CBDT Notifies ITR-1 and ITR-4 for AY 2025-26—LTCG up to ₹1.25 Lakh Now Allowed

Notification 40/2025, dated 29-04-2025

The Central Board of Direct Taxes (“CBDT”) has notified the Income Tax Return (ITR) Forms 1 and 4 for the Assessment Year (“AY”) 2025–26, applicable for income earned during the Previous Year (“PY”) 2024–25 (01-04-2024 to 31-03-2025).

Unlike in the last couple of years, when these forms were released well in advance, typically by February or March, this year, the ITR forms have been released with a delay of 30 days. This created an anticipation that the department may have to extend the due date to file the return of income.

Apart from notifying the new ITR forms, the CBDT has amended Rule 12 of the Income-tax Rules, 1962, which outlines the criteria for the applicability of ITR forms to different classes of taxpayers and the method of furnishing returns.

The following changes have been introduced in the ITR forms 1 and 4:

• Salaried individuals or any assessee eligible for ITR-1 and small business owners eligible for ITR-4 can continue to use these forms, even if they have LTCG under Section 112A, provided the total LTCG does not exceed Rs. 1,25,000 and there is no brought forward or carry forward capital loss.
• ITR Forms have been updated to remove the reference to Aadhaar Enrolment ID. Taxpayers are now required to provide their Aadhaar number when filing their returns, aligning with the new provisions under Section 139AA.
• The new ITR-4 seeks confirmation of past filings of Form 10-IEA and asks whether the assessee wants to continue opting out of the New Tax Regime in the current year.
• Taxpayers are required to mention the specific section under which TDS has been deducted. This detail is to be furnished in Schedule TDS in ITR-1 and in Schedule TDS-2 of ITR-4, which pertains to Tax Deducted at Source on income other than salary.

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