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ITR Filing 2026: There is excellent news for salaried taxpayers regarding Assessment Year 2026-27. Previously, anyone earning even a small profit from mutual funds or the stock market was compelled to file the lengthy and complex 'ITR-2' form. However, the government has now significantly relaxed the rules and expanded the scope of the 'ITR-1' (Sahaj) form.

Now, small investors and salaried individuals can file their tax returns using the simple ITR-1 form without any hassle. However, there are still certain conditions that may prevent some people from availing of this benefit.

Why the exemption from ITR-2?

Earlier, the rule was that even a capital gain of ₹1 would make a taxpayer ineligible for ITR-1. The government has changed this rule starting this year. You can now file the ITR-1 form even if you have earned Long-Term Capital Gains (LTCG) of up to ₹1.25 lakh from listed shares or equity mutual funds under Section 112A. Since long-term profits up to ₹1.25 lakh are tax-free anyway, this change comes as a major relief for small investors.

Relief for owners of two houses instead of one

Another significant change has been made to the scope of ITR-1 this year. Previously, only those owning a single house property could file this form. Now, however, if you own two houses—for instance, one in your hometown and another in the city where you work—you can still conveniently opt for ITR-1 (Sahaj).

Who still cannot file ITR-1?

Despite this relief, tax experts note that not everyone will be able to benefit from this change. If your portfolio or profile includes the following, you will still need to file ITR-2:

Short-Term Capital Gains (STCG): If you have made a profit by selling shares or mutual funds within a year.

Profit exceeding ₹1.25 lakh: If your long-term profit crosses the ₹1.25 lakh threshold.

Carrying forward losses: If you have incurred market losses and wish to carry them forward to future years.

Other assets: If you have earned capital gains from selling a house, land, or gold.

Income exceeding ₹50 lakh: If your total annual income is above ₹50 lakh.

Other reasons: If you are a company director, hold unlisted shares, or have foreign income or assets.

If you are a salaried investor who has been filing ITR-2 in previous years solely due to the sale of mutual funds or shares, be sure to check your profit calculation this time. If the profit is within the ₹1.25 lakh limit, you can easily file the simpler ITR-1 form this year.

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