The Central Board of Direct Taxes (CBDT) has finally notified the income tax return (ITR) Forms 1 and 4 for the Financial Year 2024-25 (Assessment Year 2025-26). This update now has set the grounds for income tax filing for individuals and certain categories of taxpayers.
With new forms now available, tax season has officially begun and it is time for individuals to take stock of their financial affairs.
The forms notified, ITR-1, also known as Sahaj, and ITR-4, known as Sugam, are not one-size-fits-all. They cater to specific categories of taxpayers. Your income source, nature of employment, investments, and even agricultural income can determine whether or not you are eligible to use these forms.
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Important Change in ITR-1 Form
This year, there’s a significant shift that taxpayers need to take note of. For the first time, ITR-1 form will allow reporting of long-term capital gains (LTCG) from listed equity shares and equity-oriented mutual funds, but only up to Rs 1.25 lakh. Previously, even a small amount of capital gain from equities meant that the taxpayer had to file using the more detailed ITR-2 form.
This change may appear minor, but it is a welcome simplification for salaried individuals who occasionally invest in mutual funds or stocks and have modest gains to declare.
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So, who can file using ITR-1 now?
You’re eligible to use ITR-1 if:
You are an individual resident in India (not a non-ordinary resident)
Your total income is up to Rs 50 lakh
You have income from salary, one house property, and other sources like interest
You have long-term capital gains under Section 112A, up to Rs 1.25 lakh, from the sale of listed shares or mutual funds
Your agricultural income is not more than Rs 5,000
You do not have to ITR using this form if:
- You are a director in a company
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- You have investments in unlisted equity shares
- Your income tax on ESOPs is deferred
- You have foreign assets or financial interests abroad
- TDS has been deducted under Section 194N (cash withdrawals)
Who Can File ITR Using ITR-4
ITR-4 is designed for those who earn income from small businesses or professions and prefer the presumptive taxation scheme.
Individuals, Hindu Undivided Families (HUFs), and firms (other than LLPs)
Whose total income is up to Rs 50 lakh
Who earn income from business or profession under sections 44AD, 44ADA, or 44AE of the Income-tax Act, 1961
And those who have LTCG under Section 112A up to Rs 1.25 lakh
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ITR-4 is off-limits in these instances:
You are a company director
You hold unlisted equity shares
Your agricultural income exceeds Rs 5,000
You have foreign assets or financial interests
Income tax is deferred on ESOPs
Apart from the inclusion of capital gains from equities, both ITR-1 and ITR-4 remain structurally similar to previous years. But this small inclusion could make tax filing easier for millions of salaried or small business taxpayers who also dabble in the markets but don’t want to file lengthy forms unnecessarily.
The government has not yet notified the other ITR forms (namely, ITR-2, 3, and 5 onwards) but with ITR-1 and 4 out, the rest are expected to follow soon. Importantly, the due date for filing tax returns for non-audit cases remains July 31, 2025. Salaried taxpayers should earmark this deadline and file their returns before the due date to remain tax compliant.
