The ITR-1 Sahaj AY 2026-27 is the simplest return form in the Indian tax system, and as of this year, it covers a meaningfully wider slice of salaried taxpayers than ever before. CBDT Notification 45/2026 now allows a second house property, and the relief that lets small equity long-term capital gains up to ₹1.25 lakh stay in ITR-1 (introduced for AY 2025-26 by Notification 40/2025) continues this year.
If you are a salaried employee or pensioner with a clean income profile, this is the form for you. Here is exactly who qualifies, what changed, and how to file without triggering a Section 139(9) defective return notice.
Who Can File ITR-1 Sahaj for AY 2026-27
You can use ITR-1 Sahaj AY 2026-27 only if you tick every one of these boxes:
- Residential status: Resident individual (Ordinarily Resident only; RNOR and NRI are excluded).
- Total income: Up to ₹50 lakh in FY 2025-26.
- Income sources: Limited to salary or pension, income from up to two house properties, other sources (interest, dividends, family pension), agricultural income up to ₹5,000, and long-term capital gains under Section 112A up to ₹1.25 lakh.
- Capital gains: Only Section 112A LTCG (listed equity shares and equity mutual funds) up to ₹1.25 lakh, with no STCG, no other LTCG and no carry forward losses.
If any single condition fails, you must file ITR-2 (or ITR-3 / ITR-4, depending on your income profile).
The Two Big Changes in ITR-1 AY 2026-27
Change 1: Two House Properties Now Allowed
The AY 2026-27 form permits income from up to two house properties, subject to all other eligibility conditions. The form choice follows the income and exclusions; merely owning vacant land does not automatically force ITR-2.
From AY 2026-27, the expanded ITR-1 covers up to two house properties. One can be self-occupied (notional rent nil) and the other let-out, both self-occupied, or both let-out. The combined income from both properties (after standard deduction and home loan interest under Section 24) flows into your Income from House Property head.
The expanded property limit can make ITR-1 available to more eligible filers. All other income, residential-status and exclusion conditions still need to be checked.
Change 2 (since AY 2025-26): LTCG Under Section 112A Up to ₹1.25 Lakh
The second relief targets retail equity investors, and it actually arrived a year earlier, through CBDT Notification 40/2025 for AY 2025-26; it continues unchanged this year. Section 112A, covering long-term gains on listed equity shares and equity-oriented mutual funds, has a basic exemption of ₹1.25 lakh per financial year. You can report Section 112A LTCG within this exemption directly in ITR-1, provided:
- You have no short-term capital gains (Section 111A or otherwise).
- You have no other long-term capital gains (debt funds, real estate, gold, listed bonds).
- You have no brought-forward losses or carry-forward losses.
- You are not offsetting LTCG against any other head.
If even one of these conditions fails, say, you sold an ELSS unit with ₹40,000 gain and also have a ₹15,000 STCG from a single equity trade, you must file ITR-2.
Who Cannot File ITR-1 (Even If You Earn Salary)
ITR-1 disqualifications are absolute. If any of these apply, you must escalate to ITR-2 or ITR-3:
- You are an NRI, an RNOR, or a Hindu Undivided Family (HUF).
- Total income exceeds ₹50 lakh.
- You are a director in any company (listed or unlisted, public or private).
- You hold any unlisted equity shares during the financial year, including shares received under ESOPs of an unlisted parent.
- You have deferred tax on ESOPs of an eligible startup (Section 17(2)(vi)).
- You own more than two house properties.
- You have business or professional income of any kind, including freelance gigs and side consulting.
- You have foreign income or foreign assets (a single foreign bank account, foreign mutual fund, or vested foreign RSU pushes you to ITR-2).
- You have agricultural income above ₹5,000.
- You have any capital gain that does not fit within the Section 112A ₹1.25 lakh exemption.
- You are claiming relief under Section 90, 90A, or 91 (DTAA relief on foreign tax).
ITR-1 is only for resident individuals. Firms and LLPs file ITR-5, companies file ITR-6, and charitable trusts and other exempt institutions file ITR-7.
Also check the notified AY 2026-27 ITR-1 for exclusions involving section 194N TDS, section 89A income, special-rate income, losses and other form restrictions. An unexercised ESOP grant alone does not mean unlisted shares were held; actual shareholding and any deferred ESOP tax must be checked separately.
ITR-1 Income Sources: What You Can and Cannot Report
| Income head | Allowed? | Limit |
|---|---|---|
| Salary / pension | ✅ Yes | Within ₹50L total |
| Family pension | ✅ Yes | Reported under Other Sources |
| House property | ✅ Yes | Up to 2 properties |
| Bank interest, dividend | ✅ Yes | No specific limit |
| LTCG under Section 112A | ✅ Yes | Up to ₹1.25 lakh only |
| STCG (any section) | ❌ No | Use ITR-2 |
| Other LTCG | ❌ No | Use ITR-2 |
| Business / profession | ❌ No | Use ITR-3 or ITR-4 |
| F&O or intraday trading | ❌ No | Business income: use ITR-3 |
| Crypto / VDA | ❌ No | Section 115BBH: use ITR-2 or ITR-3 |
| Foreign income | ❌ No | Use ITR-2 |
| Agricultural income | ✅ Conditional | Up to ₹5,000 only |
Filing ITR-1 Sahaj AY 2026-27: Step-by-Step
Step 1: Gather Your Documents (Before Opening the Portal)
You need: Form 16 from your employer, AIS and TIS from the e-filing portal, bank interest certificates and FD statements, Form 26AS, capital gains report from your broker (if you have 112A LTCG), home loan interest certificate (if you have a housing loan), and rent receipts and landlord details (if claiming HRA in the old regime).
Step 2: Reconcile AIS Against Your Records
Pull your AIS from the official e-filing portal and reconcile every entry: salary TDS, interest income, dividend, capital gains, large deposits, credit card spends. Mismatches are the single biggest trigger for post-filing notices.
Step 3: Choose Your Tax Regime
The new regime under Section 115BAC is the default for AY 2026-27. If your old-regime tax (with 80C, 80D, HRA, LTA, 24(b) home loan interest) is lower, you must explicitly opt out at the start of the form. Re-run the math both ways before deciding. For two-property owners with home loan interest above ₹2 lakh, the old regime often still wins.
Step 4: Enter Income Heads Carefully
For two house properties, classify each as self-occupied or let-out. For self-occupied, the income is nil but you can claim interest on borrowed capital up to ₹2 lakh (capped, old regime). For let-out, declare gross rent, deduct municipal taxes paid, take the 30% standard deduction, and deduct full interest.
For LTCG under Section 112A, enter the scrip-wise or fund-wise details exactly as shown in your broker’s capital gains report. Grandfathering value (closing price on January 31, 2018) applies to acquisitions before that date.
Step 5: Verify TDS and Tax Credits
Schedule TDS auto-populates from Form 26AS / AIS. Double-check that every TDS entry matches your records, especially for interest, dividend, and rent TDS deducted by your employer.
Step 6: Validate, Submit, and E-Verify Within 30 Days
Run the in-utility validation, fix every error and warning, then submit. E-verify within 30 days using Aadhaar OTP, net banking, or bank account validation. An unverified return is treated as not filed.
Common ITR-1 Mistakes That Trigger Notices
- Using ITR-1 after acquiring unlisted shares or deferring ESOP tax. Holding unlisted equity shares at any time during FY 2025-26, or having deferred tax on an ESOP, excludes ITR-1. An unexercised grant alone is not the same as holding shares. Check the AY 2026-27 eligibility list before choosing the return.
- Missing a second savings account in interest income. AIS sees every bank’s TDS, so your ITR must match.
- Claiming HRA without rent and landlord evidence. For FY 2025-26, employees claiming HRA in the old regime provide rent and landlord evidence to their employer on Form 12BB under the Income-tax Act, 1961. If annual rent exceeds ₹1 lakh, give the landlord’s PAN to the employer. If the landlord has no PAN, ask the employer for its no-PAN declaration process, keep the landlord’s name and address, and retain rent and payment evidence. Payroll TDS treatment and the final HRA exemption should be checked against the actual rent and applicable conditions.
- Reporting LTCG of ₹1.30 lakh and assuming the ₹1.25 lakh exemption keeps you on ITR-1. No, once total 112A LTCG exceeds ₹1.25 lakh, you must file ITR-2.
- Forgetting to opt out of the new regime when the old regime is more beneficial. Choose in a timely original return. If you made a mistake, check the revised-return rules and the due-date restrictions promptly; a later revision does not always permit a regime change.
- Mismatching Form 16 salary with Section 17 breakup. The AIS shows your employer’s TDS return, while Part B of Form 16 is the supporting detail. Both must perfectly agree.
ITR-1 Sahaj vs ITR-2: When to Upgrade
The decision tree is brutal in its simplicity:
| Trigger | Verdict |
|---|---|
| Salary only, ≤ ₹50L, ≤ 2 properties, no capital gains | ITR-1 ✓ |
| Salary + LTCG ₹1.25 lakh exactly, no other gains | ITR-1 ✓ |
| Salary + STCG ₹1 | ITR-2 (forced) |
| Salary + foreign RSU vesting (no sale) | ITR-2 (forced) |
| Salary + ₹6,000 agricultural income | ITR-2 (forced) |
| Salary + three properties (one ancestral) | ITR-2 (forced) |
| Salary + unlisted shares acquired under an ESOP | ITR-2 (forced) |
When in doubt, file ITR-2. It accepts everything ITR-1 accepts plus more, and there is absolutely no penalty for using a heavier form. The reverse (using ITR-1 when you needed ITR-2) is what gets you a defective return notice.
ITR-1 Filing Deadline and Late Fees
| Action | Deadline |
|---|---|
| File ITR-1 (original return) | 31 July 2026 |
| Belated return (with late fee) | 31 December 2026 |
| Revised return | 31 March 2027 |
| E-verify after submission | Within 30 days of filing |
These AY 2026-27 dates apply to the usual ITR-1 filer; check the current Department ITR-1 FAQ and any extension for your case. A belated return is generally due by 31 December 2026. A revised return may be filed by 31 March 2027 or before completion of assessment, if earlier; revisions after 31 December 2026 attract the fee under section 234-I. This return concerns FY 2025-26 under the Income-tax Act, 1961.
Late fee under Section 234F is ₹1,000 if total income is up to ₹5 lakh, and ₹5,000 if above ₹5 lakh. Interest under Section 234A applies at 1% per month on any unpaid tax, calculated from August 1 onwards.
Prepare your figures before opening the return
Keep salary certificates, bank-interest records, property workings and any eligible capital-gains statement together. Reconcile the relevant figures with AIS and Form 26AS, and keep a note of each difference and its resolution. This guide does not automatically ingest documents or prepare a filing-ready return.
Follow our AIS, Form 26AS and TIS comparison guide for the statement checks, then use the official ITR-1 utility for validation and filing.
Frequently Asked Questions
Can I file ITR-1 if I have a single foreign mutual fund?
No. A single foreign asset, even one US-listed ETF, forces you to ITR-2.
Does dividend income disqualify me from ITR-1?
No. Dividend income is reported under "Income from Other Sources" and is fully compatible with ITR-1.
What if my LTCG is exactly ₹1.25 lakh?
You can still file ITR-1. The ₹1.25 lakh figure is inclusive, meaning gains up to and including ₹1.25 lakh qualify. Gains of ₹1.25 lakh and ₹1 (₹1,25,001) trigger ITR-2.
I switched jobs mid-year and have two Form 16s. Can I still file ITR-1?
Yes, multiple Form 16s do not disqualify you. Simply combine both salaries under the Income from Salary head and ensure that the total TDS matches Form 26AS.
Is e-verification mandatory?
Complete e-verification within 30 days. If that period has passed, follow the portal's late-verification and condonation process and check the resulting filing date. Do not automatically submit another return or use ITR-U to claim a refund. See the official e-verification FAQ.
Related guides:
- 🏠 Master index: ITR Forms AY 2026-27: Pick the Right Return
- 🔵 ITR-2 Guide: For Capital Gains, Multiple Properties, and Foreign Income
- 🟣 ITR-4 Sugam: If You Have Side Freelance Income
Official reference: ITR-1 FAQs for AY 2026-27, Income Tax Department. Check the assessment year when using form instructions.
Related free calculators: old vs new regime calculator, capital gains tax calculator, ITR-1 late fee and interest calculator, HRA exemption calculator.
Official source: Always confirm the official ITR-1 form and instructions at incometax.gov.in.
The information and tools on this page are for general information only and are not legal, tax, accounting or financial advice. For advice on your own situation, use the Professional help form on this page.