Government Releases ITR Form 1 and 4 for FY 2024-25: Top Highlights and Changes

Introduction

India’s Central Board of Direct Taxes (CBDT) released the much-awaited Income Tax Return (ITR) Form 1 and 4 under the Income Tax Rules, 1962, with Amendments in Income Tax Rules done in 2025. The ITR Forms 1 and 4 are for 2024-25 (and the Assignment year of 2025-26) and came into force on 1 April 2025. This article gives a clear and detailed understanding of Forms 1 and 4 with major highlights.

Latest Update Highlights

Top Changes in Forms for AY – 2025-26

There are notable changes made in the recently declared ITR Form 1 and Form 4. These highlights are as follows

1. Long-Term Capital Gain Inclusion

• Individuals can file under ITR Form 1 or ITR Form 4 if their earnings through Long-term 3
• You must declare information related to acquisition cost, the full value of consideration and related things.
• No existence of carry-forward loss.

2. New Tax Regime Opt-out

ü  Any taxpayer willing to opt out of the New Tax Regime must fill and submit Form 10 –IEA  under Section 115BAC(6). It should be submitted before the due date.

3. Long-Term Capital Gain Inclusion

• Individuals can file under ITR Form 1 or ITR Form 4 if their earnings through Long-term 3
• You must declare information related to acquisition cost, the full value of consideration and related things.
• No existence of carry-forward loss.

4. New Tax Regime Opt-out

• Any taxpayer willing to opt out of the New Tax Regime must fill and submit Form 10 –IEA under Section 115BAC(6). It should be submitted before the due date.

5. Long-Term Capital Gain Inclusion

• Individuals can file under ITR Form 1 or ITR Form 4 if their earnings through Long-term 3
• You must declare information related to acquisition cost, the full value of consideration and related things.
• No existence of carry-forward loss.

6. New Tax Regime Opt-out

• Any taxpayer willing to opt out of the New Tax Regime must fill and submit Form 10 –IEA under Section 115BAC(6). It should be submitted before the due date.

7. Filing Under Clause (vii) of Section 139 (i)

Even if the Taxpayer doesn’t come under the tax bracket has to file an ITR under the following situations –

• Foreign Travel expenses exceed more than 2 Lakhs.
• Electricity Bill paid is more than 1 Lakh.
• Have deposited 1 Crore or more in ‘Current Account’ in the bank.

8. Income Breakup in Detail

ITR-1 AND ITR-4 both require the following in the New Tax Regime.

• Details of Home Loan taken.
• The Salary Component should be mentioned in Segregated form.
• Declare Interest Income with its source.
• You must clearly mention all deductions under Chapter 4(A). (For Eg – 80C, 80D, 80G)

What is Income Tax Return (ITR)

In clear words, an Income Tax Return is an official statement of your income and tax liability payable to the Income Tax Department for a particular Financial Year. It should be filed before the officially specified due date. The Income Tax Department has specified Form Types from 1 to 7 to be applicable based on the amount of income earned by the Taxpayer, the type of source of income, and the category of the Taxpayer. The taxpayer can be a company, HUF, or an individual.  Income sources can be from salary, business, and capital gains.

A Taxpayer has to calculate the tax payable on his income and should make the due payment. After this process, he can do the ITR filing for a financial year. In case of carry forward of losses and set-off of brought forward losses, you can file for an Income Tax Return.

Documents Required for ITR Filing

• Salary Pay Slips
• Bank Statements
• PAN Card
• Form 26AS
• Forms 16A, 16B, 16C
• TDS Certificate
• Proof of Tax Saving Investments
• Interest Certificates

Which ITR Form to Choose

Here, we talk in detail about ITR Forms 1 and 4

ITR (Income Tax Return) Form 1 (SAHAJ) – The main key features are

• It is for Individual Resident Individual of India
• Taxpayer’s total income is not more than 50 Lakhs in a Financial Year.
• Income is from Salary or Pension.
• Taxpayer has income from One House Property.
• The Agricultural Income is more than 5000 Rupees.
• Long Term Capital Gains up to 1.25 Lakhs in the Financial Year (Not having any Brought-forward or carry-forward losses).
• Income from other sources (not including lottery wins and horse race wins).

Who can not file under Form 1?

• If you have income from foreign sources.
• If you hold the post of a director in a company.
• Your total income is more than 50 Lakhs.
• Your Agriculture income is more than 5000.
• If you have an investment in unlisted equity shares.
• Your Capital Gains are taxable.
• If your tax deduction is made under 194N.
• Payment/Deduction deferrals on ESOP.
• Assets in Foreign lands.
• If you are a Non-Resident or Resident not Ordinary Resident (RNOR).

ITR (Income Tax Return) Form 4 (SUGAM)

ITR-4 applies to Individuals, Hindu Undivided Family, and Partnership Firms (not including LLP).

• Total income of Taxpayer up to 50 Lakhs.
• Business Income according to presumptive income scheme under sections 44AD and 44AE.
• Business Income according to presumptive income scheme under section 44DA.
• Income from Salary or Pension.
• Income from One House Property.
• Income from other sources (excluding wins from horse races and lottery wins).
• Long-Term Capital Gains up to 1.25 Lakhs (Not having any Brought-forward or carry-forward losses).
• A freelancer can opt for a Presumptive Scheme if his gross income is not more than 50 Lakhs.

Who can not file under Form 4?

• Taxpayer’s total income exceeds 50 Lakhs.
• Own an asset in a foreign country.
• If you have income from more than one house.
• If you hold the post of a Director in a company.
• Taxpayer has a foreign source of income.
• You hold a signatory authority in an account located outside of India.
• You are a Non-Resident or Resident Not Ordinary Resident (RNOR).
• Your payment or tax deduction has been deferred on ESOP.
• If you have Brought-Forward Loss to be carried forward under any income lead.

When ITR Filing becomes Mandatory

1. The Taxpayer’s income exceeds the Basic Exempted Limit.

AGE Basic Exemption Limit (New Tax Regime)

2. Irrespective of your income being under the exempted limit, you still have to file an ITR if the following situation occurs –

• When you have deposited more than 50 Lakhs in your ‘Saving Bank Account’
• When you have deposited more than 1 Crore in your Current Bank Account’
• Foreign Travel expenses are more than 2 Lakhs.
• Your electricity expenditure is more than 1 Lakhs.
• TDS is more than 25000 rupees.
• Gross Professional Income is more than 10 Lakhs yearly.
• Your business turnover for the previous year is more than 60 Lakhs.

Conclusion

The recent changes to ITR Form 1 and Form 4 are progressive in nature. The aim is to simplify ITR filing for salaried individuals and small-scale businesses. This development supports the government’s initiative of Ease of Doing Business.

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