It’s good news for taxpayers who are filing their income tax returns (ITR) for FY 2024-25 on or before July 31, 2025. This year the ITR filing forms 1, 3 and 4 have been notified and soon the ITR filing utilities will be released too. A noteworthy fact for this year is ITR-1 (Sahaj), which has been updated to now include reporting of long term capital gains (LTCG) from equities income if it is up to Rs 1.25 lakh. ITR-1 is also known to be one of the most simple ITR form to be filed by taxpayers. Earlier if you had LTCG income, you needed to file the complex ITR-2 form or the even more complicated ITR-3, but now you can do the task with the simpler ITR-1 form. It’s like you have got a shortcut to reach your destination and thus save time and resources.
Read below to know more about how the updated ITR-1 can help taxpayers in the new tax regime save their time and resources.
What’s new with ITR-1 for FY 2024-25 (AY 2025-26)?
According to the Income Tax Department, ITR-1 for FY 2024-25 (AY 2025-26) has two notable changes:
- File ITR-1 even with Long term capital gains under Section 112A (up to Rs 1.25 lakh with no brought forward/ carry forward loss).
- Changes made to capture details of deductions claimed under various sections.
Apart from these changes, all other details remain unchanged. This means you can still file ITR-1 to report one house property (let-out or self-occupied) and salary income. Apart from these incomes you can’t report any other income.
If there is an LTCG income above Rs 1.25 lakh or STCG income, then you need to file ITR-2 or ITR-3 (in specified cases). Also if you want to claim Section 54 capital gains tax exemption for sale of house then you need to use ITR-2 or ITR-3 and not ITR-1.
How do these changes make filing ITR-1 simpler for taxpayers?
Usually taxpayers with a new tax regime don’t have many tax deductions to claim and neither do they have many declarations to file except LTCG, foreign income, crypto, etc. Hence in this context if a tax payer under the new tax regime has only LTCG income up to Rs 1.25 lakh, filing ITR-1 saves his time and resources.“This year, taxpayers with long-term capital gains (LTCG) from equity shares, equity-oriented funds or business trust units up to 1.25 lakhs who opt for the new tax regime can file using ITR-1. Previously, they were required to use ITR-2 or ITR-3 for such income. As a result, filing returns has become simpler for taxpayers under both the new and old tax regimes, since ITR-1 is the easiest tax filing form among others,” says Chartered Accountant Ashish Karundia.
The other noteworthy feature introduced in ITR-1 for FY 2024-25 (AY 2025-26) is change in mode of capturing details of deductions claimed under various sections.
Karundia explains: “One more positive change in ITR-1 is the inclusion of a drop-down menu that allows filers to specify the exact clause of a section under which deductions are claimed. It casts a responsibility on the taxpayers to make accurate disclosure. For instance, Section 80D for medical insurance premiums has several sub-clauses—previously, only general section-wise reporting was required. This new level of detail improves accuracy and can help resolve future disputes.”
Chartered Accountant Gopal Bohra, Partner, Direct Tax, N. A. Shah Associates LLP, says: “Until last year, resident individual having income from salary, income from house property (not own more than one house) and income from other sources were allowed to use ITR-1 (Sahaj). In order to make this simple Form accessible to many more, now from AY 2025-26 newly notified ITR-1 (Sahaj) can also be used by resident individual who in addition to income from salary, one house property and other sources, also have income from long term capital gain chargeable to tax under section 112A (i.e. gain from listed equity shares and equity oriented mutual fund) not exceeding Rs 1.25 lakh and does not have any brought forward loss or loss to be carried forward under the head capital gain. The new ITR-1 will definitely make the compliances easy for resident individual who participate in equity market and their gains from such transactions does not exceeds Rs 1.25 lakh.”
Should you include self-occupied house details if filing ITR-1 for the new tax regime?
While ITR-1 still includes fields for income from house property, under the new tax regime, tax deductions are limited to home loan interest on let-out properties.
“Taxpayers can choose to report self-occupied property details, but in my experience, it’s safer to disclose such information rather than leave it out, as the tax department has issued reassessment notices in the past due to non-disclosure of transactions undertaken, even though such transactions do not affect the taxability,” says Karundia.
As Per CA Ashish Niraj , Partner, A S N & Company, “ ITR 1 can be filed only if you have one house Property. That one house may be let out, deemed let out or self occupied. However if you have more that one house then you should file ITR 2, ITR 3 aş applicable.”
