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What is ITR-1 and ITR-4?
The most commonly used forms for filing Income Tax Returns in India are ITR-1, ITR-2 and ITR-4, filed by lakhs of taxpayers every year. For FY 2025-26 (AY 2026-27), ITR-1 Sahaj is used by eligible resident individuals with simple incomes, while ITR-4 Sugam is filed by taxpayers who opt for the Presumptive Taxation Scheme under sections 44AD, 44ADA and 44AE of the Income Tax Act, 1961. The earlier form ITR-4S was discontinued and replaced by the current ITR-4 Sugam.
What is the difference between ITR-1 and ITR-4?
| Basis for Comparison | ITR-1 (Sahaj) | ITR-4 (Sugam) |
| Meaning | Return for resident individuals with income from salary or pension, house property and other sources, up to Rs. 50 lakh | Return for eligible residents who opt for the Presumptive Taxation Scheme (sections 44AD, 44ADA, 44AE), with total income up to Rs. 50 lakh |
| Applies to | Resident Individual only | Resident Individual, HUF and Firm (other than LLP) |
| Heads of Income covered (AY 2026-27) |
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Who should File ITR 1?
ITR-1, commonly known as the Sahaj form, can be filed only by a resident individual. For AY 2026-27, ITR-1 is applicable to taxpayers who:
- Are resident individuals with total income up to Rs. 50 lakh.
- Derive income from salary or pension.
- Earn income from up to two house properties (extended from one for AY 2026-27).
- Have no income from business or profession.
- Have no taxable capital gains, except long-term gains under section 112A up to Rs. 1.25 lakh.
- Do not own foreign assets or earn foreign income.
- Have agricultural income up to Rs. 5,000.
- Earn interest from savings accounts, deposits, income tax refund or family pension.
- Have no winnings from lotteries or race horses, are not company directors and hold no unlisted equity shares.
- May club a spouse's or minor's income only if it falls within the same limits.
Who is eligible to file ITR-4?
For AY 2026-27, ITR-4 Sugam can be filed by taxpayers who:
- Are resident individuals, HUFs or firms (other than LLPs) with total income up to Rs. 50 lakh.
- Compute business or professional income on a presumptive basis under section 44AD, 44ADA or 44AE.
- May also have salary or pension and income from up to two house properties.
- Have no taxable capital gains, except long-term gains under section 112A up to Rs. 1.25 lakh.
- Have agricultural income up to Rs. 5,000.
- Do not own foreign assets, earn foreign income, hold unlisted equity shares or serve as company directors.
Note: the old ITR-4S form was discontinued and replaced by ITR-4 Sugam, so presumptive taxpayers now file ITR-4. If presumptive conditions do not fit, regular business income is reported in ITR-3. For AY 2026-27, non-audit returns should be filed by the notified due date and verified within 30 days of filing.
Who cannot file ITR-1 for AY 2026-27?
ITR-1 is barred, even below Rs. 50 lakh, for a taxpayer who:
- Is a non-resident or resident but not ordinarily resident (RNOR).
- Has any income from business or profession, including F&O or intraday trading.
- Has taxable capital gains other than section 112A long-term gains up to Rs. 1.25 lakh, including short-term gains.
- Is a director in a company or holds unlisted equity shares.
- Owns foreign assets, has foreign income or signing authority in a foreign account.
- Has income from crypto or other virtual digital assets.
- Has winnings from lottery or race horses, agricultural income above Rs. 5,000, TDS under section 194N, or deferred tax on start-up ESOPs.
Such taxpayers move to ITR-2 or, with business income, ITR-3; see the full ITR-1 Sahaj guide.
Who cannot file ITR-4 for AY 2026-27?
- Non-residents, RNORs and LLPs, or anyone with total income above Rs. 50 lakh.
- Taxpayers whose business income is not presumptive - regular books, F&O, intraday or speculative trading belong in ITR-3.
- Those above the presumptive limits: section 44AD turnover above Rs. 2 crore (Rs. 3 crore if cash within 5%), or 44ADA receipts above Rs. 50 lakh (Rs. 75 lakh if cash within 5%).
- Company directors, holders of unlisted equity shares, and owners of foreign assets or foreign income.
- Taxpayers with crypto/VDA income, more than two house properties, or brought-forward losses to set off.
Which form should I pick? A quick decision flow
- Resident, total income up to Rs. 50 lakh, only salary or pension, up to two house properties, interest or family pension, and at most Rs. 1.25 lakh of 112A LTCG? File ITR-1 Sahaj.
- Same profile but with other capital gains, crypto, foreign assets, directorship, unlisted shares or income above Rs. 50 lakh, and no business income? File ITR-2.
- Resident with eligible presumptive business or professional income under 44AD/44ADA/44AE, total income up to Rs. 50 lakh? File ITR-4 Sugam.
- Business or profession with regular books, losses, trading activity or anything beyond the presumptive limits? File ITR-3.
Estimate your liability with our income tax calculator.
Worked examples for AY 2026-27
Salaried with bank interest: ITR-1
Ananya has salary of Rs. 14,00,000, one self-occupied flat and Rs. 40,000 of FD interest. With no other heads and income under Rs. 50 lakh, ITR-1 applies; she files by 31 July 2026.
Freelance designer under 44ADA: ITR-4
Rohan bills Rs. 28,00,000 in professional receipts. Under section 44ADA he offers 50% (Rs. 14,00,000) as deemed income, keeps no detailed books and files ITR-4 Sugam.
Salary plus share sales: neither form
Meera has salary of Rs. 22,00,000 and sold shares with Rs. 3,00,000 of long-term gains plus short-term gains. The gains exceed what ITR-1 allows, so she files ITR-2; with F&O trading as well, ITR-3 would apply.
Common mistakes when choosing a form
- Filing ITR-1 despite short-term gains or 112A gains above Rs. 1.25 lakh - a common cause of defective returns.
- Using ITR-4 for F&O or intraday trading - not eligible presumptive income.
- Declaring less than the deemed rate in ITR-4, which may force regular books, audit and ITR-3.
- Ignoring AIS/Form 26AS, so interest or dividend income is missed.
- Forgetting that opting out of section 44AD triggers a five-year lock-out from presumptive taxation.
- Skipping e-verification within 30 days, which can invalidate the return.
Due dates for AY 2026-27
ITR-1 for FY 2025-26 is generally due by 31 July 2026, while non-audit business returns such as ITR-4 are indicated as due by 31 August 2026 in the Income Tax Department FAQ. Belated or revised returns can be filed up to 31 December 2026. E-verify within 30 days whichever form you use - see our online filing guide or get expert help via our salaried filing plans.
Frequently Asked Questions
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