ITR Filing 2025: How to Choose Between ITR 1 and 2?

ITR Filing 2025: How to Choose Between ITR 1 and 2?

The Income Tax Department has officially started the 2025-26 tax return filing season by releasing all Income Tax Return (ITR) forms earlier this month. Salaried individuals will need to wait until their Form 16 is out in June. However, they can still start preparation, which is time-consuming, by checking the changes in the ITR forms. Many of these modifications are due to changes announced in tax slabs and capital gains tax rationalization in the July 2024 budget.

For example, up until last year (AY 2024-25), Indian taxpayers who were ordinary residents could use ITR-1 (Sahaj) only if their income came from sources like salary or pension, one house property, interest, dividends, and agricultural income below Rs. 5,000.

But from this year, even those who have long-term capital gains (LTCG) from selling listed shares or equity mutual funds (taxed at 12.5%) can use ITR-1 if gains are not more than Rs. 1.25 lakh in the financial year 2024-25. Let us understand how you can choose between ITR-1 and ITR-2.