to INR 50 lakh from salary/pension, one house property, and other sources (excluding lottery/horse race winnings). From FY 2025-26, also covers LTCG under Section 112A up to INR 1.25 lakh from listed equity shares or equity mutual funds, with no carry-forward losses. NRIs cannot use this form⁴. 

2. ITR-2

For individuals or HUFs with income from salary, multiple house properties, capital gains, or foreign assets but without any business or profession income. For FY 2025-26, capital gains must be reported separately for transactions before and after July 23, 2024, as per revised Budget 2024 tax rates.

3. ITR-3

For individuals or HUFs earning income under 'Profits and Gains from Business or Profession', including salary, bonus, commission, or remuneration from a partnership firm. Also applicable for taxpayers with business income alongside capital gains or salary. Taxpayers switching to the old regime must include the Form 10-IEA acknowledgement number.

4. ITR-4 (Sugam)

For resident individuals, HUFs, or firms (excluding LLPs) opting for presumptive taxation under Sections 44AD (business), 44ADA (professionals), or 44AE (transport operators). Income from one house property and other sources is also permitted. From FY 2025-26, LTCG under Section 112A up to INR 1.25 lakh is now reportable in this form. NRIs cannot use ITR-4.

5. ITR-5

For entities other than individuals, HUFs, and companies,  including partnership firms, LLPs, AOPs, BOIs, local authorities, business trusts, and investment funds.

6. ITR-6

For all companies registered in India, except those claiming exemption under Section 11 (charitable or religious trusts). Updated via CBDT Notification No. 44/2025 dated May 6, 2025, incorporating Finance Act 2024 changes..

7. ITR-7

For trusts, political parties, universities, and institutions required to file under Sections 139(4A), 139(4B), 139(4C), or 139(4D) of the Income Tax Act.

Here is a summary:

Who Is Exempt From Filing ITR In India?

Not every individual is required to file an ITR. Exemption from filing depends on your income level, age, residential status, and the nature of your income. Here is a complete breakdown:

Special Exemption: Senior Citizens Aged 75+ (Section 194P)

Resident senior citizens aged 75 years or above are exempt from filing ITR if:

• Income consists only of pension and interest from the same bank
• They submit Form 12BBA to the bank, which then deducts TDS on their behalf

Still Mandatory Even If Tax = Zero

Filing remains compulsory regardless of tax liability if:

• Gross income exceeds the basic exemption limit (even if Section 87A rebate makes tax nil)
• Foreign assets, foreign income, or foreign account signing authority exists
• TDS/TCS deductions total INR 25,000+ (INR 50,000 for senior citizens)
• High-value transactions are triggered,  current account deposits of INR 1 crore or more, foreign travel expenditure of INr 2 lakh or more, or electricity bills of INR 1 lakh or more.
• You are a company or firm - always required to file, regardless of profit or loss

Source: Income Tax Department⁵

Procedure For Downloading Income Tax Return Form For FY 2025-26

Taxpayers can check their eligibility, tax details, and ITR filing deadlines before downloading the necessary ITR forms⁶. For offline payment via cheque, demand draft, or cash, payments can be made at authorized bank branches.

The e-filing procedure for income tax returns has simplified the crucial annual task. Taxpayers can follow these steps for paying income tax online:

Step 1. Log in to the Portal
Visit incometax.gov.in and log in using your PAN (User ID) and password. First-time users must register using their PAN and Aadhaar-linked mobile number.

Step 2. Select the Correct ITR Form
Go to e-File > Income Tax Returns > File Income Tax Return. Select Assessment Year 2026-27, filing mode (online), and choose the applicable ITR form (ITR-1 to ITR-4 for individuals).

Step 3. Pre-fill and Verify Details
The portal auto-populates salary, TDS, and interest income from Form 26AS and AIS. Review and confirm all pre-filled data, income heads, deductions, and tax paid details.

Step 4. Pay Any Outstanding Tax (if applicable)
If additional tax is payable after TDS and advance tax credits, navigate to e-File > e-Pay Tax to pay via net banking, UPI, or debit card using Challan 280. Enter the Assessment Year, type of payment (Self-Assessment Tax), and confirm.

Step 5- Submit and e-Verify
After reviewing the return, submit it and e-verify within 30 days using Aadhaar OTP, net banking, or Digital Signature Certificate (DSC). The ITR is not considered filed until e-verification is complete.

Conclusion

An Income Tax Return (ITR) is more than just a tax payment statement—it serves as a comprehensive financial document that reflects a taxpayer’s income, assets, and tax liabilities. It acts as proof of income, making it essential for various financial transactions, including loan approvals, tax refunds, and investment planning. With seven types of ITR forms, taxpayers must choose the appropriate one based on their income sources and tax status.

Looking to diversify your financial portfolio beyond tax savings? Explore alternative investment opportunities with Grip Invest today!

Frequently Asked Questions On Which ITR Should I File?

1. Who cannot use the ITR-1 form?

ITR-1 cannot be used by NRIs, company directors, or individuals with income exceeding INR 50 lakh, more than one house property, foreign assets, or unlisted equity shares. It also excludes those with any STCG, LTCG under Section 112A exceeding INR 1.25 lakh, agricultural income above INR 5,000, dividend income above INR 10 lakh, or any business/profession income.

2. Who cannot use the ITR-2 form?

ITR-2 cannot be filed by individuals or HUFs who have income from business or profession - including salary, bonus, commission, or remuneration received under the head 'Profits and Gains from Business or Profession'. Such taxpayers must file ITR-3 instead.

3. Who cannot use the ITR-4 form?

ITR-4 cannot be used by NRIs, company directors, or individuals with income exceeding INR 50 lakh, foreign assets, unlisted equity shares, or more than one house property. It also excludes those with capital gains (except LTCG under Section 112A up to INR 1.25 lakh), income from speculative business, agency, brokerage, commission, cryptocurrency/VDA gains, or TDS deducted under Section 194N.

References

1. Economic Times, accessed from: https://economictimes.indiatimes.com/wealth/tax/income-tax-department-extends-deadline-to-file-revised-and-belated-itr-to-january-15-2025/articleshow/116821027.cms?from=mdr

2.. Income Tax Department, accessed from:  https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+filing+the+return+of+income

3. Income Tax Department, accessed from:   https://incometaxindia.gov.in/Pages/faqs.aspx?k=FAQs+on+filing+the+return+of+income

4. Income Tax Department, accessed from:    https://www.incometax.gov.in/iec/foportal/downloads

7. Income Tax Department, accessed from:  https://eportal.incometax.gov.in/iec/foservices/#/e-pay-tax-prelogin/user-details

Author: Grip Invest Editorial Team The Grip Invest Editorial Team is a group of Chartered Accountants, MBA (Finance) graduates, and Qualified Research Analysts dedicated to helping you invest smarter. We dive deep into India's fixed income landscape to deliver content that is accurate, up-to-date, and easy to understand. Whether you're exploring bonds, fixed deposits, or other fixed income opportunities, our guides cut through the noise and give you the clarity to make better financial decisions.

Want to stay at the top of your finances? 

Join the community of 4 lakh+ investors and learn more about Grip Invest, the latest financial knick-knacks, and shenanigans in the world of investing.

Happy Investing!

Disclaimer - Investments in debt securities/municipal debt securities/securitised debt instruments are subject to risks including delay and/ or default in payment. Read all the offer related documents carefully. The investor is requested to take into consideration all the risk factors before the commencement of trading.
This communication is prepared by Grip Broking Private Limited (bearing SEBI Registration No. INZ000312836 and NSE ID 90319) and/or its affiliate/ group company(ies) (together referred to as “Grip”) and the contents of this disclaimer are applicable to this document and any and all written or oral communication(s) made by Grip or its directors, employees, associates, representatives and agents. This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip does not guarantee or assure any return on investments and accepts no liability for consequences of any actions taken based on the information provided. For more details, please visit www.gripinvest.in

Registered Address - 106, II F, New Asiatic Building, H Block, Connaught Place, New Delhi 110001