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.