Mumbai, June 25: The Income Tax Department has delayed the release of utilities for ITR-2 and ITR-3 forms, causing inconvenience to taxpayers ahead of the AY 2025–26 deadline. While ITR-1 and ITR-4 utilities were made available on May 30, those who fall under the ITR-2 and ITR-3 categories are still waiting. These include salaried professionals, HNIs, and freelancers, many of whom prefer to file early. The filing deadline, which was extended to September 15, 2025, adds urgency to the situation.

The delay has heightened confusion about form selection, as filing with the wrong ITR can trigger notices from the department. Understanding the correct form based on your income type is crucial for smooth and compliant filing. Each ITR form serves a distinct category of taxpayer, from salaried individuals to professionals and business owners. Let’s know what ITR-1, ITR-2 and ITR-3 are, and which ITR you should file? ITR Utility: Income Tax Department Enables Excel Utility for ITR-1 and ITR-4 for AY 2025-26, Who Can Use Them To File Income Tax Return?

What is ITR-1?

ITR-1, also known as Sahaj, is designed for resident individuals with a straightforward income profile. It suits those whose total income does not exceed INR 50 lakh and includes income from salary or pension, one house property (excluding brought-forward losses), and other sources like interest. It also accommodates agricultural income up to INR 5,000 and long-term capital gains up to INR 1.25 lakh under section 112A. However, taxpayers with business income, capital gains beyond the limits, multiple house properties, foreign assets, or who are directors in companies cannot use ITR-1. New ITR-U Form Notified by CBDT: Know Who Can File Income Tax Updated Return, Last Date for ITR-U Filing and Penalty for Missing Deadline.

What is ITR-2?

ITR-2 is designed for individuals or Hindu Undivided Families (HUFs) who do not have income from business or profession. It covers income from salary, multiple house properties, capital gains, and foreign income. It’s also used if you are a company director, have investments in unlisted equity shares, or agricultural income over INR 5,000. If the income of a spouse or minor child is to be clubbed and falls within these categories, ITR-2 can also be used. However, it is not applicable for those with business or professional income.

What is ITR-3?

ITR-3 applies to individuals and HUFs engaged in proprietary business or professional activities that require maintaining books of accounts or auditing. It covers income from business or profession and other incomes such as salary, house property, and capital gains. Taxpayers who have investments in unlisted equity shares or are partners in firms should also use ITR-3. This form is essential for those who do not qualify for ITR-1, ITR-2, or presumptive taxation under ITR-4.

Which ITR Should You File?

Choosing the right ITR form depends on your sources of income and financial situation. If you are a salaried individual with simple income sources like salary, one house property, and other basic earnings, ITR-1 is suitable. Those with capital gains, foreign assets, or multiple house properties should opt for ITR-2. If you run a business or professional practice, maintain books of accounts, or have complex income streams, ITR-3 is the correct choice.

Understanding your income type and selecting the correct ITR form is crucial for hassle-free tax filing. The Income Tax Department’s delayed utilities make it even more important to stay informed and prepared. Early and accurate filing helps avoid last-minute stress and potential penalties.

(The above story first appeared on LatestLY on Jun 25, 2025 09:16 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).