The Central Board of Direct Taxes (CBDT) has announced new ITR-1 and ITR-4 forms for the Financial Year 2024–25 (Assessment Year 2025–26). These updated forms come with important changes that will directly benefit small taxpayers, salaried individuals, and digital businesses.
If you earn up to ₹50 lakh annually and fall under specific income categories, this update is for you. Let’s break down what’s new in simpler terms.
Long-Term Capital Gains Can Now Be Declared in ITR-1
One of the biggest updates is that ITR-1 can now be used to declare Long-Term Capital Gains (LTCG) under Section 112A, but only if LTCG is up to ₹1.25 lakh and there is no capital loss carried forward or set-off.
Earlier, taxpayers had to file ITR-2 even for small capital gains, which was more complex. Now, this simplifies the process for small investors who earn minor profits from selling equity shares or mutual funds.
However, if you have short-term capital gains or LTCG exceeding ₹1.25 lakh, you still have to use ITR-2.
Digital Businesses Get Higher Turnover Limits
For taxpayers using ITR-4 under presumptive taxation schemes (Sections 44AD and 44ADA), there is great news.
- If 95% or more of your business transactions are digital, your turnover limit under Section 44AD is now ₹3 crore.
- For professionals under Section 44ADA, the limit is now ₹75 lakh if the same digital condition is met.
This step encourages more cashless business practices and rewards those who already operate digitally.
Mandatory Details and New Declaration Rules
Taxpayers who had opted out of the new tax regime in AY 2024–25 must now declare whether they want to continue or withdraw from the same regime in AY 2025–26.
Also, if you are withdrawing for the first time, you must submit Form 10-EEA, and if delayed, provide a reason for the delay.
New Format for Deductions and Bank Details
Deductions under Section 80C to 80U now come with a drop-down menu format on the e-filing portal. Taxpayers must select the correct clause and mention related details.
In both ITR-1 and ITR-4, taxpayers will now have to report all bank accounts held during the year (excluding dormant ones).
Better Support for NRI and Foreign Retirement Income
For those receiving income from retirement accounts held abroad under Section 89A, the forms now provide better tracking and relief claim options.
These changes are mainly focused on making tax filing easier for individuals, small businesses, and professionals, especially those who invest or operate digitally.
Sources: TV9 Hindi, AKM Global
