The hardest thing in the world to understand is income tax. — Albert Einstein Updated for Assessment Year 2025–26 | Based on FY 2024–25 Income Rules Avoid Mistakes: Wrong ITR Form Can Cost You! Select Correct Form Based on Income – AY 2025–26 Introduction: Confused about which ITR form to file for AY 2025–26? You're not alone! With multiple income types like salary, business, crypto, F&O trading, rent, capital gains, or even foreign income, selecting the correct ITR form is crucial to avoid notices, rejections, and penalties from the Income Tax Department. In this blog, we break down exactly which ITR form (ITR-1, 2, 3, or 4) is applicable to you based on your specific income situation. S.No Income / Situation ITR Form to Use Reason 1 Short Term Capital Gain (STCG) from sale of equity and mutual fund – Even ₹1 Profit ITR 2 / ITR 3 ITR 2: For investments like mutual funds or shares ITR 3: For share trading (business income) 2 Long Term Capital Gains (LTCG) > ₹1.25 lakh from equity/mutual fund ITR 2 / ITR 3 ITR 2: Allowed up to ₹1.25L under Sec 112A ITR 3: If part of business income 3 Capital gains from unlisted shares, land, or property ITR 2 Treated as regular capital gains 4 Capital gains from sale of property (land/building) ITR 2 Real estate sale = capital gain 5 More than one house property ITR 2 ITR-1 allows only 1 house property 6 Business or Professional Income (doctor, shopkeeper, etc.) ITR 3 or ITR 4 ITR 4: If using presumptive under 44AD/ADA/AE 7 Speculative Income (intraday, F&O) ITR 3 Speculative income = business income 8 Crypto / NFT (VDA) Income ITR 2 / ITR 3 ITR 2: If capital gains ITR 3: If regular business 9 Carry-forward of losses (house/capital gains) ITR 2 / ITR 3 Depends on whether you have business income 10 Foreign Assets / Income (e.g., US Stocks) ITR 2 / ITR 3 ITR 2: For salary/capital gain ITR 3: With business income 11 Director in a company ITR 2 / ITR 3 Based on type of income (salary or business) 12 Employee of foreign company with ESOPs ITR 2 ESOPs = foreign assets 13 Interest from Foreign Bank ITR 2 Report as foreign income 14 Dividend from Foreign Companies ITR 2 Foreign income 15 Lottery / Horse Race Winnings ITR 2 Taxed at special rate; ITR-1 not allowed 16 Freelance services (writer, consultant, etc.) ITR 3 Professional income 17 Consultant using presumptive taxation (44ADA) ITR 4 Only if eligible 18 Pension + 2 houses + capital gains ITR 2 Multiple properties + gains = ITR-2 19 Salary + Lottery winnings ITR 2 Special rate income = ITR-2 20 Pension Income only ITR 1 If total income ≤ ₹50 lakh and eligible Common Mistakes to Avoid: Filing ITR-1 despite having capital gains or foreign assets Ignoring crypto/VDA schedule in ITR-2/3 Not disclosing intraday/F&O trades as business income Selecting ITR-4 without qualifying for presumptive taxation Expert Tip: Always match your AIS, Form 26AS, and broker statements before selecting your ITR form. A mismatch or wrong form can lead to scrutiny notices. Still Confused? Contact us with your income details for free ITR form advisory from Multigyan’s finance team! Explore more blogs at Multigyan.in Subscribe to our newsletter for the latest updates