The Income Tax Department has rolled out significant updates to ITR forms for the Financial Year 2024-25 (Assessment Year 2025-26), aiming to simplify tax filing for many.1 These changes, particularly to ITR-1, ITR-2, and ITR-4, broaden eligibility for some and streamline reporting for others.2
ITR-1 (Sahaj) Gets a Simpler Path for Capital Gains
Previously, any taxpayer with capital gains couldn’t use the ITR-1. Now, it’s more accessible! If you’re an ordinarily resident individual with a total taxable income up to ₹50 lakh, you can now use ITR-1 even if you have long-term capital gains (LTCG) up to ₹1.25 lakh from listed equity shares or equity mutual funds (taxable under Section 112A).
This is a big relief! To be eligible for ITR-1, your income should primarily come from salary, one house property, other sources (like interest or pension), and agricultural income not exceeding ₹5,000.
ITR-2 Sees Updates for High Earners and Complex Capital Gains
For those who don’t qualify for ITR-1, ITR-2 has been updated to better handle capital gains.
- Capital Gains Reporting: The form now has dedicated sections to report capital gains both before and after July 23, 2024, aligning with recent changes in capital gains calculations.3
- Claiming Capital Losses: You can now claim capital losses on share buybacks if they occurred on or after October 1, 2024.4
- Higher Threshold for Asset Reporting: The mandatory reporting of assets and liabilities (Schedule AL) has been doubled! You only need to report if your total income exceeds ₹1 crore, a significant increase from the previous ₹50 lakh limit, offering more convenience for high-income taxpayers.5
ITR-4 (Sugam) Expands for Professionals and Businesses
ITR-4, designed for those opting for the presumptive taxation scheme, also sees beneficial changes:6
- Professionals: Doctors, lawyers, and other professionals can now use ITR-4 if their income is up to ₹75 lakh, provided most of their payments are received through banking channels. This is an increase from the previous ₹50 lakh limit.
- Businesses: For businesses under presumptive taxation (Section 44AD), the income limit remains ₹2 crore but extends to ₹3 crore if most payments are digital or bank-based.7
These updates aim to streamline the filing process and reflect recent legislative changes, making tax compliance more efficient and user-friendly for a wider range of taxpayers.8 Remember to carefully assess these changes to ensure you select the correct ITR form for your FY 2024-25 return.