ITR-1 Is Declining for the First Time — What's Happening
For the first time in over a decade, ITR-1 (Sahaj) filings have declined year-over-year — down 2.8% in FY 2025-26. Meanwhile, ITR-2 filings jumped 18.4%.
The Numbers
| ITR Form | FY 2024-25 | FY 2025-26 | Change |
|---|---|---|---|
| ITR-1 (Sahaj) | 4.82 Cr | 4.68 Cr | -2.8% |
| ITR-2 | 1.12 Cr | 1.33 Cr | +18.4% |
| ITR-3 | 0.98 Cr | 1.04 Cr | +6.1% |
| ITR-4 (Sugam) | 1.64 Cr | 1.58 Cr | -3.7% |
Why ITR-1 Is Shrinking
ITR-1 is the simplest form — for salaried individuals with income up to Rs 50 lakh, one house property, and no capital gains. The decline signals that more taxpayers now have income sources that disqualify them from ITR-1:
- Capital gains from stocks, mutual funds, and property sales — the biggest driver of the shift to ITR-2
- Multiple house properties — remote work has increased second-home ownership
- Foreign assets and income — global investments through platforms like Vested, INDmoney
- Income above Rs 50 lakh — bracket creep as salaries rise
The Rise of the Salaried Investor
The ITR-2 surge tells a clear story: India's salaried class is investing more than ever. Demat accounts crossed 15 crore in 2025. SIP inflows hit record highs. When salaried employees earn capital gains — even Rs 100 from an equity fund — they must move from ITR-1 to ITR-2. This structural shift is likely permanent.
What This Means for Filing
If you've started investing in stocks or mutual funds, you probably need to file ITR-2 instead of ITR-1. ITR-2 requires reporting capital gains in Schedule CG and foreign assets in Schedule FA. Use our ITR Guide to check which form you need.