The Income Tax Department has officially notified the new income tax ITR forms for the Financial Year 2024-25 (Assessment Year 2025-26), bringing in significant changes aimed at simplifying the filing process for individual taxpayers. Most notably, ITR-1 (Sahaj) and ITR-4 (Sugam) have been revamped to include long-term capital gains (LTCG) up to a certain threshold, allowing more taxpayers to file under these simpler forms.
Let’s break down the key changes and understand how they impact taxpayers.
✅ ITR-1 (Sahaj): Now Includes Limited LTCG
For the first time, ITR-1 will allow individuals to report long-term capital gains (LTCG) up to ₹1.25 lakh under Section 112A. This section covers gains from the sale of listed equity shares and equity-oriented mutual funds.
✔️ Who Can File ITR-1:
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Resident individuals (excluding “not ordinarily resident”).
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Total income not exceeding ₹50 lakh.
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Income sources include:
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Salary or pension
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One house property
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Other sources (like bank interest)
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Agricultural income up to ₹5,000
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LTCG under Section 112A up to ₹1.25 lakh (new inclusion)
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❌ Who Cannot File ITR-1:
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Those with:
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Capital gains from selling a house property
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Short-term capital gains from listed equities
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Investments in unlisted shares
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Directorships in a company
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Foreign assets or foreign income
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Income subject to TDS under Section 194N
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Deferred ESOP tax from eligible startups
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📄 ITR-4 (Sugam): Simplified, With New Capital Gains Threshold
ITR-4, designed for presumptive income from business or profession, has also been revised. Taxpayers can now file ITR-4 if their LTCG under Section 112A does not exceed ₹1.25 lakh—provided they don’t have any capital loss to carry forward or set off.
This move simplifies the tax return process for small business owners and professionals with limited investments in listed equities.
📆 When Do These New Forms Apply?
The revised income tax ITR forms are applicable for:
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Financial Year 2024-25 (April 1, 2024 – March 31, 2025)
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Assessment Year 2025-26
📝 Why These Changes Matter
These updates aim to:
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Reduce the burden on small investors and salaried taxpayers
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Minimize the need to switch to more complex ITR forms
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Enhance compliance by aligning with modern investment trends (like mutual funds and equities)
By allowing LTCG up to ₹1.25 lakh under simpler forms, the government is recognizing the growing role of capital markets in individual income profiles.
🔍 Conclusion
The revamped income tax ITR forms bring welcome relief for many taxpayers, especially those with limited capital gains from mutual funds or equity investments. With these changes, filing your ITR just got a little easier — provided you meet the eligibility.
Always consult a tax expert or use a trusted e-filing platform to ensure you're choosing the correct form based on your specific income profile.