Income tax department notifies ITR forms 1, 4 for AY 2025-26

ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) are simpler forms that cater to a large number of small and medium taxpayers

New Delhi: The income tax department has notified ITR forms 1 and 4 for assessment year (AY) 2025-26 that are to be filed by individuals and entities with total income of up to Rs 50 lakh a year.

Now, individuals having long-term capital gains of up to Rs 1.25 lakh in a fiscal year can also file ITR-1. Earlier, such persons were required to file ITR-2. With the notification, individuals, HUFs, and firms having income up to Rs 50 lakh and those having earnings from business and profession in the 2024-25 fiscal (April-March) can start filing I-T returns for the income earned in the financial year.

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ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) are simpler forms that cater to a large number of small and medium taxpayers. Sahaj can be filed by a resident individual having annual income up to Rs 50 lakh and who receives income from salary, one house property, other sources (interest) and agricultural income up to Rs 5,000 a year.

Sugam can be filed by individuals, Hindu Undivided Families (HUFs) and firms (other than Limited Liability Partnerships (LLPs) having total annual income up to Rs 50 lakh and income from business and profession.

ITR-2 is filed by individuals and HUFs not having income from profits and gains in business or profession. “The Central Board of Direct Taxes (CBDT) has introduced significant changes to the Income Tax Return (ITR) forms for Assessment Year (AY) 2025-26, particularly benefiting salaried taxpayers with long-term capital gains (LTCG) from equity shares and mutual funds.

“With the latest amendments, individuals can now utilise the simpler ITR-1 (Sahaj) or ITR-4 (Sugam) forms if their LTCG under Section 112A does not exceed Rs 1.25 lakh and they have no capital losses to carry forward or set off,” said Sandeep Sehgal, Partner-Tax, AKM Global, a tax and consulting firm.

Sehgal further noted that “this change streamlines the tax filing process, making it more accessible and less burdensome for small investors and salaried individuals, thereby encouraging timely and accurate compliance”.