Use Code: ITR40
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The Central Board of Direct Taxes (CBDT) has notified the revised Income Tax Return forms ITR-1 and ITR-4 for FY 2024-25 (AY 2025-26). These forms have been notified with several key changes in the ITR forms. These revised ITR forms aim to increase transparency, compliance, and accuracy. In this guide, we list the major changes introduced in the revised ITR forms.The ITR filing deadline for FY 2024-25 has been extended to 15th September 2025. File now!
The Income Tax Department has released the Excel-based utilities of ITR-1 and ITR-4 for AY 2025-26. These utilities have undergone significant changes in reporting requirements and filing methods. Listed below are the key updates introduced in the revised ITR-1 and ITR-4 forms -
Taxpayer will now have to report their long-term capital gains under section 112A in ITR-1 & ITR-4. If the capital gains have resulted from the sale of listed shares or equity mutual funds, and the total gains are upto Rs. 1.25 lakhs.
Example: Rashi earns capital gains of Rs. 95000 during FY 24-25. Since this gain is less than Rs. 1,25,000, and there is no capital loss to be carried forward, Rashi can now report it in ITR-1
or ITR-4 (depending on the case).
The revised ITR-1 form is now simpler for salaried persons who invest small amounts in stock markets, making it easier for them to report their income. However, ITR-1 cannot be used for short-term capital gains or capital gains from the sale of land & property.
Taxpayers who are opting out of the new tax regime are now required to provide detailed information about their choice.
Taxpayers opting for the old regime for the first time in AY 25-26 are now mandatorily required to mention their Form 10-IEA acknowledgment number. If the form is submitted late, then the taxpayer will have to provide proper justification for the same.
In both ITR-1 and ITR-4, taxpayers are now required to select the deductions under sections 80C to 80U in more detail. For example, to claim HRA deduction, employees must provide detailed information and not just the rent receipts, unlike earlier. This change aims to increase transparency in deductions.
The new format of the ITR Form has made the process of claiming tax relief on foreign retirement income simpler under section 89A. This has also made it easy to track deferred tax relief.
Example: Rajesh worked in the UK for several years and contributed to a pension scheme there. After returning to India, he withdraws his pension. With the updated ITR form, he can now easily track and claim the applicable tax relief on his deferred UK pension income.
The turnover limit for the businesses opting for the presumptive income scheme under section 44AD has increased to ₹3 crore (from ₹2 crore). This applies if at least 95% of the total receipts are in digital form. The threshold for professionals under section 44ADA has also increased to ₹75 lakh (up from ₹50 lakh), applicable only if at least 95% of the receipts are in digital form.
Example: Neha, a chartered accountant earning ₹70 lakh with over 95% of her income received through bank transfers or UPI, can now use the presumptive taxation scheme under ITR-4. This helps her avoid maintaining detailed books and simplifies her tax filing process.
Taxpayers must report all the active bank accounts that were held in India during the financial year. However, the dormant accounts that have remained inactive for more than 2 years can be excluded.
Example: If you have four bank accounts and one has been dormant for more than two years, you must report the other three active accounts in your ITR, even if there were no transactions during the year.
The revisions have increased the scope of ITR-1 and ITR-4. This has allowed more taxpayers to file ITR-1 and thus simplified the tax filing process.
Example: A salaried individual earning from salary, interest, and small capital gains, who earlier didn’t qualify for ITR-1, can now use the form if their income fits within the updated limits.
Taxpayers claiming deductions like HRA, LTA, etc, under the old regime are now required to furnish detailed information while filing their ITR.
ITR filing for FY 2024-25 (AY 2025-26) has started. File at the earliest to get your tax refund faster! Start Now.
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ITR-1 now allows the taxpayers to report LTCG under section 112A from listed equity shares or equity mutual funds. However, this is only possible if there are no capital losses to be carried forward. In case of a capital loss, you need to file ITR-2.
ITR-4 is applicable for individuals, HUFs, and firms (except LLPs), under the presumptive taxation scheme (section 44AD, 44AE, 44ADA). You can now report LTCG upto Rs. 1.25 lakhs under section 112A, if 95% of the transactions are digital.
Form 10-IEA is required for taxpayers who are opting out of the new tax regime. For AY 25-26, those who are opting out for the first time, you need to mention the Form 10-IEA acknowledgment number in the return.
Yes, you must clearly indicate in your ITR whether you wish to continue with the old tax regime or switch to the new one.
For businesses under Section 44AD, the turnover limit has been increased to ₹3 crore if 95% or more of transactions are digital. For professionals under Section 44ADA, the limit is now ₹75 lakh, subject to the same digital payment condition.
Yes, you can file ITR-1 if your long-term capital gains (LTCG) are up to ₹1.25 lakh, you have no short-term capital gains (STCG) or capital losses, and you meet all other eligibility criteria.
Yes, deductions under Sections 80C to 80U must now be selected from a detailed drop-down menu in the ITR form. This change helps improve accuracy and ensures better clarity while filing.
You must report all active bank accounts held in India during the financial year. You can exclude dormant accounts that have been inactive for more than two years.
