The Central Board of Direct Taxes (CBDT) has officially released ITR-1 and ITR-4 forms for Financial Year 2024-25 (Assessment Year 2025-26).
These forms are to be used for filing returns for income earned between 1 April 2024 and 31 March 2025.
This year, some important changes have been made to both forms that tax filers should take note of.
Major Change in ITR-1: Long Term Capital Gains Can Be Reported
This year, a significant update has been made to ITR-1 (Sahaj). Now, taxpayers can use it to report Long Term Capital Gains (LTCG) under Section 112A—but only under these conditions:
The LTCG amount must not exceed ₹1.25 lakh.
The taxpayer should not have any capital loss to carry forward or set off.
Earlier, capital gains were not allowed in ITR-1, and taxpayers had to file ITR-2 for this.
Now, if someone has gains from selling listed equity shares or equity mutual funds, they can show it directly in ITR-1—provided the above conditions are met.
However, if a taxpayer has:
Capital gains from house property, or
Short Term Capital Gains (STCG) from listed shares or mutual funds,
they cannot use ITR-1 and must file a different form.
Taxpayers Opting Out of the New Regime Must Declare Their Choice
The notification also highlights changes for taxpayers dealing with the new tax regime:
If someone opted out of the new tax regime in AY 2024-25, they must state whether they will continue with that choice or withdraw in AY 2025-26.
If a taxpayer is opting out of the new regime for the first time in AY 2025-26, they must provide:
Acknowledgement details of Form 10-IEA, and
A reason for delay, if the form was not filed on time.
Other Important Changes in the Notification
Several other updates have been included in both ITR-1 and ITR-4 forms:
1. Claiming Deductions (Sections 80C to 80U)
Deductions must be selected from a drop-down list on the e-filing portal.
Taxpayers must clearly indicate the relevant clauses and sub-sections.
2. Income from Foreign Retirement Accounts
New fields and relief tracking features have been added for income from foreign retirement accounts under Section 89A.
3. Higher Turnover Limits for Presumptive Taxation
For business (Section 44AD): If 95% or more transactions are digital, the turnover limit is now increased to ₹3 crore.
For professionals (Section 44ADA): Under the same digital receipt condition, the limit has been raised to ₹75 lakh.
4. Mandatory Reporting of Bank Accounts
All active bank accounts held in India during the financial year must be reported, except for dormant accounts.
This requirement applies to both ITR-1 and ITR-4.
