Taxpayers Can Now File ITR-1 With LTCG Up to ₹1.25 Lakh
The Income Tax Department has introduced significant changes to the ITR-1 (Sahaj) form, making tax filing more accessible for small investors. A key update allows individuals with long-term capital gains (LTCG) up to ₹1.25 lakh under Section 112A to file using this simplified form.
Previously, even those with LTCG under ₹1 lakh had to opt for ITR-2, which required more detailed disclosures. This change, implemented in April 2025, streamlines filing for small investors, especially those investing in equity shares and equity-oriented mutual funds.
Extended Deadline for ITR Filing: Why It Matters
To further ease compliance, the government extended the ITR filing deadline from July 31, 2025, to September 15, 2025. This gives taxpayers extra time to:
- Adapt to the revised ITR forms
- Address technical updates on the IT portal
- Reconcile TDS data before submission
The extension helps individuals and businesses prepare documents, verify tax deductions, and ensure accurate reporting, reducing last-minute filing errors.
Who Should Use ITR-1 (Sahaj)?
This simplified return form is suitable for individuals who:
✅ Earn income from salary, one house property, or other sources (e.g., interest income)
✅ Have LTCG up to ₹1.25 lakh under Section 112A, where no tax is payable
ITR-1 cannot be used if:
❌ You have taxable LTCG or short-term capital gains
❌ You sold a property or need to carry forward losses
ITR-4: Best for Business Owners Under Presumptive Taxation
Business owners and professionals opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE should file ITR-4. It applies to:
✅ Resident individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs)
✅ Total income up to ₹50 lakh
✅ Business income under presumptive taxation
✅ LTCG under Section 112A up to ₹1.25 lakh (non-taxable)
ITR-4 is NOT applicable if:
❌ You are a company director
❌ You own unlisted shares
❌ You have foreign assets, foreign income, or high agricultural income
ITR Filing: Online & Offline Tools Available
Taxpayers can now prepare their returns using the Excel utility provided by the Income Tax Department for ITR-1 and ITR-4, with an online filing utility expected soon on the Income Tax India portal.
This resource helps users calculate tax liability, verify deductions, and ensure compliance with the latest tax laws before filing.
Final Thoughts: Stay Informed & Choose the Right Form
With these updates, small investors and business owners can expect a smoother tax filing experience. Choosing the correct form based on income sources, financial activities, and exemptions ensures a seamless return submission.
Take advantage of the extended deadline and prepare your return with accuracy—filing early avoids last-minute stress and technical issues!
1. What is the major update in ITR-1 for AY 2025-26?
Taxpayers with long-term capital gains (LTCG) up to ₹1.25 lakh under Section 112A can now file their returns using ITR-1 instead of ITR-2, simplifying the process for small investors.
2. When is the extended deadline for filing ITR for AY 2025-26?
The government has extended the ITR filing deadline to September 15, 2025, allowing taxpayers additional time to adjust to the updated forms and reconcile TDS data.
3. Who qualifies to file ITR-1 (Sahaj)?
ITR-1 is designed for individuals earning income from salary, one house property, and other sources (such as interest income). They can also include non-taxable LTCG up to ₹1.25 lakh under Section 112A.
4. Who should file ITR-4?
ITR-4 is intended for resident individuals, HUFs, and firms (excluding LLPs) with income up to ₹50 lakh, business income taxed under presumptive taxation, and non-taxable LTCG up to ₹1.25 lakh under Section 112A.
5. What are the available methods for filing ITR?
Taxpayers can prepare their returns offline using the Excel utility or wait for the online filing utility on the official Income Tax portal: https://www.incometaxindia.gov.in.
