Tag: TaxFiling

ITR-1 and ITR-4 Eligibility for AY 2025-26 Explained

The Central Board of Direct Taxes (CBDT) has notified ITR-1 (Sahaj) and ITR-4. These forms will be applicable for Income Tax Return filing for Financial Year 2024-25, or Assessment Year 2025-26.

This year, ITR-1 and ITR-4 can be used by taxpayers having up to ₹1.25 lakh long-term capital gains from the sale of listed equity shares and equity-oriented mutual funds. However, there are other eligibility conditions for using these forms that you should know.

ITR-1 (Sahaj) eligibility for AY 2025-26

According to the notification, ITR-1 can be used by the following taxpayers:

  • Individuals being a resident (other than not ordinarily resident) having total income up to ₹50 lakh and having Income from Salaries, one house property, other sources (interest, etc.), long-term capital gains under section 112A up to ₹1.25 lakh, and agricultural income up to ₹5000.

Earlier, the ITR-2 form was used for filing returns by taxpayers having capital gains from mutual funds and shares.

This form is not applicable for an individual who is either a Director in a company or has invested in unlisted equity shares, or in cases where TDS has been deducted under Section 194N, or if income tax is deferred on ESOP, or has assets (including financial interest in any entity) located outside India.

ITR-4 (Sugam) eligibility for AY 2025-26

ITR-4 can be used by individuals, HUFs, and Firms (other than LLP) being a resident having total income up to ₹50 lakh and having income from business and profession which is computed under sections 44AD, 44ADA, or 44AE, and having long-term capital gains under section 112A up to ₹1.25 lakh.

This form does not apply to an individual who is either a Director in a company or has invested in unlisted equity shares, or if income tax is deferred on ESOP, or has agricultural income more than ₹5000, or has assets (including financial interest in any entity) located outside India.

It is now expected that the other ITR forms will also be notified by CBDT soon.

The due date of ITR filing for AY 2025-26 for non-audit cases is July 31, 2025.

The notification of these forms has come after a long wait, giving voice to rumours that the ITR filing due date for AY 2025-26 may be extended. However, this is unlikely to happen, especially for salaried taxpayers, as they can file their returns only after June 15.

Filing Income Tax Returns in 2025: Who Must Comply and Why

As per the Income Tax Department website, individuals with a taxable income and non-auditable accounts are required to submit an Income Tax Return. Those exempt from taxes due to income falling below the taxation threshold will be refunded by the Department.

As the assessment year 2025-26 begins, taxpayers are urged to file their Income Tax Returns (ITR) on the Income Tax portal. It is crucial to submit the relevant forms and declare financial gains to avoid legal consequences, even if one is exempt from paying taxes. While some groups in India, including those earning below certain thresholds, receive relief under existing ITR laws, the requirement to file a return remains imperative. Each individual with taxable income whose accounts are not audited is obligated to file an ITR, ensuring compliance with tax regulations.

For individuals earning below the income tax threshold, exemptions from paying taxes are possible, leading to a full refund upon filing. These individuals must meticulously disclose their income and the nature of exemptions alongside valid documentation to substantiate their claims. The Income Tax Department emphasizes the necessity of filing a return to adhere to legal expectations, even for those who might not owe any taxes.

Senior citizens, particularly those aged 75 and above, receive specific exemptions from filing returns, provided they meet certain criteria. Those receiving pension and interest income from a specified bank account can avoid the annual return filing. This relief, however, is conditional upon completing a declaration using Form 12BBA and submitting it to a designated bank. Once this procedural requirement is fulfilled, qualifying seniors can opt out of filing their Income Tax Returns.

The benefits extended to senior citizens underscore the importance of understanding tax obligations and processes. Although filing requirements for certain groups are relaxed, ensuring that declarations and disclosures are accurate remains crucial to avoid potential legal issues. Compliance with these stipulations is vital for maintaining transparency and preventing any future complications with the Income Tax Department.

The legal framework around ITR filing in India mandates that even those exempt from paying taxes must observe disclosure requirements. This includes providing comprehensive documentation of income sources and exemptions claimed. Such measures ensure that individuals, regardless of their tax liability, remain compliant with national tax laws. By fulfilling these obligations, taxpayers safeguard themselves against any unforeseen legal challenges.

As per the Income Tax Department website, individuals with a taxable income and non-auditable accounts are required to submit an Income Tax Return. Those exempt from taxes due to income falling below the taxation threshold will be refunded by the Department. To process the claim, these individuals must provide valid documentation disclosing their income and applicable exemptions.

🚨 First-Time Taxpayers ALERT! AY 2025-26 E-Filing is LIVE! 🚨

The Income Tax Department has recently opened its online portal for the assessment year 2025-26, providing an opportunity for first-time taxpayers to file their returns electronically. For those new to the process, the filing can appear intricate due to various regulations and requirements that must be adhered to. It’s important to remember that any errors in the ITR form could lead to rejection.

When filing for the first time, individuals must select between two different tax regimes with varying deductions and also link their PAN and Aadhaar cards for electronic verification.

Here are five crucial considerations for first-time taxpayers:

  • Collect All Sources of Income and Important Documents

    It is essential to list every source of income when filing income tax returns. Taxpayers must account for income and assets, even if their earnings fall below the taxable threshold. Additionally, it is necessary to gather all pertinent documents, including PAN and Aadhaar cards, before proceeding with the tax filing. For salaried individuals, obtaining Form 16 and pay slips from employers is crucial. Other important documents include bank interest certificates, capital gains statements, and records of rental income.
  • Select Your Tax Regime

    taxpayers have the option to choose between the old and new tax regimes, each offering different tax slabs and rates. The old regime allows for various deductions and exemptions, while the new regime features lower tax rates but permits fewer deductions. It is advisable to carefully assess both options before making a decision based on individual financial circumstances.
  • Understand the Available Deductions and Exemptions

    First-time taxpayers will discover numerous exemptions and deductions available when filing their returns. It’s vital to check for applicable benefits, especially those under sections 80C, 80D, and 80E during form submission. Salaried individuals may qualify for total or partial exemptions on house rent allowance, leave travel concessions, and more. Taxes deducted at source will be reflected on Form 16 and 16A.
  • Choose the Correct Form and Verify All Details

    Using the appropriate ITR form based on your income type is essential. Ensure that all sources of income and deductible expenses are accurately declared, and double-check every detail before submission. Mismatched or incorrect information can lead to the rejection of your form.
  • Be Mindful of Deadlines and E-Verification Requirements

    Taxpayers have until July 31 to file their returns for the assessment year 2025-26. Additionally, the Income Tax Department mandates e-verification within 30 days from the filing date. E-verification serves as a way for taxpayers to confirm the accuracy of their filed income tax return.