Income tax return filing for the Assessment Year 2025–26 is expected to commence next week, following the recent notification of ITR-1 and ITR-4 forms. With the July 31 deadline fast approaching, early filing is encouraged to avoid last-minute delays.
Key Updates to ITR Forms for AY 2025–26
On April 29, the Income Tax Department officially released the updated ITR-1 and ITR-4 forms for the financial year 2024–25. A significant update allows individuals with long-term capital gains (LTCG) of up to ₹1.25 lakh from listed equities to file using ITR-1. This exemption under Section 112A makes filing simpler for retail investors and salaried individuals with modest equity gains.
Notably, this change does not apply to:
- Short-term capital gains
- LTCG from immovable property
- LTCG exceeding ₹1.25 lakh under Section 112A
- Taxpayers carrying forward or bringing forward losses
The ITR-4 form, primarily used by small businesses and professionals under the presumptive taxation scheme, also incorporates provisions for reporting LTCG under Section 112A, provided the gains remain within the ₹1.25 lakh exemption limit.
Timeline and Expected Filing Start Date
Although the forms are out, the actual ITR filing portal is expected to go live within the next few days. Traditionally, the process begins in April, but this year’s delay was due to backend changes in the forms and portal. According to tax professionals, this brief delay should not affect the standard July 31 deadline for non-audit cases.
That said, most salaried employees typically wait until mid-June to file, as Form 16—a summary of income and taxes deducted—is issued by employers by June 15, 2025, as mandated by the tax department.
Here’s a quick comparison of ITR-1 and ITR-4 eligibility:
| ITR-1 (Sahaj) | ITR-4 (Sugam) |
|---|---|
| Resident individuals with income up to ₹50 lakh from salary, one house property, and other sources. | Resident individuals, HUFs, and firms (excluding LLPs) with presumptive income from business or profession. |
| LTCG up to ₹1.25 lakh under Section 112A from listed securities allowed. | Includes reporting of LTCG under Section 112A within ₹1.25 lakh cap. |
| Cannot be used if losses are carried forward. | Same restriction applies regarding carry-forward losses. |
What It Means for Taxpayers
This early notification and simplification, especially regarding LTCG reporting, reflect the government’s intent to streamline compliance. Taxpayers are advised to collect relevant documents—such as Form 16, investment proofs, and capital gains statements—well ahead of time.
For official updates and form downloads, visit the Income Tax India portal.
Meanwhile, stay tuned for the portal’s filing activation. With market trends and equity participation growing, especially among retail investors, these changes could ease compliance for millions this year.