After a long wait, the Central Board of Direct Taxes (CBDT) has finally notified the Income Tax Return Forms ITR-1 and ITR-4 for the Financial Year 2024-25 and Assessment Year 2025-26. ITR returns for income earned during the financial year 1 April 2024 to 31 March 2025 will have to be filed through these new forms. Major changes have also been made in the new forms.

This big change in ITR-1

A major change in ITR forms this year is that ITR-1 (Sahaj) can be filed to notify Long Term Capital Gains (LTCG) under section 112A. But there is a condition attached to it that the LTCG should not exceed Rs 1.25 lakh and the taxpayer should not have any capital loss to carry forward or 'set off'. Let us tell you that earlier there was no provision to show capital gains tax in ITR-1. Now taxpayers can use the ITR-1 form to show LTCG from the sale of listed equity shares and equity mutual funds. Earlier, taxpayers had to file Form ITR-2 for this. However, if a taxpayer has capital gains from the sale of house property or short-term capital gains (STCG) from listed equity and mutual funds, then they cannot use the ITR-1 form.

Those who do not choose the new tax regime will have to make this declaration.

The notification also states that taxpayers who had opted out of the new tax regime in AY 2024-25 will have to declare whether they will continue or withdraw the same option in AY 2025-26. Those who have decided to opt out of the new tax regime for the first time in AY 2025-26 will have to provide the acknowledgment details of Form 10-IEA. Apart from this, there should also be an explanation for the late filing of Form 10-IEA.

Know what else was said in the notification

All deductions from sections 80C to 80U in both ITR-1 and ITR-4 forms will have to be selected from the drop-down menu on the e-filing portal and the relevant clauses and sub-sections will have to be clarified. Better fields and relief tracking features will now be available for income received from retirement accounts held abroad (Section 89A).

Under ITR-4 Section 44AD (Business), if digital transactions are up to 95 per cent of business transactions, the turnover limit will now be Rs 3 crore. The limit has now been increased to Rs 75 lakh under the same digital receipt condition in section 44ADA (Professional). All bank accounts held in India during the financial year (except dormant accounts) are now mandatorily required to be reported in ITR-1 and ITR-4 forms.

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