How to File ITR with Multiple Income Sources in India (AY 2025-26)?

The deadline for filing your income tax return (ITR) is approaching and you have got a little of everything to report, salary, some interest from a fixed deposit and a bit of profit from shares you sold during the year.

However, it is easy to get confused when your income comes from more than one place.

This Master Brains’ article is here to address your concerns on how to file ITR with multiple income sources and provide clear solutions, so you can approach your tax return with clarity and control.

1. What Counts as Multiple Sources of Income under Indian Tax Law?

In India, the income tax law classifies all income into five specific categories, known as the “Heads of Income”. Your tax filing journey begins by correctly identifying and sorting your earnings into these groups.

1. Salary:

It includes your basic pay, allowances, bonuses and any other benefits you get from your employer. Your employer generally provides a Form 16 which details your salary, deductions and the tax already paid (TDS).

2. Income from House Property:

This covers any rental income you receive from a property you own. You can report up to 2 residential properties as self-occupied and others will be deemed let-out.

3. Income from Business or Profession:

This head shows revenue from self-employed work, freelancing and other business ventures. You can deduct various business-related expenses from your total receipts to arrive at your net taxable profit. This can include things like office rent, internet bills and travel expenses directly related to your work.

4. Capital Gains:

This category is for the profit/loss on transfer of assets. For example, if you sell stocks, mutual funds, or real estate, the profit is considered a capital gain (anchor text for another blog). Then you have to check whether it is short-term (STCG) or long-term (LTCG) as Income tax law as it is taxed differently.

5. Income from Other Sources:

This is the final and all-inclusive category for any income that doesn’t fit into the other four heads. This can include interest from bank accounts or fixed deposits, dividends, winnings from lotteries or family pensions.

Read Beginner’s Guide to Income Tax Law in India to know more.

2. Choosing the Right ITR Form

Selecting the correct ITR form is the base of your entire income reporting process. With the Income Tax Department tightening rules for AY 2025-26, it is more important than ever.

A. ITR filing for Salaried Individuals

Those salaried individuals earning below ₹ 50 lacs annually, mainly from salary, interest and a single residential property, are eligible to file using ITR-1 (Sahaj). This is applicable only when:

• Agri-income is not over ₹ 5,000 and
• LTCG from listed stocks or mutual funds stay within ₹ 1.25 lacs.

Otherwise, go for ITR-2.

B. For Freelancers, Consultants and Small Business Owners

The ITR Filing for Freelancers and Consultants should be done carefully and considering whether to choose:

i) ITR-4: for those using presumptive tax under Sections 44AD or 44ADA of the Income-tax Act, 1961 (“the Act”), where income is declared as a percentage of turnover. From AY 2025–26, higher turnover limits apply:

• ₹ 3 crore for businesses
• ₹ 75 lacs for professionals

with cash receipts under 5% of total turnover.

ii) ITR-3 is for those maintain financial records or who have opted out of presumptive taxation.

C. For NRIs (Non-Resident Indians)

NRIs can no longer use ITR-1 or ITR-4. You have to choose ITR 2 or ITR 3 based on the nature of your income. Before choosing the form, confirm your residential status for the financial year. Also, review the DTAA (Double Taxation Avoidance Agreement) provisions, which may allow relief if you’ve been taxed on the same income abroad.

For a more detailed breakdown of every ITR form, who qualifies, what’s changed in 2025 and how to avoid common mistakes, check out our full guide:

Choose the Right ITR Form for AY 2025-26: Salaried, Self-Employed & NRIs

3. How Different Incomes are Taxed Together?

To make it simpler, let’s understand with a couple of real-life scenarios of filing ITR with multiple income sources.

A. Salaried Income + Freelance Income:

Your salary is taxed under “Salary” with the standard deduction of ₹ 50,000 (old regime) or ₹ 75,000 (new regime) and allowances like house rental allowance (HRA), leave travel allowance (LTA).

Income from freelance work is treated as business/professional income. You can either claim your actual expenses to arrive at your net profit or opt for the presumptive taxation scheme under Section 44ADA of the Act, where you declare 50% of your gross receipts as profit.

All this income is combined to calculate your total tax liability and you must use ITR-3 or ITR-4 depending on which method you choose for your freelance income.

B. Rental + Salaried Income:

Your salary will be treated same as above. For your rental income, you must first calculate the Gross Annual Value (GAV) of the property. From this, you deduct any municipal taxes paid. The remaining amount is the Net Annual Value (NAV), from which you can claim two significant deductions under Section 24 of the Act:

1. 30% of the NAV is allowed as a flat deduction.

2. You can also claim the home loan interest paid.

The final taxable amount from house property is then added to your salary to get your total income. In this case, you would likely use ITR-2, unless you have income from a business as well.

4. The Risks of Incorrect ITR Filing

Filing your ITR correctly is a legal duty and obligation.

In today’s digital age, the Income Tax Department has powerful tools to verify your financial data. One small income tax filing mistake can set off a chain of notices, fines and costs you didn’t plan for.

The most immediate risk is receiving a notice from the Income Tax Department for “information mismatch” if your filed return doesn’t match the data they have from sources like your Form 26AS, Annual Information Statement (AIS) & Taxpayer Information Statement (TIS).

This can lead to a detailed inquiry, penalties and interest charges on any unpaid tax. Failing to file ITR altogether, or providing false information, can lead to even more severe penalties, including legal action.

This is why many individuals with multiple income sources choose to file through trusted ITR filing services.

5. The Role of an Income Tax Consultant

What does a professional income tax return advisor offer:

1. Structured Income Reporting: They help you organize receipts, invoices, bank statements, rent deeds, etc., so nothing is left and you also get clarity over your finances. They follow year-long tax checklist.
2. Accurate Expense Allocation: Professionals know exactly what counts as allowable expense for freelancing or businesses, reducing errors and risk.
3. Deduction & Regime Advisory: They guide you through the suitable income tax regime, all available tax deductions, remind you of timely investments (80C) and focusing on tax planning in advance.
4. Choosing the Right ITR: They can confirm whether ITR1, ITR 2, ITR 3, or ITR 4 is your best fit, based on your overall profile.
5. Minimising Litigation Risk: Experienced filing reduces chances the tax department flagging inconsistencies. Even then any notice is served, a tax consultant can respond to income tax notice accurately and on time.
6. Digital & Filing Accuracy: Tax Consultants are expert of the technicalities of the reporting process and use authorized e-filing software with their manual checks for completeness and accuracy.

In short, a good consultant brings clarity, assurance and reduces the stress of cross-checking receipts, tax law and form choices.

Master Brain’s Income Tax Consultancy Services can give you the clarity and confidence to file without the usual stress and confusion.