Synopsis: The Income Tax Department has notified ITR-1 and ITR-4 forms for AY 2025-26, with ITR-1 now including LTCG under Section 112A within limits. Taxpayers must choose their ITR form wisely based on their income sources to avoid compliance issues.
The Income Tax Department has officially released the ITR-1 (Sahaj) and ITR-4 (Sugam) forms for Assessment Year 2025–26, bringing some key changes that will benefit certain taxpayers. Notably, ITR-1 has been overhauled to now allow reporting of long-term capital gains (LTCG) under Section 112A, provided they fall within the Rs 1.25 lakh exemption limit.
Earlier, taxpayers with such LTCG had to file ITR-2, but this change simplifies the process for salaried individuals with modest capital gains on listed equity shares, mutual funds, or business trusts.
ITR-1: What’s New?
The revised ITR-1 now includes a section for “Income on which no tax is payable: Long Term capital gains u/s 112A not chargeable to Income-tax.” This means if your LTCG from listed securities is below Rs 1.25 lakh, you can continue using ITR-1. However, this doesn’t apply to:
Short-term capital gains
- LTCG from immovable property
- LTCG exceeding the exemption threshold
Eligibility for ITR-1 Sahaj:
You can file ITR-1 if you are a resident individual with:
- Total income up to Rs 50 lakh
- Income from salary, one house property, family pension
- LTCG u/s 112A within limit
- Agricultural income (up to Rs 5,000)
- Interest and other sources of income
ITR-4 Sugam: Who Should Use It?
ITR-4 is meant for resident individuals, HUFs, and firms (not LLPs) with:
- Total income up to Rs 50 lakh
- Presumptive income from business/profession under Sections 44AD, 44ADA, or 44AE
- Income from salary/pension, one house property
- Agricultural income (up to Rs 5,000)
- Other income from bank/post office interest, tax refund interest, family pension, etc.
Which Form to Choose?
Choosing the correct ITR form is crucial for compliance. Filing the wrong form could result in notice from the IT Department or rejection of your return. Here’s a quick pointer:
- Use ITR-1 if your income is salaried and you have small LTCG under Section 112A.
- Use ITR-4 if you have presumptive business income and meet eligibility criteria.
What You Need Before Filing ITR:
Before you file your return, keep these documents ready:
- PAN & Aadhaar
- Form 16 from your employer (due by June 15, 2025)
- Form 26AS & AIS
- Interest and investment proofs
- Capital gains statements
- Home loan and property documents
- Previous year ITR and tax payment receipts
When to File?
While the filing portal is expected to open in May, most salaried individuals will wait until they receive Form 16. You can file your return offline or online once the portal is enabled.
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Please consult a tax professional before filing your income tax return.
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