Income Tax Return Forms AY 2025-26: What CBDT Changed
The CBDT has notified new ITR forms for AY 2025-26 via Notification No. 40/2025 dated 24 April 2025. These revised ITR-1 and ITR-4 forms apply from 1st April 2025 and will impact millions of taxpayers during the current return filing season.
✅ What’s New in ITR-1 (Sahaj)?
The updated ITR-1 (Sahaj) form brings a crucial relaxation for small retail investors with limited capital gains:
- Applicable for resident individuals (other than not ordinarily resident)
- Total income must be up to ₹50 lakh
- Sources of income must be limited to:
- Salary or pension
- One house property
- Income from other sources (excluding lottery, racehorse, etc.)
- NEW: LTCG under Section 112A up to ₹1 lakh allowed
- Not allowed if:
- There is any loss under the head of income being reported
- You want to carry forward or set off capital losses
- Legal Basis: Rule 12 of Income-tax Rules amended; clause (a)(iv) inserted
📌 This change benefits first-time or low-volume equity investors, making ITR-1 more accessible.
✅ What’s Confirmed in ITR-4 (SUGAM)?
ITR-4 remains mostly unchanged but CBDT has clarified its scope for presumptive taxpayers:
- Eligible for:
- Resident Individuals
- HUFs
- Resident firms (excluding LLPs)
- Income must be under:
- Section 44AD – Presumptive income for small businesses
- Section 44ADA – For specified professionals
- Section 44AE – For goods transport vehicle owners
- Must be resident in India and not an LLP
- Verification method unchanged
📌 Still the go-to return for small business owners under presumptive taxation.
🔍 Quick Comparison: ITR-1 vs ITR-4 (AY 2025–26)
| Criteria | ITR-1 (Sahaj) | ITR-4 (Sugam) |
|---|---|---|
| Resident Status | Resident (not NOR) | Resident (not LLP/NOR) |
| Total Income | Up to ₹50 lakh | Up to ₹50 lakh (presumptive) |
| Income Sources | Salary, one house, other sources, LTCG u/s 112A | Business/profession under 44AD/ADA/AE |
| LTCG Allowed | Only u/s 112A ≤ ₹1 lakh | Not applicable |
| Carried forward losses allowed? | ❌ Not allowed | ❌ Not allowed |
| For LLPs? | ❌ Not allowed | ❌ Not allowed |
🧠 Expert Tip:
Small investors earning under ₹1 lakh as capital gains from equity (u/s 112A) can now avoid ITR-2 headaches. ITR-1 makes life easier—just ensure no capital loss involved.
📜 Legal Reference & Source
- CBDT Notification No. 40/2025 dated 24 April 2025
- Income-tax Rules, 1962 – Rule 12 amended
- AY 2025–26 compliance starts from 1st April 2025
📌 FAQs
Q1. Can I file ITR-1 if I sold shares?
Only if your LTCG under Section 112A is ≤ ₹1 lakh and you have no loss under that head.
Q2. Is ITR-4 for freelancers or consultants?
Yes, if your income is declared under Section 44ADA (presumptive scheme).
Q3. I’m an LLP using presumptive income. Can I file ITR-4?
No. ITR-4 is not permitted for LLPs.
🔗 Related Read:
How to Choose the Right ITR Form in FY 2024–25
✅ Summary for Snippet:
CBDT has notified revised ITR-1 and ITR-4 forms for AY 2025-26. Key change: ITR-1 now allows capital gains under Section 112A up to ₹1 lakh with no losses. ITR-4 eligibility remains for residents using presumptive schemes under 44AD, 44ADA, or 44AE.
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