ITR-1 & ITR-4 Simplified: Key Changes for AY 2025-26 Taxpayers

The Income Tax Department has introduced updated ITR-1 (Sahaj) and ITR-4 (Sugam) forms for the Assessment Year 2025-26, streamlining tax filing for individuals with long-term capital gains (LTCG) up to ₹1.25 lakh. Previously, taxpayers with LTCG had to file ITR-2, but now they can opt for ITR-1 or ITR-4, provided their total annual income does not exceed ₹50 lakh. The revised forms include a dedicated section for exempt LTCG under Section 112A, allowing taxpayers to report gains from listed equity shares and mutual funds directly. Additionally, ITR-4 now accommodates presumptive taxation limits, increasing thresholds to ₹3 crore for businesses under Section 44AD and ₹75 lakh for professionals under Section 44ADA, provided cash transactions remain below 5%. The forms also introduce enhanced reporting for deductions under Sections 80C and 80GG, requiring taxpayers to furnish detailed disclosures. These updates aim to reduce compliance burdens and make tax filing more accessible for small taxpayers while ensuring transparency in financial reporting.