ITR-1 vs ITR-2: Which One Should I File?
ITR-1 is the simpler return for eligible resident individuals with specified income, while ITR-2 is used by individuals and HUFs who do not have business/professional income but are not eligible for ITR-1. Capital gains, foreign income/assets, multiple house properties and other exclusions commonly make ITR-2 necessary.
Quick Answer
In practical terms, ITR-1 is the simpler return for eligible resident individuals with specified income, while ITR-2 is used by individuals and HUFs who do not have business/professional income but are not eligible for ITR-1. Capital gains, foreign income/assets, multiple house properties and other exclusions commonly make ITR-2 necessary.
Core difference
| Feature | ITR-1 | ITR-2 |
|---|---|---|
| Business/profession income | No | No |
| Capital gains | Only specified 112A LTCG within limit | Yes, where applicable |
| Residential status | Resident other than RNOR | Resident or non-resident, subject to conditions |
| Foreign assets/income | Generally disqualifies ITR-1 | Can be reported where applicable |
Salaried taxpayer with shares
A salaried taxpayer who sold shares and has taxable short-term capital gains generally cannot use ITR-1. ITR-2 is typically the form to examine when there is no business/professional income.
Salaried taxpayer with foreign assets
Foreign assets or foreign-source income can disqualify ITR-1. The taxpayer should examine ITR-2 and the applicable foreign-asset schedules.
Do not choose based only on salary
The complete income and eligibility profile determines the return form.
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