Income Tax Department Shakes Up ITR Filing for Assessment Year 2025-26, Introducing Simplified Forms ITR-1 and 4
Government rolls out modifications for income tax filing; Forms 1 and 4 introduced for assessment year 2025-26
Hey there! Ready to make your life a bit easier when it comes to filing your taxes? The Income Tax Department has got you covered. They've rolled out the new ITR forms 1 and 4 for the Assessment Year 2025-26. In a nutshell, these forms are intended for individuals and entities reporting an annual income of up to ₹50 lakh.
What's Changed in ITR Filing Notifications for Assessment Year 2025-26
Here's a big relief for small investors: Now, individuals with long-term capital gains (LTCG) of up to ₹1.25 lakh within a financial year can fill out the user-friendly ITR-1 form — previously, they were stuck with the more complex ITR-2 form.
So, if you're a resident individual with an income of up to ₹50 lakh, derived from a salary, a single house property, other sources, and agricultural income not exceeding ₹5,000 per year, or have eligible LTCG, you can start the process of filing your income tax return for the income earned during the 2024-25 fiscal year (April-March).
ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) are well-known for their simplified structure. They cater specifically to a large segment of small and medium-sized taxpayers.
Who Can Leverage These Simplified Forms?
- ITR Form 1 (Sahaj): ideal for resident individuals within the income threshold, including those with eligible LTCG.
- ITR Form 4 (Sugam): applicable for individuals, Hindu Undivided Families (HUFs), and firms (excluding Limited Liability Partnerships – LLPs) with an income of up to ₹50 lakh and income generated from business and profession.
Take note that ITR-2 is now specifically for individuals and HUFs who have income from profits and gains in business or profession, LTCG exceeding ₹1.25 lakh, or capital losses to carry forward.
Tax gurus have praised these updates. Sandeep Sehgal, Partner-Tax at AKM Global, said, "The CBDT has made substantial changes to the ITR forms for Assessment Year 2025-26, especially benefiting salaried taxpayers with long-term capital gains."
In essence, salaried individuals with eligible LTCG and small investors can now use the simpler ITR-1 or ITR-4 forms. This tweak in the tax filing process will likely save time and lower complexity associated with tax compliance.
(Insights provided by PTI)
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- The Income Tax Department has introduced simplified forms ITR-1 and 4 for the Assessment Year 2025-26, catering to individuals and entities reporting an annual income of up to ₹50 lakh.
- Small investors can now fill out the user-friendly ITR-1 form if they have long-term capital gains (LTCG) of up to ₹1.25 lakh within a financial year, as previously they were required to use the more complex ITR-2 form.
- For the Assessment Year 2025-26, individuals, Hindu Undivided Families (HUFs), and firms (excluding Limited Liability Partnerships – LLPs) with an income of up to ₹50 lakh and income generated from business and profession can use ITR Form 4 (Sugam).
- Income Tax Department's changes in ITR forms for Assessment Year 2025-26, such as the introduction of forms ITR-1 and 4, aim to benefit salaried taxpayers with long-term capital gains and small investors.
- If you're a personal-finance enthusiast planning investments and aiming for gains, you might find these changes in the tax-filing process during the Assessment Year 2025-26 beneficial in terms of time savings and reduced complexity.
