The Central Board of Direct Taxes (CBDT) has notified the Income Tax Return (ITR) Forms 1 and 4 applicable for the Assessment Year 2025–26, under the Income Tax Rules, 1962, as amended by the Income-tax (Twelfth Amendment) Rules, 2025. These forms are effective from 1st April 2025.
🔍 Applicability of ITR Forms
ITR Form 1 – Sahaj
ITR-1 is meant for resident individuals (excluding not ordinarily resident) having total income up to ₹50 lakh from:
- Salary or pension
- One house property
- Other sources (e.g., interest income)
- Long-term capital gains up to ₹1.25 lakh under Section 112A
- Agricultural income up to ₹5,000
🚫 Not applicable to:
- Directors in companies
- Investors in unlisted equity shares
- ESOP deferrals
- Foreign assets or foreign income holders
- Those covered under section 194N (TDS on cash withdrawals)
ITR Form 4 – Sugam
ITR-4 is applicable for:
- Individuals, HUFs, and Firms (other than LLPs), who are residents and have:
- Business income under presumptive taxation (Section 44AD, 44ADA, or 44AE)
- Total income up to ₹50 lakh
- Long-term capital gain under Section 112A not exceeding ₹1.25 lakh
🚫 Not applicable to:
- Companies’ directors
- Those with foreign assets or income
- Agricultural income over ₹5,000
- Non-residents and not-ordinarily residents
✅ Key Features and Revisions in AY 2025–26 Forms
1. Capital Gains Reporting
- Individuals earning long-term capital gains up to ₹1.25 lakh under Section 112A can file ITR-1 or ITR-4.
- Additional declarations are required for such gains, including acquisition cost, full value of consideration, etc.
2. Filing under Clause (vii) of Section 139(1)
- Even if not otherwise required to file returns, individuals must file ITR if they:
- Incurred foreign travel expenses exceeding ₹2 lakh
- Paid electricity bills over ₹1 lakh
- Deposited ₹1 crore or more in current accounts
3. New Tax Regime Opt-Out Reporting
- Taxpayers choosing to opt out of the new tax regime under Section 115BAC(6) must submit Form 10-IEAbefore the due date.
4. Detailed Income Breakup
Both ITR-1 and ITR-4 now require:
- Segregated reporting of salary components
- Home loan interest details
- Interest income classified by source
- Clear mention of deductions under Chapter VI-A (like 80C, 80D, 80G, etc.)
🧾 Additional Requirements
- Bank Account Details: Disclosure of all bank accounts held at any time during the year, excluding dormant/inoperative accounts.
- TDS and TCS Reporting: Must be accurately filled based on Form 16/16A/26AS.
- Schedule AL (Assets and Liabilities): Required in ITR-4 for certain business entities.
💡 Important Notes for Taxpayers
- Use ITR-2 or ITR-3/5 if you are ineligible to use ITR-1 or ITR-4 due to income complexity or asset holdings.
- The maximum set-off of house property loss allowed is ₹2,00,000 in ITR-1/4. For further set-off, ITR-2 or ITR-3 is mandatory.
- Those with business turnover over thresholds must maintain books and audit reports.
📅 Effective Date
These revised rules and ITR forms will apply from 1st April 2025 for income earned in the Financial Year 2024–25.
The streamlined ITR-1 and ITR-4 aim to simplify the filing experience for salaried and small business taxpayers, while still capturing essential disclosures such as foreign income, capital gains, and presumptive taxation. Ensure correct form selection and full compliance to avoid notices under Sections 139(9), 142(1), 148, or 153A.
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