Income Tax: The Income Tax Department has notified ITR-1 (Sahaj) and ITR-4 (Sugam) forms for FY 2024-25 (Assessment Year 2025-26). Now ITR-2 will not be filled when long-term capital gains (LTCG) up to Rs 1.25 lakh. Mutual funds and business trusts will be applicable.

ITR-1 (spontaneous) can be filled:-Resident Indians who have a total annual income less than ₹ 50 lakh. Aye is only salary/pension, rent or interest from a house. LTCG is less than 1.25 lakhs and no capital loss.

ITR-4 (Sugam) can fill:-individuals, huffs and firms (not LLP) whose income is less than ₹ 50 lakh. Declare Presumptive Income (44AD/44ADA). LTCG is less than 1.25 lakhs and no Los Carry Frewer.

It will be necessary to fill ITR-2 if:- Ltcg is more than 1.25 lakhs. Short-Term Capital Gains (STCG). The property is LTCG from sale. Some capital loss carry forward or set-off. Sameer Kanabar of EY India told media that this decision is an important step towards making tax filing easier. Sandeep Sehgal of AKM Global: “Now it has become easy for small investors and salary to pay tax.

What changes have been made in the form?

Sandeep Sehgal, a partner of Tax and Consulting Company AKM Global, said that the Central Board of Direct Taxes (CBDT) has made significant changes in the Income Tax Return (ITR) form for the assessment year 2025-26, especially the salaried taxpayers who get long-term capital benefits (LTCG) will benefit. He said, with the latest amendments, individuals can now use simple ITR-1 (comfortable) or ITR-4 (Sugam) form. If his LTCG under Section 112A does not exceed Rs 1.25 lakh and has no capital deficit to take or ‘set off’.

Small taxpayers will get relief

Sehgal said, “This change streamlines the tax filing process, making it more accessible and less cumbersome for small investors and salaried people. This promotes timely and accurate compliance.” Overall-If you are a salary taxpayer and LTCG up to Rs 1.25 lakh from share or mutual funds, now you can fill the returns directly from ITR-1 or ITR-4, which will liberate from the complications of ITR-2. This step will promote “Ease of Compliance” and will motivate more people for voluntary tax filing.