The Central Board of Direct Taxes (CBDT) has officially notified the Income Tax Return (ITR) Forms 1 and 4 for the assessment year 2025–26. These forms are to be used for reporting incomes earned between 1 April 2024 and 31 March 2025, i.e. for the financial year 2024–25.
There are a few major updates that affect us as taxpayers and, at the same time, quietly hint at the direction the Income Tax Department is heading.
Let’s break down what’s new, who it affects, and when you’ll actually be able to file.
The CBDT has also notified ITR-2 and ITR-3 forms for AY 2025-26, and we’ve covered the key changes for those forms here.
What’s new in ITR-1 and ITR-4?
1. Long-term capital gains now allowed
Earlier, ITR-1 and ITR-4 did not allow for the reporting of capital gains. That’s changed this year. If you have long-term capital gains of up to ₹1.25 lakh from the sale of listed equity shares (on which you have paid STT) or equity-oriented mutual funds, you can now report them directly in ITR-1 or ITR-4.
This is a welcome move for small investors who can now continue using the simpler ITR-1 (Sahaj) or ITR-4 (Sugam) forms without needing to shift to the more complex ITR-2.
2. Filing Form 10-IEA for switching regimes
The new tax regime has been the default since last year. And if you want to opt for the old regime, you need to file Form 10-IEA.
Now, the income tax form clearly asks if you’ve opted out of the new regime in previous years (via Form 10-IEA), and what you plan to do this year. Depending on your choices, you might or might not have to file Form 10-IEA, or simply mention the details of the Form 10-IEA filed in the previous assessment year.
Here’s a table to help you understand better.
Note: This is applicable only if you’re filing ITR-3 or ITR-4. Taxpayers using ITR-1 or ITR-2 can switch regimes without needing to file any separate form.
3. Reporting of Chapter VI-A deductions
Details of deductions, including those under Section 80C, 80D, 80G, etc., now have to be reported using dropdown fields. It is expected that the government may ask for more granularity (like a bifurcation of your 80C investments) going forward.
4. Reporting of TDS details
In the Schedule TDS, you’ll now be required to mention the specific section under which TDS was deducted, like 194A for interest, 194H for commission, and so on. You can refer to these details from Form 26AS, AIS & TIS.
5. Bank account reporting
You need to mandatorily report all Indian bank accounts held at any point during the financial year, except dormant accounts. This was already required, but now it has been specified by adding a note for better clarification.
6. Aadhaar enrolment ID removed
The option to enter your Aadhaar Enrolment ID has been removed. Only the 12-digit Aadhaar number is now accepted.
How these changes affect you?
With the latest changes, more taxpayers, especially salaried individuals and small businesses, can now continue using the simpler ITR-1/4 forms.
You can file ITR-1 if you:
- are a resident individual
- have income up to ₹50 lakh from salary, one house property, and other sources (like interest)
- have LTCG taxable under Section 112A up to ₹1.25 lakh
You can file ITR-4 if you:
- are a resident individual, HUF, or firm (other than LLP)
- have total income up to ₹50 lakh
- have business or professional income under presumptive taxation
- have LTCG taxable under Section 112A up to ₹1.25 lakh
However, remember that you still can’t file ITR-1/4 if:
- your LTCG under Section 112A exceeds ₹1.25 lakh
- you have capital losses to set-off or carry forward
- you have gains from sale of house property, or short term capital gains from listed stocks & equity mutual funds
- you’re a company director, hold unlisted shares, have foreign assets, or have deferred tax on ESOPs
Why these changes?
These changes are not just about tweaking form fields, they reflect two key areas of focus for the government:
1. Simplify ITR filing to boost tax compliance
Allowing LTCG in ITR-1/4 makes the filing process smoother for salaried individuals and small businesses with small equity investments.
2. Seeking more structured and comprehensive data from taxpayers
Dropdowns ensure cleaner inputs that are easier to validate. Further, additional disclosures like bifurcation of deductions, specifying TDS sections, and listing all bank accounts will help the Income Tax Department cross-check data more effectively.
When will tax filing for AY 2025–26 start?
We’ve already started getting this question a lot: “Can I file my ITR for AY 2025–26 now?”
Here’s a little context for you. Every year, the CBDT first notifies the return forms, and then the Income Tax Department rolls out the e-filing utilities — these are the tools you actually use to file your return online. While ITR-1 and ITR-4 have now been notified, the utilities aren’t live yet, which means you can’t start filing just yet.
There’s also been a slight delay this year compared to last, so it might be another couple of weeks before the utilities go live.
But even once they’re available, most salaried taxpayers will still need to wait for two key things:
- Form 16 from your employer — usually issued by 15th June
- TDS data in Form 26AS and AIS — generally updated by early June, after companies file their TDS returns for the Jan–Mar quarter (due by 31st May)
So realistically, mid-June is when everything falls into place — your Form 16, your TDS data, and the e-filing utility, and that’s when you’ll likely be ready to file your return.
Closing
We’ll be able to share more details about these changes once the utilities go live. We’ll also keep sharing updates as the government notifies ITR-2 & ITR-3, followed by releasing the utilities for all forms.
If you have any questions or doubts around filing for AY 2025–26, feel free to drop them below.