Finance Khabar: As the financial year 2024-25 has ended, it’s time to prepare for Income Tax Return (ITR) filing for the assessment year 2025-26. The Income Tax Department will soon activate the online and offline filing portals. While most salaried individuals usually file ITR-1 (Sahaj), those with income from the stock market must consider filing ITR-3 instead.
What is ITR-1 (Sahaj)?
ITR-1 is the simplest form for salaried individuals and pensioners with total annual income up to ₹50 lakh. You can use this form if your income sources include:
- Salary or pension
- One house property
- Interest income (excluding lottery or race winnings)
- Agricultural income up to ₹5,000
Who Cannot Use ITR-1?
You must not use ITR-1 if:
- Your income exceeds ₹50 lakh
- You have capital gains
- You have business or professional income
- You have income from more than one house property
- You are a company director or hold unlisted shares
What is ITR-3?
ITR-3 is for individuals and HUFs with complex income sources like:
- Salary + Capital gains
- Business or professional income (freelancers, consultants, etc.)
- Partnership firm income
- Multiple house properties
- Speculative income or cryptocurrency trading
- Directorship in a company or unlisted equity shares
Which ITR Form Should You File?
Choose ITR-1 if:
- You earn salary/pension up to ₹50 lakh
- No capital gains, business income, or multiple properties
Choose ITR-3 if:
- You earn from salary and stock market (capital gains)
- You are a freelancer or run a business
- You hold unlisted shares or are a director
Example Scenarios:
- Ravi earns ₹45 lakh from salary and bank interest – he can file ITR-1.
- Suman earns ₹30 lakh salary + ₹5 lakh capital gains – she must file ITR-3.
- Amit earns ₹15 lakh from consulting + ₹10 lakh capital gains – he must file ITR-3.
Filing the correct ITR form is key to staying tax-compliant and avoiding legal issues. If you only have salary income within limits, ITR-1 is enough. But if you earn from capital gains or business, go with ITR-3.
