Return of Income Changes in New ITR Forms for the Assessment Year 202526

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The Tax Publishers Income Tax--Return of Income Changes in New ITR Forms for the Assessment Year 2025-26 Ayush Rathi Every year, the Central Board of Direct Taxes (CBDT) notifies changes in the Income Tax Return (ITR) forms to reflect amendments made through the annual Finance Act and to improve compliance, transparency, and ease of filing. For the Assessment Year (AY) 2025-26 (corresponding to Financial Year 2024-25), the new ITR forms incorporate several significant changes aligned with the Income-tax Act, 1961 and the Finance (No. 2) Act, 2024. This article highlights the key changes introduced in the new ITR forms, their implications, and the rationale behind them. 1. Expanded eligibility for ITR-1 (Sahaj) & ITR-4 (Sugam) LTCG inclusion Taxpayers with long-term capital gains up to Rs.1.25 lakh (Section 112A) can now use ITR-1 or ITR-4, provided they have no carried forward/forward losses. Earlier, any LTCG made one ineligible for these simpler forms. Relaxed applicability rules Official form instructions reflect amended Rule 12, extending Sahaj/Sugam eligibility to taxpayers with such exempt capital gains. 2. Capital gains reporting updates across forms LTCG thresholds Enhanced exemption limit increased from Rs.1 lakh to Rs.1.25 lakh in section 112A (Budget 2024, effective from July 23, 2024). Segregated gains SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Return of Income

Changes in New ITR Forms for the Assessment Year 2025-26

Ayush Rathi

Every year, the Central Board of Direct Taxes (CBDT) notifies changes in the Income Tax Return (ITR) forms to reflect amendments made through the annual Finance Act and to improve compliance, transparency, and ease of filing. For the Assessment Year (AY) 2025-26 (corresponding to Financial Year 2024-25), the new ITR forms incorporate several significant changes aligned with the Income-tax Act, 1961 and the Finance (No. 2) Act, 2024. This article highlights the key changes introduced in the new ITR forms, their implications, and the rationale behind them.

1. Expanded eligibility for ITR-1 (Sahaj) & ITR-4 (Sugam)

LTCG inclusion

Taxpayers with long-term capital gains up to Rs.1.25 lakh (Section 112A) can now use ITR-1 or ITR-4, provided they have no carried forward/forward losses. Earlier, any LTCG made one ineligible for these simpler forms.

Relaxed applicability rules

Official form instructions reflect amended Rule 12, extending Sahaj/Sugam eligibility to taxpayers with such exempt capital gains.

2. Capital gains reporting updates across forms

LTCG thresholds

Enhanced exemption limit increased from Rs.1 lakh to Rs.1.25 lakh in section 112A (Budget 2024, effective from July 23, 2024).

Segregated gains