New ITR Forms for 2025: What You Need to Know

ITR-1 and ITR-4 Forms Released for Assessment Year 2025-26

The Income Tax Department (ITD) has made a few updates to the ITR-1 and ITR-4 forms for the financial year 2024-25 and the assessment year 2025-26. These forms are used to declare your income and pay taxes for the period from April 1, 2024, to March 31, 2025.

Big Change: Reporting Capital Gains

One of the biggest changes this year is that you can now report long-term capital gains (LTCG) on your ITR-1 form (SAHAJ). This applies only if your LTCG is less than Rs 1.25 lakh and you don’t have any capital loss to carry forward or set off. Previously, ITR-1 didn’t allow you to report capital gains. So, if you sold listed equity shares or equity-oriented mutual funds and made a profit, you can now use ITR-1 to file your taxes.

However, remember that ITR-1 is not for reporting capital gains from the sale of house property or short-term capital gains from listed equity and equity mutual funds.

New Tax Regime Options

If you opted out of the new income tax regime for the assessment year 2024-25, you need to declare your choice again for the 2025-26 assessment year. You can either continue with the old regime or switch back to the new one.

For those opting out for the first time in 2025-26, you’ll need to provide details of your Form 10-IEA acknowledgment and explain any late filing.

Other Important Changes

Here are a few other changes you should be aware of:

• You’ll need to select deductions from 80C to 80U from a drop-down menu in the e-filing facility, and specify the exact clauses and sub-sections.
• The fields for reporting income from foreign retirement accounts (under section 89A) have been improved, and there’s now a relief tracking feature.
• The turnover threshold for businesses under Section 44AD (business) has been increased to Rs 3 crore if 95% or more of their transactions are digital.
• For professionals under Section 44ADA (professionals), the turnover limit has been increased to Rs 75 lakh under the same digital transaction condition.
• All bank accounts held in India during the previous year (except dormant accounts) must be reported in ITR 1 and ITR 4.

Keep Checking for Updates

Remember to keep an eye out for any further updates or clarifications from the IT Department. They might release more information as the filing deadline approaches.