ITR for AY 2025-26: ITR-1 and ITR-4 Now Include LTCG Disclosure under Section 112A

The Income Tax Department has notified the income tax return (ITR) forms for the assessment year (AY) 2025-26, pertaining to the financial year 2024-25. Effective from April 1, taxpayers can now file their returns using simplified formats, with a significant change allowing disclosure of long-term capital gains (LTCG) under Section 112A directly in ITR-1 (Sahaj) and ITR-4 (Sugam).

LTCG Reporting Eased for Small Taxpayers

Earlier, taxpayers reporting any LTCG under Section 112A—irrespective of the amount—were required to file the more detailed ITR-2. With the latest amendment by the Central Board of Direct Taxes (CBDT), individuals can now report LTCG up to ₹1.25 lakh in the simpler ITR-1 and ITR-4 forms, provided:

The gains fall under Section 112A (pertaining to listed equity shares, equity mutual funds, or REITs held for more than 12 months),
No capital losses are carried forward or set off,
The taxpayer meets other eligibility criteria for the respective ITR forms.

Sandeep Sehgal, Partner-Tax at AKM Global, commented, “This move simplifies tax compliance for salaried individuals and small investors, making tax return filing faster and more accessible.”

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

ITR-1 (Sahaj) can be filed by resident individuals with:

Total income up to ₹50 lakh,
Income from salary, one house property, other sources (like interest), and
LTCG under Section 112A not exceeding ₹1.25 lakh,
Agricultural income up to ₹5,000.

ITR-4 (Sugam) is meant for individuals, Hindu Undivided Families (HUFs), and firms (other than LLPs) with:

Total income up to ₹50 lakh,
Income from business or profession (under presumptive schemes), and
LTCG under Section 112A up to ₹1.25 lakh, without any capital losses to carry forward.

Additional Disclosures Required in ITR for FY 2024-25

The notified ITR forms also mandate reporting of:

Foreign travel expenses exceeding ₹2 lakh for self or others,
Electricity bills exceeding ₹1 lakh in the financial year,
Deposits exceeding ₹1 crore in one or more current accounts during the year.

These disclosures are aimed at improving tax transparency and curbing underreporting of high-value transactions.

AIS and Form 26AS: Crucial for Pre-Filing and Verification

Taxpayers are advised to cross-check their income details using the Annual Information Statement (AIS) and Form 26AS, which consolidate data from banks, financial institutions, and tax deductors. Discrepancies can be flagged by the taxpayer during ITR filing.

Note that updated AIS and 26AS data for Q4 (January–March) will be available only after May 31, following the deadline for filing TDS returns. It is recommended to wait until the first week of June 2025 for the most accurate data before submitting your return.

How to File ITR for AY 2025-26

Taxpayers can file their returns online through the Income Tax Department e-filing portal. With the inclusion of LTCG disclosures in ITR-1 and ITR-4, filing has become more streamlined for eligible individuals.