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Every time tax season approaches, individual taxpayers and small business owners have to stay informed of the latest updates in Income Tax Return (ITR) Forms. For AY 2025-26, working with income earned in FY 2024-25, the Income Tax Department has made some big changes to ITR 1 (Sahaj) and ITR 4 (Sugam).
These changes aim to make compliance easier, enhance transparency, and provide a better experience for digital filing from the individual's perspective through any reliable ITR filing software for filing the return.
Since the deadline for filing the ITR has been extended to 15th September 2025, taxpayers will have an additional window of time to get comfortable with the changes in validation rules and disclosures in Excel utilities.
Here is a quick yet comprehensive coverage of what is new and what needs to be kept in mind.
ITR-1 (Sahaj) vs ITR-4 (Sugam): Eligibility Criteria for AY 2025–26
| Criteria | ITR-1 (Sahaj) | ITR-4 (Sugam) |
|---|---|---|
| Who Can File | Resident individuals (excluding Not Ordinarily Resident) | Resident Individuals, HUFs, and Firms (excluding LLPs) |
| Total Income Limit | Up to ₹50 lakh (excluding 112A) | Up to ₹50 lakh (excluding 112A) |
| Sources of Income Allowed | Salary/pension, one house property, other sources (like interest, Dividend) | Presumptive income u/s 44AD, 44ADA, 44AE and all Income allowed in ITR 1 |
| Capital Gains | LTCG under Section 112A up to ₹1.25 lakh (i.e. Exemption Limit) | LTCG under Section 112A up to ₹1.25 lakh (i.e. Exemption Limit) |
| Agricultural Income | Up to ₹5,000 | Up to ₹5,000 |
| Not Allowed If |
|
|
| Additional Disclosure Requirements |
|
Same as ITR-1; applicable deductions and disclosures must follow a similar detailed format |
The Income Tax Department has rolled out multiple changes in ITR-1 (Sahaj) and ITR-4 (Sugam) forms for Assessment Year 2025–26, aiming to simplify compliance, reduce errors, and improve digital filing experiences, especially for those using ITR filing software for returns. Below are the most significant updates taxpayers should know before filing.
1. Mandatory Detailed Disclosures for Deductions (Old Tax Regime)
If you're opting for the old tax regime, you now need to provide detailed disclosures for deductions under sections like:
2. LTCG Disclosure Now Permitted in ITR-1 and ITR-4
Individuals with Long-Term Capital Gains (LTCG) up to ₹1.25 lakh u/s 112A - earned from listed equity shares or equity mutual funds - can now declare such gains directly in ITR-1 or ITR-4. Previously, they were required to file ITR-2 or ITR-3 for such reporting. Salaried individuals and small investors with limited stock market gains makes the filing process simpler and more accessible.
3. Mention of TDS Sections
Mentioning the TDS section improves TDS credit matching with Form 26AS and reduces processing delays. Taxpayers must now specify the exact TDS section under which tax has been deducted, such as:
4. Improved Reporting of House Property – Interest on Borrowed Capital
The updated forms allow clearer reporting of home loan interest for all property. Required details now include:
Benefit: Easier and more accurate claiming of interest deduction.
5. Mandatory Submission of Form 10BA for Section 80GG Deduction
Taxpayers who pay rent but do not receive House Rent Allowance (HRA) and intend to claim a deduction under Section 80GG must now mandatorily file Form 10BA before submitting their Income Tax Return (ITR).
Form 10BA is a declaration confirming that:
Additionally, the Acknowledgment Number of Form 10BA must be quoted in the ITR. Failing to comply with this requirement can result in rejection of the 80GG claim or delay in return processing.
6. Smarter Excel Utility with Real-Time Error Detection
The upgraded ITR Excel utility offers:
It suggests less room for human error, making it ideal for first-time filers or those using taxation software for a smart process.
Read this Article to Know Which ITR is applicable to you!
Some of these critical changes in ITR-1 and ITR-4 for AY 2024–25 enforce greater transparency and ensure data accuracy. Whether you’re a salaried individual claiming deductions or a freelancer under presumptive taxation, careful preparation and timely compliance are more important than ever.
To make things easier, consider EasyTax by EasyOffice Software – the best ITR filing software package that is designed to render your return-filing experience easy. From inbuilt validation and deduction checks to smart guidance, EasyOFFICE ensures your compliance and maximizes the advantage from your tax returns, all stress-free.
