New Delhi, May 12 – The Income Tax Department has officially notified all seven income tax return (ITR) forms for the assessment year 2025-26, introducing key changes to simplify the filing process for small taxpayers and revise capital gains reporting.
ITR-1 and ITR-4: Simplified Filing for Capital Gains Up to Rs 1.25 Lakh
On April 29, ITR-1 (Sahaj) and ITR-4 (Sugam), primarily used by small and medium taxpayers, were notified. A significant change now allows salaried individuals and those under the presumptive taxation scheme with long-term capital gains (LTCG) from listed equities up to Rs 1.25 lakh to continue filing these simpler forms.Previously, such taxpayers were required to shift to the more complex ITR-2. This move eases compliance for a large section of the taxpaying population with limited capital gains exposure.
Under current tax law, LTCG of up to Rs 1.25 lakh annually from listed shares and mutual funds is tax-exempt, while gains exceeding this threshold are taxed at 12.5%.
New Capital Gains Reporting Format in ITR-2 to ITR-7
The department has also updated ITR forms 2, 3, 5, 6, and 7 to reflect the rationalisation of capital gains taxintroduced in the Union Budget on July 24, 2024. In these forms, taxpayers must now split capital gains based on whether they were realised before or after July 23, 2024.The budget revision reduced the LTCG tax on real estate from 20% with indexation to 12.5% without indexation. Taxpayers can now choose between:
- Paying 12.5% LTCG tax without indexation, or
- Availing indexation benefits and paying 20% tax
Higher Threshold for Asset Reporting in ITR-3
For ITR-3 filers — individuals and HUFs with income from business or profession — the threshold for reporting assets and liabilities under 'Schedule AL' has been doubled from Rs 50 lakh to Rs 1 crore, easing the reporting burden on middle-income professionals and entrepreneurs.Overview of ITR Forms and Eligibility
- ITR-1 (Sahaj):
For resident individuals with income up to Rs 50 lakh from salary, one house property, other sources (like interest), and agricultural income up to Rs 5,000. - ITR-4 (Sugam):
For resident individuals, HUFs, and firms (excluding LLPs) with income up to Rs 50 lakh from business or profession under the presumptive taxation scheme. - ITR-2:
For individuals and HUFs with capital gains but no income from business or profession. - ITR-3:
For individuals and HUFs with income from business or profession. - ITR-5:
For firms, LLPs, and cooperative societies. - ITR-6:
For companies registered under the Companies Act. - ITR-7:
For trusts and charitable institutions. This form was notified on May 11.
Filing Deadline
The last date for filing ITR for individuals and taxpayers not requiring an audit is July 31, 2025.Taxpayers are advised to carefully review the applicable form and changes before filing to ensure accurate and compliant returns.