ITR filing 2026: Which income tax return form should salaried taxpayers and freelancers choose? Know the difference

Choosing the correct Income Tax Return (ITR) form is one of the first and most important steps while filing returns for Assessment Year 2026-27. The Central Board of Direct Taxes (CBDT) had notified all ITR forms on March 31, allowing businesses, individuals, and other entities to start filing their income tax returns for the financial year 2025-26.

While the income tax portal technically opens on April 1, actual return filing usually begins only after the backend systems and forms are fully updated and stabilised. As a result, ITR filing activity typically gains pace around mid-May.

The applicable form for salaried taxpayers differ from that of freelancers and professionals, depending entirely on income sources. Factors such as freelance receipts, capital gains, foreign income, multiple house properties, and the use of presumptive taxation provisions also determine which ITR form a taxpayer is required to file for FY 2025-26.

What form should salaried taxpayers use?

Salaried taxpayers in India must file ITR-1 (Sahaj) if you are a resident individual with income up to ₹50 lakh, earning via salary, two house property, and interest income. With the introduction of the new Income Tax Act, 2026, some changes were made to the ITR-1.

Earlier, reporting capital gains in this form was not allowed. However, after the changes, long-term capital gains (LTCG) from listed equity and equity-oriented mutual funds can be reported in it, given that your total LTCG is up to ₹1.25 lakh. For proceeds exceeding this amount, the taxpayer must move to ITR-2.

Another major change is witnessed in LTCG taxation. Earlier, long-term gains were taxed at two different rates — 10% and 12.5%. In Budget 2024-25, the rates for LTCG on all assets were standardised at 12.5% without indexation, and 20% with indexation. These rates will apply when you file for ITR-1 in FY 2025-26.

Previously, only taxpayers with income from one house property could use ITR 1. Now, those with income from two house properties can also file using this form.

Additionally, if you have interest income from fixed deposits (FDs), then it is taxed under "Income from Other Sources" at your applicable slab rate, with 10% tax deducted at source (TDS) deducted if annual interest exceeds ₹40,000 ( ₹50,000 for seniors). If PAN is not provided, the bank will deduct higher TDS.

What form must be filed by freelancers?

Freelancers are required to file either ITR-3 or ITR-4 and pay tax at applicable tax slab rates. However, freelancers have the option to opt for the presumptive taxation scheme under Section 44ADA and declare only 50% of their total receipts as taxable income under the head “Income From Business & Profession,” according to ClearTax.

A freelancer is a self-employed individual who offers services to clients on a project or contract basis. Some examples include content writers, graphic designers, video editors, among others.

Under Section 194J of the Income Tax Act, payments made to freelances and professionals for specified services are subject to 10% TDS. However, the TDS deducted can be claimed as credit against the tax liability or as a TDS refund if there is zero tax liability during filing ITR, ClearTax said in a report.

As a freelancer if the tax liability for the year is more than Rs. 10,000 then advance tax must be paid every quarter. However, if they opt for presumptive taxation, then they would have to pay advance tax in one single installment before 15th March each year.

All the available forms and who should file what

The ITR form applicable depends on the type and amount of income of the taxpayer. Here are the different forms that are available on income tax portal and who should file them:

• ITR 1: Salaried individuals with earnings up to ₹50 lakh.
• ITR 2: Individuals with capital gains.
• ITR 3: Income from business or profession.
• ITR 4: Income from business and profession that does not exceed ₹50 lakh.
• ITR 5: Firms, LLPs, AOPs, and BOIs
• ITR 6: Companies
• ITR 7: Charitable trusts

All non-audit taxpayers must file ITR-1 and ITR-2 before or on July 31 for FY 2025-26. Meanwhile, non-audit taxpayers required to file ITR-3 and ITR-4, the due date is 31 August 2026.

If a taxpayer misses the deadline, they still have the option of filing a belated return on or before December 31, 2026. However, in that case, late filing fees and interest will be applicable.