Income Tax Department notifies ITR Forms 1, 4 for Assessment Year 2025-26

Mumbai Mumbai, May 1: The Income Tax Department has notified ITR Forms 1 and 4 for the assessment year (AY) 2025-26, to be filed by individuals and entities with total income up to Rs 50 lakh annually. Now individuals with long-term capital gains of up to Rs 1.25 lakh in a financial year can also file ITR-1. Earlier, such individuals had to file ITR-2. With the notification, individuals, HUFs, firms and those with income from business and profession having income up to Rs 50 lakh in the 2024-25 financial year (April-March) can start filing IT returns for income earned in the financial year. ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) are simple forms that cater to the needs of a large number of small and medium taxpayers. Sahaj can be filed by a resident individual having an annual income up to Rs 50 lakh and income from salary, one house property, other sources (interest) and agricultural income up to Rs 5,000 per annum.

Sugam can be filed by individuals, Hindu Undivided Families (HUFs) and firms (other than Limited Liability Partnerships (LLPs)) having a total annual income up to Rs 50 lakh and income from business and profession. ITR-2 is filed by individuals and HUFs who do not have income from profits and gains of business or profession. “The Central Board of Direct Taxes (CBDT) has made significant changes to the income tax return (ITR) form for assessment year (AY) 2025-26, which will particularly benefit salaried taxpayers having long-term capital gains (LTCG) from equity shares and mutual funds.

With the latest amendments, individuals can now use the simplified ITR-1 (Sahaj) or ITR-4 (Sugam) form if their LTCG under section 112A does not exceed Rs 1.25 lakh and they have no capital losses to carry forward or set off,” said Sandeep Sehgal, partner-tax at tax and consulting firm AKM Global. Sehgal further added that “the change streamlines the tax filing process, making it more accessible and less cumbersome for small investors and salaried individuals, thereby promoting timely and accurate compliance.”