The 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
(Note- Long-term capital gain from Shares and Equity-Oriented Mutual Fund (U/S 112A) up to Rs. 1.25 Lakh has to be shown in ITR 1)
🚫 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
(Note- Long-term capital gain from Shares and Equity-Oriented Mutual Fund (U/S 112A) up to Rs. 1.25 Lakh has to be shown in ITR 4)
🚫 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 house property loss set-off 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.
