Filing an income tax return (ITR) correctly depends heavily on choosing the right form. Many salaried employees are confused about which ITR form they should select while filing their return for Assessment Year 2025–26 (Financial Year 2024–25).
This blog explains in simple words which ITR form is applicable for salaried employees, with examples and filing tips.
Legal Reference and Applicability
- Income Tax Act, 1961
- Rule 12, Income Tax Rules, 1962
- Section 139(1) mandates individuals to file returns using the correct ITR form.
The Central Board of Direct Taxes (CBDT) notifies ITR forms every year based on different income situations.
ITR Forms Available for Salaried Employees
ITR-1 (Sahaj)
Eligibility:
- Resident Individuals
- Income up to ₹50 lakh
- Salary or pension income
- Income from one house property
- Income from other sources (like interest, dividends)
Not Eligible if:
- You own more than one house property
- You have capital gains
- You have foreign income or foreign assets
- You are a director in a company or hold unlisted shares
ITR-2
Eligibility:
- Resident Individuals and Hindu Undivided Families (HUFs)
- No business or professional income
- Salary income, capital gains, multiple house properties, foreign income
Common for salaried individuals who have:
- Capital gains from shares, mutual funds, real estate
- More than one house property
- Foreign income/assets (including ESOPs from foreign employers)
ITR-3
Eligibility:
- Individuals and HUFs
- Income from business or profession (including salary + freelance/consulting income)
Salaried individuals will need ITR-3 only if:
- Along with salary, you have business or professional income (example: freelancing, consultancy)
ITR-4 (Sugam)
Not Generally for Salaried Employees.
ITR-4 is used if you have opted for presumptive income under Sections 44AD, 44ADA, or 44AE and income is up to ₹50 lakh (mostly for small businesses and freelancers).
Salaried individuals do not use ITR-4 unless they have presumptive freelance income.
How to Choose Correct Form: Simple Scenarios
Example 1:
Mr. Rahul has ₹12 lakh salary income and ₹15,000 interest income.
Correct Form: ITR-1
Example 2:
Ms. Sneha has ₹15 lakh salary income and sold mutual funds for profit.
Correct Form: ITR-2
Example 3:
Mr. Aditya earns ₹10 lakh salary and ₹10 lakh freelancing income.
Correct Form: ITR-3
Example 4:
Mrs. Priya earns ₹9 lakh salary and earns ₹5 lakh as a yoga trainer under presumptive taxation.
Correct Form: ITR-4 (only if presumptive conditions met)
Common Mistakes to Avoid
- Filing ITR-1 despite having capital gains or two house properties.
- Filing ITR-1 despite owning foreign assets (bank accounts, stocks, etc.).
- Filing ITR-1 when salary exceeds ₹50 lakh (must file ITR-2).
- Filing wrong ITR form can lead to a defective return notice under Section 139(9).
Conclusion
Salaried individuals should carefully select the correct ITR form based on their income type and sources. Filing using the wrong form can result in defective returns and unnecessary complications. Always double-check income types before filing to ensure a smooth tax filing experience.
Reach out Today!
Still confused about which ITR form you should file as a salaried employee?
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Disclaimer: I am Anshul Goyal, a Chartered Accountant licensed with ICAI, India. This blog is for informational purposes only and should not substitute professional tax advice.
Frequently Asked Questions
1. Can salaried employees file ITR-4?
Only if they have presumptive income from freelancing or small business along with salary.
2. Which ITR form to file for salary and capital gains?
ITR-2 is the correct form.
3. Can I file ITR-1 if I have two Form 16s?
Yes, if total income is below ₹50 lakh and no other ineligible conditions apply.
4. What happens if I file wrong ITR form?
Your return may be marked defective and you may need to file a corrected return.
5. Is it compulsory to file ITR if my salary is below taxable limit?
Not compulsory, but recommended for record and visa purposes.