After a long wait, the Central Board of Direct Taxes (CBDT) has finally released Form 1 and Form 4 of ITR. These notified ITRs are for the financial year 2024-25 i.e. assessment year 2025-26.
After the notification of ITR-1 and ITR-4, it is now expected that the rest of the forms will also be notified soon. There have been major changes in the new ITR form. Earlier there was no provision to show capital gains tax in ITR-1. Now after the new change, if there is long term capital gains from the sale of listed equity shares and equity mutual funds, then ITR-1 can be used to file tax returns.
Earlier, in case of capital gain, taxpayers had to file ITR-2 form. Apart from the inclusion of long-term capital gains from equity in the ITR-1 form, there has been no significant change.
Who can use ITR-1 for FY25 (AY26)?
According to the notification, ITR-1 form can be used in these situations-
a) Resident individuals with income up to Rs 50 lakh
b) Income from other sources like salary, one house property, interest
c) Long term capital gains up to Rs 1.25 lakh arising from sale of listed equities and mutual funds
d) Agricultural income up to Rs 5 thousand
You will not be able to use ITR-1 in these situations
Despite the provision to show long term capital gains in case of short term capital gains from sale of house property or sale of listed equity and equity mutual funds, in some cases one will not be able to use ITR-1 form for returns. Apart from this, if one is a director in a company or has invested in equity shares of an unlisted company or TDS has been deducted under section 194N or tax on ESOP is deferred or one has any property outside the country, then one will not be able to use ITR-1 form.
Who can use ITR-4 for FY25 (AY26)?
ITR-4 can be used by individuals having income from business and profession computed under sections 44AD, 44ADA or 44AE, resident individuals, HUFs and firms (other than LLPs) having income up to Rs 50 lakh and long term capital gains up to Rs 1.25 lakh under section 112A.
Who will not be able to use ITR-4 form
If you are a director in a company or have invested in equity shares of an unlisted company or have deferred tax on ESOP or have agricultural income of more than Rs 5,000 or have any property outside the country, then you will not be able to use ITR-4 form.
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