Income Tax Department has officially released the Excel utilities for ITR-1 and ITR-4 for Assessment Year (AY) 2025–26, covering income earned in Financial Year (FY) 2024–25. This year brings several critical changes aimed at increasing transparency, preventing errors, and enhancing taxpayer compliance, especially for salaried individuals and small business owners filing under the old tax regime.
With the filing deadline extended to September 15, 2025, from the usual July 31, taxpayers now have more time to adapt to the new validation rules and disclosures introduced in the ITR Excel utilities.
Quick Summary
ITR-1 and ITR-4 Excel Utilities Released
The Income Tax Department released the Excel utilities for ITR-1 and ITR-4 on May 30, 2025, enabling taxpayers to file their returns for the Assessment Year 2025–26 (Financial Year 2024–25). This is significant because these are among the most commonly used forms by:
Who Can File ITR-1 and ITR-4 for AY 2025–26?
ITR-1 (Sahaj)
Not eligible: Company directors, holders of unlisted equity shares, foreign asset holders, or those with TDS under Section 194N.
ITR-4 (Sugam)
7 Key Changes in the ITR 1 & ITR 4 Excel Utility for AY 2025–26
The enhanced Excel utilities bring in multiple validation checks, compliance improvements, and user-friendly features to simplify return filing and prevent false claims. Here are the 7 most prominent changes that taxpayers should be aware of before filing their ITR this year.
1. Mandatory Detailed Disclosures for Deductions
For taxpayers opting for the old tax regime, claiming deductions under Sections like 80C, 80D, 80E, and 80DDB now requires detailed reporting:
Why it matters: These validation checks reduce the chances of errors and false deduction claims, making ITRs more accurate and compliant.
2. Long-Term Capital Gains (LTCG) Reporting Allowed in ITR-1 and ITR-4
Previously, taxpayers with LTCG exceeding ₹1 lakh had to file ITR-2 or ITR-3. Now, LTCG up to ₹1.25 lakh under Section 112A (from listed equity shares or mutual funds) can be disclosed directly in ITR-1 and ITR-4.
Who benefits: Salaried individuals and small investors with modest equity gains can now use simpler forms.
3. Mandatory Mention of TDS Sections
Taxpayers now need to specify the exact section under which TDS was deducted for different income sources. For instance:
Section 192 for salary
Section 194A for interest income
Section 194H for commission, etc.
Why it’s important: Ensures accurate matching of TDS credits with Form 26AS and reduces chances of processing delays or tax credit mismatches.
4. Revised Asset Reporting Thresholds
In line with streamlining compliance for smaller taxpayers, the threshold for asset and liability reporting in ITR-3 and ITR-4 has been revised upward.
Who benefits: Small business owners and professionals with limited asset base may now be exem
5. Improved Reporting of Self-Occupied House Property
Taxpayers can now report interest on loans for self-occupied property more clearly under both regimes, including:
Why it matters: Helps claim home loan interest deduction (up to ₹2 lakh) under the old regime without ambiguity.
6. Integration of Updated Capital Gains Rules
The Excel utilities now reflect updated capital gains rules, including:
Taxpayer tip: Ensure proper documentation and acquisition dates are readily available when filling these sections.
7. Smarter Excel Utility with Error Detection
The revamped Excel utilities now come with real-time validation, smarter error detection, and section-wise instructions. This includes:
Advantage: Reduces manual errors and makes the filing experience smoother, especially for first-time filers.
Another Important Change: TDS Code Validation in ITR-1
One of the most impactful updates in the ITR-1 utility for AY 2025–26 is the automatic disqualification of returns based on certain TDS section codes. If your Form 26AS reflects TDS under the codes listed below, the utility will not allow filing through ITR-1 — helping prevent incorrect or defective filings.
Disqualifying TDS Sections Include:
ITR Excel Utility – Smart Features for 2025–26
This year’s Excel utility has added automation and intelligence:
Benefit: Prevents incorrect filings and speeds up the return processing by catching errors at the filing stage itself.
Whether you are a salaried employee claiming HRA or a freelancer under presumptive tax, these changes mean you’ll need to be more precise and accurate in your disclosures this year.
Key Takeaway for Taxpayers
For Assessment Year 2025–26, the Income Tax Department has introduced significant changes in ITR-1 and ITR-4 utilities, especially affecting salaried individuals and those claiming deductions under the old tax regime. With stricter validation rules, detailed disclosure requirements, and disqualification from ITR-1 in cases involving crypto, gaming, or cross-border income, taxpayers must exercise greater care while filing. To avoid delays, rejections, or defective return notices, it’s crucial to file accurately, with all required information and documentation. Early preparation and expert assistance can ensure a smooth, error-free filing experience — and help you maximize your eligible tax benefits.