Filling ITR? Which is the Right Form For You- Get All Information Regarding Important ITR Changes Here

From capital gains relief to higher income thresholds, the revamped ITR forms aim to ease compliance for salaried individuals, professionals, and investors in FY 2024–25.

July-12, 2025: The Income Tax Department has significantly revised the Income Tax Return (ITR) forms for Assessment Year (AY) 2025–26, introducing user-friendly changes that simplify the tax filing process for individuals, professionals, and small businesses. The most notable update allows taxpayers with long-term capital gains (LTCG) up to ₹1.25 lakh to now file under the simplified ITR-1 form, provided their total taxable income does not exceed ₹50 lakh and they meet other eligibility criteria.

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🔹 What’s New in ITR-1 (Sahaj)?

Previously, individuals with any capital gains were ineligible to file ITR-1. However, for FY 2024–25, LTCG under ₹1.25 lakh from listed equity shares or mutual funds (under Section 112A) is now allowed under ITR-1. Eligible taxpayers must:

• Be ordinarily resident
• Have income from salary, one house property, and other sources (like pension or interest)
• Have agricultural income up to ₹5,000

This move broadens the scope of ITR-1 and reduces compliance burdens for middle-income investors.

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🔹 Updates to ITR-2: Relief for High-Income Individuals

For taxpayers ineligible for ITR-1, ITR-2 has seen notable updates:

• It now supports capital gains reporting split by the July 23, 2024, rule change
• Taxpayers can now claim capital losses on share buybacks (effective from October 1, 2024)
• The threshold for mandatory reporting of assets and liabilities has been doubled from ₹50 lakh to ₹1 crore

These changes improve flexibility for individuals with multiple income sources, complex capital gains, or higher net worth.

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🔹 Professionals and Small Businesses: ITR-4 Made More Accessible

Professionals like doctors and lawyers can now use ITR-4 if their gross receipts are up to ₹75 lakh, provided that most payments are received via digital or banking channels. For presumptive taxation businesses, the income threshold remains ₹2 crore, but can go up to ₹3 crore if digital receipts dominate.

This shift promotes digital payments and simplifies the filing process for MSMEs and individual professionals.

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🔹 Choosing the Right ITR Form: Key Considerations

The Income Tax Department’s changes are part of a broader push to digitise and streamline compliance. Taxpayers are advised to:

• Review their total income and its sources
• Account for capital gains, digital receipts, and foreign assets
• Match their eligibility to the revised ITR criteria

These updates are designed to reduce filing complexity, encourage transparency, and align with current economic realities.

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Conclusion:
The revamped ITR forms for AY 2025–26 reflect the government’s intent to modernise India’s tax ecosystem and make compliance easier for a diverse range of taxpayers—from salaried individuals and mutual fund investors to professionals and business owners.

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Tags:
ITR-1 changes AY25-26, ITR-4 for professionals, ITR-2 updates, Income Tax India, Tax Filing FY2024-25, Capital Gains in ITR, Digital tax compliance, LTCG under Section 112A, New ITR forms, Presumptive Taxation India

#Tags:
#IncomeTaxReturn #ITR2025 #ITR1 #ITR4 #TaxFilingIndia #CapitalGainsTax #IncomeTaxIndia #DigitalCompliance #AY2526 #FinancialYear2024 #TaxUpdates #BudgetFriendlyTaxFiling