Can You File ITR-1 Sahaj? The Eligibility Rules and Disqualifiers for AY 2026-27

The simplest income tax return form in India is ITR-1, officially called Sahaj, and for Assessment Year 2026-27 (the year in which you report income earned between 1 April 2025 and 31 March 2026) it remains the form of choice for ordinary salaried taxpayers. But "simple" does not mean "for everyone". The Income Tax Department restricts Sahaj to a narrow band of resident individuals, and filing it when you are not eligible can render your return defective under Section 139(9). Choosing the wrong form is one of the most common reasons a return gets flagged in processing, so the 10 minutes you spend confirming eligibility can save weeks of correspondence later.

This guide walks through exactly who can file ITR-1 for AY 2026-27, the seven hard disqualifiers that push you to ITR-2 or ITR-3, and a worked example so you can test your own situation before you log in to file. Every rule below is drawn from the Income Tax Department's official "File ITR-1 (Sahaj) Online" instructions.

What the Section Says

ITR-1 Sahaj is meant for a resident and ordinarily resident (ROR) individual whose total income does not exceed Rs 50 lakh in the financial year. The income that may be reported on it is deliberately limited to four heads: salary or pension, income from one or two house properties, income from other sources such as bank interest and dividends, and, from AY 2025-26 onwards, long-term capital gains under Section 112A up to Rs 1.25 lakh from listed equity shares or equity mutual funds (provided there is no brought-forward or carried-forward capital loss).

If that describes you, ITR-1 is almost certainly the right form. The trouble starts when even one of the following seven disqualifiers applies. According to the Income Tax Department's e-filing portal, you cannot file ITR-1 for AY 2026-27 if any of these is true:

Two more situations push you out of Sahaj even though they are not always listed as headline disqualifiers: any business or professional income (which requires ITR-3 or ITR-4) and any short-term capital gains on shares (which requires ITR-2). A useful mental model is that ITR-1 is for steady, domestic, salary-shaped income. The moment your finances acquire a foreign dimension, an ownership stake, or a trading element, the Department wants the fuller disclosure that ITR-2 and ITR-3 provide.

The Section 194N trigger surprises many filers. Under Section 194N of the Income Tax Act 1961, banks deduct TDS at 2% once your aggregate cash withdrawals cross Rs 1 crore in a financial year; for taxpayers who have not filed returns for the three preceding years, the threshold drops to Rs 20 lakh. Even a single such TDS entry in your Form 26AS disqualifies Sahaj, because the credit cannot be claimed on ITR-1.

Worked Example

Consider Rohan, a 38-year-old marketing manager filing for AY 2026-27. His income for FY 2025-26 looks like this:

Rohan has no foreign assets, holds no unlisted shares, is not a company director, and had no Section 194N TDS. His gross total income of Rs 15,39,000 is comfortably below the Rs 50 lakh ceiling, and every rupee falls within the four permitted heads. He can file ITR-1 Sahaj.

Now compute his tax under the new regime slabs for FY 2025-26. After the standard deduction of Rs 75,000 (available to salaried filers in the new regime), his taxable income is Rs 14,64,000:

Because his taxable income of Rs 14,64,000 exceeds the Rs 12 lakh threshold for the Section 87A rebate, Rohan does not get the Rs 60,000 rebate that fully shields a new-regime income up to Rs 12 lakh. You can reproduce this calculation for your own figures with the income tax calculator, and compare the two regimes side by side using the old vs new regime tool. If Rohan had instead booked Rs 90,000 of long-term equity gains, he would still stay on ITR-1, since Section 112A gains below Rs 1.25 lakh are now permitted; a quick check on the capital gains calculator confirms whether your gains cross that line.

Common Mistakes

These are the eligibility errors that most often surface in ITR scrutiny and Section 139(9) defective-return notices for AY 2026-27.

Filing ITR-1 with a capital loss to carry forward. If you sold equity at a loss in FY 2025-26 and want to carry that loss into future years, ITR-1 cannot capture it; you must use ITR-2. Filing Sahaj forfeits the carry-forward of losses, and the eight-year window under Section 74 for capital losses is lost for that year.

Ignoring a Section 194N entry in Form 26AS. Taxpayers who withdrew large amounts of cash for a property deal or business float often forget the 2% TDS the bank deducted once withdrawals crossed Rs 1 crore. That single line in Form 26AS makes ITR-1 invalid for the year.

Treating ESOPs in unlisted companies as ordinary perquisite. Holding unlisted equity shares at any point during FY 2025-26, even shares allotted under an employee stock plan in a private startup, is an automatic disqualifier regardless of income level. This trips up many startup employees who otherwise have a simple salary profile.

Forgetting foreign income or a foreign account. A resident with a dormant overseas bank account from an earlier posting, or a few dollars of dividend from US RSUs, cannot use ITR-1; foreign income and foreign signing authority both mandate ITR-2 and Schedule FA disclosure. Non-disclosure here carries penalties under the Black Money Act 2015.

Missing the second-property nuance. ITR-1 for AY 2026-27 allows income from up to two house properties, a relaxation from earlier years when only one was permitted. But a third property, or any property held jointly where the Department requires fuller reporting, still moves you to ITR-2.

The cleanest defence is to download your Annual Information Statement (AIS) and Form 26AS before choosing a form, reconcile every entry, and only then decide between Sahaj and the heavier forms. The filing due date for non-audit individuals for AY 2026-27 is expected to be 31 July 2026.

FAQ

Can a pensioner file ITR-1 for AY 2026-27?

Yes. Pension is treated as salary income for ITR purposes, so a resident pensioner whose total income stays within Rs 50 lakh and who has no disqualifying item can file Sahaj. Family pension, however, is reported under income from other sources, and it is still permitted on ITR-1.

I earn Rs 48 lakh in salary. Can I still use ITR-1?

Yes, provided your total income after all heads remains at or below Rs 50 lakh and no other disqualifier applies. The Rs 50 lakh ceiling is on total income, not on salary alone, so add house-property and other-source income before you test the limit. Cross the Rs 50 lakh line by even one rupee and you must file ITR-2.

Does long-term capital gain disqualify ITR-1?

Not always. From AY 2025-26 the Income Tax Department permits long-term capital gains under Section 112A of up to Rs 1.25 lakh on ITR-1, as long as you have no brought-forward or carried-forward capital loss. Short-term capital gains on shares, and LTCG above Rs 1.25 lakh, still require ITR-2.

What happens if I file ITR-1 when I was not eligible?

The return may be treated as defective under Section 139(9). You will receive a notice giving you 15 days to respond and re-file on the correct form. If you do not, the return can be treated as invalid, as if no return was filed, which can attract late-filing fees under Section 234F and loss of carry-forward benefits.

Is ITR-1 different under the old and new tax regime?

The eligibility rules are the same under both regimes; the assessment year form choice does not depend on regime. What differs is the computation: the new regime is the default for FY 2025-26, offers a Rs 75,000 standard deduction and a Section 87A rebate up to Rs 60,000 at incomes up to Rs 12 lakh, while the old regime retains Chapter VI-A deductions.

Can an NRI file ITR-1?

No. ITR-1 Sahaj is restricted to residents who are ordinarily resident. A Non-Resident Indian, or a Resident but Not Ordinarily Resident, must use ITR-2 even for a simple salary profile.

Where do I find which form applies to me on the portal?

The Income Tax Department's e-filing portal at incometax.gov.in runs an eligibility check when you start a new return for AY 2026-27 and will block ITR-1 if your pre-filled data shows a disqualifier such as a Section 194N TDS entry or foreign asset flag. Always reconcile this against your own records rather than relying solely on pre-fill.