The Income Tax Department has rolled out new versions of the Sahaj (ITR‑1) and Sugam (ITR‑4) return forms for Assessment Year 2025–26 (for income in FY 2024–25). These revised forms (notified via CBDT’s Notification No. 40/2025 on 29th April 2025) aim to simplify e‑filing for small taxpayers. The big change is that now even some capital gains can be reported in these “easy” forms, which previously required the longer ITR-2. Below are the key updates and filing tips in clear, plain language.
Who Can Use ITR‑1 (Sahaj) and ITR‑4 (Sugam) for AY 2025-26
- Income limit: Both Sahaj and Sugam remain available to residents with total income up to ₹50 lakh in the year. (ITR-1 is for individuals only, while ITR-4 can be used by individuals, HUFs and firms under presumptive business schemes.)
- Types of income:
- Sahaj (ITR‑1) is for salary/pension, one house property, and other income (like interest) – plus agricultural income up to ₹5,000.
- Sugam (ITR‑4) is for business/profession income under the presumptive scheme, along with salary, rental (one property), and other source income.
- New capital gains allowance: New for AY 2025–26: Both forms now allow long-term capital gains (LTCG) under Section 112A up to ₹1.25 lakh, provided those gains are fully exempt and there are no capital losses to adjust. In earlier years, any LTCG (even small amounts) would force taxpayers into ITR-2, a more complicated form.
In short, if your income (incl. salary, one house rent, interest, etc.) is ≤ ₹50 lakh and any equity LTCG is ≤ ₹1.25 lakh (and you have no carry-over losses), you can file Sahaj or Sugam. Otherwise, you may need the detailed ITR-2 or other ITR.
Reporting Capital Gains
- New fields for exempt LTCG: The updated ITR‑1 and ITR‑4 include specific slots to report exempt LTCG under Section 112A. In ITR‑1’s “Exempt Income” section, there’s a dropdown option for “Long-Term Capital Gains under Sec.112A not chargeable” (up to ₹1.25L). Similarly, ITR‑4 has a line for “Income on which no tax is payable: Long-Term Capital Gains under Section 112A”. This means you can include the gains from sale of equity shares or equity mutual funds (within the exemption limit) directly in the simple forms, without moving to ITR-2.
- Carry-over and other gains: Note that short-term capital gains or LTCG above ₹1.25L still must be reported in ITR‑2 (or ITR‑3/ITR‑5) as before. Also, if you have any capital loss carry‑forward from earlier years, you cannot use ITR‑1/4 – you must use the appropriate ITR for capital loss adjustments. In other words, no set‑off of losses is allowed in Sahaj/Sugam.
In previous years, Sahaj and Sugam had no place for capital gains: anyone with any gains on stocks/funds had to file ITR-2. Now that door is slightly opened: small, fully exempt gains (≤ ₹1.25L) can be handled in the simpler forms.
Other Notable Updates
- Rent deduction (80GG): Taxpayers claiming deduction under Section 80GG (rent paid, without HRA) must now attach Form 10BA with their return. Earlier, 10BA just had to be submitted eventually, but Notification No.40/2025 explicitly requires furnishing it along with the ITR. So if you claim 80GG, don’t forget Form 10BA when you e‑file.
- Tax regime choice (Form 10-IEA): On ITR‑4, there’s a new question asking whether you filed Form 10-IEA in AY 2024–25 (last year). Recall: Form 10-IEA is used by business/profession taxpayers to opt out of the new (Section 115BAC) regime. So the ITR‑4 form is checking if you had opted out previously and whether you want to continue or switch regimes this year. (If you’re under salary only, you opt in/out directly in the ITR, but business incomes need Form 10-IEA.)
- High-value transactions: Even if your income is low, certain big transactions can trigger a return-filing requirement. The form reminds you of Section 139(1)(vii): e.g. foreign travel costs over ₹2 lakh or electricity bills over ₹1 lakh may force filing a return and disclosure of those expenses. (These rules were actually notified a couple of years ago; the updated forms make the disclosure fields clearer.)
- Bank and refund details: The new forms emphasize entering correct bank account and IFSC for refunds. Make sure your bank details are up-to-date (and your account is active) so any refund comes smoothly.
Important Points for AY 2025–26 Filers
- Check your form eligibility: If you’re a resident individual (or HUF/firm in presumptive business) earning ≤ ₹50L and your only “extra” income is exempt LTCG (≤₹1.25L) or small interest, Sahaj or Sugam might now be your form. Otherwise, use ITR-2 or others.
- LTCG threshold: Long-term gains above ₹1.25L still need ITR-2. Also, Sahaj/Sugam do not handle capital losses. So if you have any losses to carry forward, or any business loss, choose the correct (longer) ITR.
- Tax regime choice: If you have business or professional income, and you opted out of the new tax regime last year (via 10-IEA), the ITR-4 will ask about it. Remember to file Form 10-IEA by the due date if you want to switch regimes.
- Other disclosures: Make sure to fill in details for any high-value transactions (over the limits) and confirm your refund bank details accurately.
- Deadline: The due date for most individual returns is July 31, 2025 (unless extended). File Sahaj/Sugam early to avoid rush.
These changes mean many small taxpayers (salaried or with presumptive income) can stick to the simpler Sahaj/Sugam forms even with some stock gains. It’s a helpful tweak from CBDT – just be sure you meet all the conditions. Read the instructions carefully on the e-filing site, and consult a tax pro if you have any doubts. Happy filing!
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The author is a practicing-chartered accountant in Delhi and can be connected at office@camridul.in.
Author Bio
In Fnance bill 2025 maturity proceeds of Post Office NSS-1987 & NSS-11992 scheme have been declared as Tax Exempt if withdrawl is from 29.8.2024 onward after it was declared that “NO INTEREST” in these scheme will be paid after 1.10.2024 and section was most likely 80CCA but how this proceed will be shown in return in ITR-1 as there is no column for this maturity proceed to be shown as
“INCOME TAX EXEMPT”.
Kindly help and it must be included in ITR-2 also for showing as “TAX EXEMPT”.