Which ITR Form for AY 2026-27? ITR-1 vs ITR-2 for ₹15L+ Earners
You earn well past ₹15 lakh, your Form 16 is sitting in your inbox, and the one-page ITR-1 looks like a 20-minute job. It isn't. A single RSU vest from your company's US parent, one equity mutual fund redemption above ₹1.25 lakh, or crossing ₹50 lakh total income quietly disqualifies you from ITR-1 — and filing the wrong form lets the department treat your return as defective under Section 139(9). The return you file now is for FY 2025-26 (AY 2026-27), and the clock runs to 31 July 2026.
Summary
| Your situation in FY 2025-26 | Form to file |
|---|---|
| Resident, salary + interest, income ≤ ₹50L, LTCG ≤ ₹1.25L, no foreign assets | ITR-1 (Sahaj) |
| Capital gains over ₹1.25L, RSUs/ESOPs, foreign assets, or income above ₹50L | ITR-2 |
| Any business, professional, or F&O income on top of the above | ITR-3 |
| Presumptive business/profession under Section 44AD / 44ADA | ITR-4 (Sugam) |
For most professionals earning ₹15L+, the honest answer is ITR-2. Here is exactly what pushes you there.
Five things that knock ₹15L+ earners off ITR-1
Capital gains above ₹1.25 lakh
AY 2026-27 finally lets ITR-1 carry long-term capital gains under Section 112A — but only up to ₹1.25 lakh, and only if you have no losses to carry forward. Sell equity or equity mutual funds for an LTCG of ₹1.26 lakh, book any short-term gain (taxed at 20% under Section 111A since 23 July 2024), or carry a loss forward, and you are on ITR-2. Action: add up every redemption in your broker and AMC capital-gains statements before you assume ITR-1 fits.
RSUs and ESOPs from a foreign parent
If your employer's stock is listed abroad — most MNC and funded-startup grants — your vested shares are a foreign asset. That triggers Schedule FA (Foreign Assets), which exists only in ITR-2 and ITR-3. The perquisite value is already inside your Form 16, but the holding itself still has to be disclosed. Action: if you held even one vested foreign share on 31 December 2025, you file ITR-2 and complete Schedule FA — non-disclosure carries a flat ₹10 lakh penalty under the Black Money Act, regardless of the amount involved.
Total income above ₹50 lakh
Cross ₹50 lakh of total income and two things happen: ITR-1 is off the table, and Schedule AL (Assets and Liabilities) becomes mandatory — you disclose property, jewellery, vehicles and financial assets with matching liabilities at cost. On a ₹15L+ trajectory with bonuses and RSUs, many readers cross this line in a strong year without noticing. Action: check your gross total income on the AIS before picking a form.
Unlisted shares, a directorship, or F&O
Holding unlisted equity at any point in the year, sitting on any company's board, or trading futures and options each force you off ITR-1 — and F&O specifically pushes you to ITR-3, because it is business income, not capital gains. Angel cheques and advisory equity count too. Action: if you took ESOPs in a private startup or hold a director seat, default to ITR-2 (or ITR-3 once F&O is in the mix).
The new AY 2026-27 changes you'll actually notice
Three real changes this year: ITR-1 and ITR-4 now allow income from two house properties (up from one) plus a field for rent that could not be realised; the obsolete 15%/10% capital-gains rate fields are gone, replaced by the flat 20% / 12.5% structure; and every deduction from Section 80C to 80U must be picked from a drop-down with the exact sub-clause on the e-filing portal. Action: keep the precise sub-section handy — "80C" alone no longer cuts it; you select 80C, 80CCD(1B), 80D and so on individually.
Real example: Salaried, ₹32L CTC, Bengaluru, RSUs from a US parent
| Income item (FY 2025-26) | Amount | What it triggers |
|---|---|---|
| Salary after ₹75,000 standard deduction | ~₹28.5L | Schedule S |
| Vested US RSUs still held on 31 Dec 2025 | ~₹12L value | Schedule FA — mandatory |
| Equity mutual fund LTCG | ₹1.8L | Schedule CG; 12.5% on the ₹55,000 above ₹1.25L |
| Rent from one let-out flat | ₹3.6L/yr | Schedule HP |
ITR-1 is impossible here on two counts — LTCG above ₹1.25 lakh and a foreign asset. This is an ITR-2 return with Schedule FA completed for the RSUs. The tax owed barely changes; the form you must file does.
What to do this week
- Download your AIS and Form 26AS from the e-filing portal and reconcile them against Form 16, broker and AMC statements — mismatches are the top trigger for notices.
- Total your capital gains. LTCG over ₹1.25 lakh, any STCG, or a carried-forward loss means ITR-2, not ITR-1.
- List every foreign holding — RSUs, ESOPs, foreign brokerage or bank balances — and plan to complete Schedule FA. This is the most expensive line to get wrong.
- Run the numbers under both regimes (the new regime is now the default and gives salaried earners zero tax up to ₹12.75 lakh via the ₹75,000 standard deduction and the Section 87A rebate), then file before 31 July 2026 to dodge the ₹5,000 late fee under Section 234F. As a salaried filer you simply choose the old regime inside the return each year — no Form 10-IEA required; that form is only for taxpayers with business income.
File the right form once
The form you choose is not paperwork trivia — it decides whether your foreign RSUs, capital gains and high income are reported correctly, and whether your return survives without a defective-return notice. For a ₹15L+ salary with equity and foreign stock, assume ITR-2 until proven otherwise, and get Schedule FA right the first time. Miss 31 July and you can still file a belated or revised return up to 31 December 2026 — but interest under Section 234A and the same form rules still apply, so it is cheaper to get the form right now.
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