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Stay informed about major changes in ITR-1 and ITR-4 forms for AY 2025-26. Discover why professional tax filing assistance is essential to avoid costly mistakes.
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Introduction Over the years, taxation in India has undergone significant transformations. A notable shift occurred with the 2020 budget when the Government …
Understanding ITR-1 (Sahaj): Simplified Filing for Individuals
ITR-1 (Sahaj) is a user-friendly income tax return form for resident individuals (Ordinary Residents) with uncomplicated income sources. This form cannot be used by HUFs or non-residents. It caters to taxpayers earning from:
Salary or Family Pension
One House Property (no carried forward or brought forward loss)
Other Sources (excluding winnings from lottery and racehorses)
NEW: Limited Long-Term Capital Gains (LTCG) under specific conditions
Eligibility Criteria for AY 2024-25 vs. AY 2025-26
What Stayed the Same?
The disqualifying conditions for filing ITR-1 remain unchanged. You’re not eligible if you:
Own foreign assets or have a signing authority in foreign accounts
Earn foreign income
Are governed by Portuguese Civil Code (Section 5A)
Claim deductions under Section 57 (except family pension)
Are a director in any company
Hold unlisted equity shares
Claim foreign tax relief under Sections 90/90A or deductions under Section 91
Earn agricultural income > ₹5,000
Have total income > ₹50 lakh
Receive income under Section 115BBDA or 115BBE
Have tax deducted under Section 194N
Have deferred tax under Sections 191(2) or 192(1C)
What Changed in AY 2025-26?
The biggest update is the inclusion of long-term capital gains (LTCG) under certain limits.
New Eligibility Clause:
You can now use ITR-1 if all of the following conditions are met:
LTCG is only under Section 112A (sale of listed equity shares/mutual fund units with STT paid)
Total LTCG ≤ ₹1.25 lakh
No capital gains losses to be carried forward or brought forward
This makes ITR-1 more accessible to small retail investors.
Why This Matters for Small Investors
Previously, even a modest capital gain would force taxpayers to file ITR-2, a more complex form. With this relaxation, individuals with limited LTCG can continue using ITR-1, simplifying their tax filing process.
Benefits:
Saves time and effort
Avoids unnecessary complexity
Reduces chances of filing errors
At-a-Glance Comparison Table
| Aspect | AY 2024-25 | AY 2025-26 |
|---|---|---|
|
Capital Gains |
Not allowed |
Allowed under Section 112A ≤ ₹1.25 lakh |
|
Capital Losses |
Not applicable |
Still not allowed |
|
Disqualifying Conditions |
13 Conditions |
Same as before |
