ITR forms 1, 4 notified: The Central Board of Direct Taxes (CBDT) on Tuesday notified the ITR 1 and ITR 4 forms which are applicable for the assessment year 2025-26 and financial year 2024-25. Those filing their income tax returns this year for the earnings incurred between April 1, 2024, and March 31, 2025, will be using these recently-launched ITR 1 and 4 forms.
As far as the changes are concerned, the ITR 1 form now has provisions for reporting capital gains — for long-term capital gains under section 112A not exceeding Rs 1,25,000 and no brought-forward losses or loss to be carried forward. As a result, those who have to report long term capital gains emerging after selling equity mutual funds and listed equity shares, can now use the ITR 1 form to file their income tax return. Earlier, they were required to use the ITR 2 form for ITR filing.
After the release of ITR 1 and 4 forms, it is expected that the government shall soon release ITR 2 and 3 forms as well for filing tax return and receiving income tax refunds.
Here are the details of the changes in the ITR forms for AY 2025–26 as compared to AY 2024–25:
ITR-1 (SAHAJ)
To be used for notifying long-term capital gain (LTCG) under section 112A while filing income tax return, under these conditions:
If LTCG is not more than Rs 1.25 lakh, and the income tax assessee has no loss to carry forward or set off under the capital gains head.
Change: Earlier, the ITR-1 form couldn’t be used in case of capital gains.
ITR-4 (SUGAM)
Apart from the provisions under ITR-1, it allows LTCG under section 112A up to Rs 1.25 lakh with no carried forward loss.
ITR-1 & ITR-4
Expanded disclosure on opting out of new tax regime using Form 10-IEA under section 115BAC(6):
If an income tax assessee has opted out of the new income tax regime in AY 2024–25, then they must declare and opt to either continue or reverse the selection.
If one has opted out of the new income tax regime for the first time in AY 2025–26, then they must furnish Form 10-IEA acknowledgment details.
Additionally, there must also be a clarification for late filing of Form 10-IEA.
ITR-1 & ITR-4
All deductions ranging from 80C to 80U must be chosen from a drop-down in the e-filing facility and the exact clauses and sub-sections must be revealed.
Income from retirement accounts maintained abroad — falling under section 89A — will now have improved fields and relief tracking feature.
ITR-4
Section 44AD (business): If digital transactions make up to 95 percent of the business' transaction, then the turnover threshold has now been changed to Rs 3 crore.
Section 44ADA (professionals): Under the same digital receipts condition the limit has now been increased to Rs 75 lakh.
ITR-1 & ITR-4
All bank accounts, being held in India during the previous year, barring the dormant ones, will now have to be compulsorily reported.
While filing the income tax return, at least one bank account will have to be compulsorily selected to receive any refund credit.
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