New income tax return (ITR) forms for the financial year 2025–26 are expected to be released soon. In recent years, the government has tried to make ITR forms easier and simpler. However, experts believe that there is still room for more simplification.
It is expected that ITR-1, ITR-2, and ITR-3 will be made simpler, especially for individual taxpayers.
ITR-1 (Sahaj): Meaning and Possible Changes
The ITR-1 form, also called Sahaj, is used by individual taxpayers whose income comes from salary, one house property, and other sources such as interest. Even though it is considered the simplest ITR form, taxpayers still have to provide many disclosures.
Prabhakar KS, founder and CEO of Shri Tax Chambers, said that salaried taxpayers and senior citizens often have to go through multiple pages of disclosures, even though many of them are not relevant to them.
He suggested that the new ITR-1 could include a radio button option at the beginning. Taxpayers could indicate whether they have dividend income or income under specific categories.
If they select “No,” the sections related to quarterly dividends and other non-applicable details could be automatically skipped.
ITR-2: Meaning and Expected Simplification
The ITR-2 form is meant for individuals and Hindu Undivided Families (HUFs) who do not earn income from business or profession but have income from sources like capital gains and foreign assets.
This form requires more disclosures than ITR-1 and, when printed, can be more than 40 pages long.
Experts believe that ITR-2 could also include a radio button option. Taxpayers could be asked whether they have authorized representatives, investments in unlisted shares, or other specific disclosures. If they choose “No,” they would not need to view or fill sections that are not relevant to them.
Challenges in Reporting Foreign Income
Experts say that reporting foreign income is one of the biggest challenges for taxpayers. Many people face heavy penalties under the Black Money Act, and even small mistakes can lead to serious penalties.
To make the process easier, experts suggest simplifying the reporting system and setting a minimum threshold for reporting foreign income.
