What ITR-1 to ITR-7? The Income Tax Return (ITR) filing season for Financial Year 2024-25 (Assessment Year 2025-26) is underway, and there are several important updates to forms, eligibility rules, and capital gains reporting. Whether you’re salaried, self-employed, running a business, or part of a trust, knowing these changes will help you file correctly and avoid mistakes.
All the Forms: ITR-1 to ITR-7 — Who Uses What
Here’s a quick rundown of the seven ITR forms and who they are for.
| Form | Name / Common Use | Income Sources / Who Should Use It |
|---|---|---|
| ITR-1 (SAHAJ) | Simple form for individuals | Resident individuals (not non-ordinarily resident), salary/pension income, one house property, other “simple” income (interest, small dividends), agricultural income up to ₹5,000. Now, also capital gains from listed equities up to ₹1,25,000 under Section 112A can be included. |
| ITR-2 | For more complex individual / HUF incomes | People with income from capital gains, multiple house properties, foreign income etc., or those ineligible for ITR-1. |
| ITR-3 | Individuals / HUFs engaged in business or profession | If you have business income, professional income, partnership, etc. Plus capital gains and other income types. |
| ITR-4 (SUGAM) | Presumptive taxation scheme, simpler business income | For individuals, HUFs, or firms (excluding LLPs) who opt for presumptive business / profession scheme under Sections 44AD / 44ADA / 44AE. Income from simpler sources. Now also allows small capital gains (LTCG) up to ₹1,25,000 under certain conditions. |
| ITR-5 | For entities not covered by other forms | Firms, LLPs, cooperative societies, etc. |
| ITR-6 | For companies | Companies excluding those that must use ITR-7. |
| ITR-7 | Exempt entities / Trusts etc. | Trusts, political parties, charitable etc., or others exempt under specific sections. |
Key Changes for AY 2025-26 You Should Know
Several significant changes have been introduced, particularly in ITR-1 & ITR-4, capital gains rules, and disclosure norms. These are especially relevant if your capital gains are from listed equities or equity-oriented mutual funds.
- Threshold for LTCG under Section 112A raised
The exemption threshold for Long Term Capital Gains (LTCG) on listed equity shares / equity mutual funds was increased from ₹1,00,000 to ₹1,25,000. - ITR-1 / ITR-4 eligibility expanded
Earlier, if you had any LTCG from listed equities, even if small, you could not use ITR-1 or ITR-4—you had to move to ITR-2 or ITR-3. Now, if your LTCG (under Sec 112A) is ≤ ₹1,25,000 and there are no brought-forward or carry-forward capital losses, you can use the simpler ITR-1 or ITR-4. - Date split for capital gains
Because the LTCG / STCG rules (especially for listed equities, unlisted bonds, etc.) changed with the Finance (No.2) Act, 2024, gains (or losses) need to be reported separately for transactions before and after 23 July 2024. This split is now built into ITR-2, ITR-3, etc. - Excel utilities released
For ITR-2 and ITR-3, Excel utilities have been made available, to help taxpayers with more complex incomes prepare their returns.
Also, ITR-1 & ITR-4 forms have updated schedules and Excel utilities for AY-2025-26. - Disclosure & threshold changes
- The asset & liability schedule (AL) in ITR-2 and ITR-3: the threshold above which taxpayers must furnish details of assets & liabilities has gone up.
- TDS section codes need to be clearly mentioned.
What’s New: Capital Gain Income under ₹1.25 Lakh & Simplified Filing
This is the change many salaried persons, small investors, and those under presumptive business schemes have been waiting for:
- If you are salaried or under the presumptive taxation scheme, and
- Your long-term capital gains under Section 112A from listed equities / equity mutual funds are up to ₹1,25,000 in FY 2024-25, and
- You do not have any carry-forward capital losses or losses under this head,
Then you are eligible to use ITR-1 or ITR-4, which are simpler forms, instead of being forced to use ITR-2.
This lowers the compliance burden—less complicated schedules, fewer disclosures, simpler validation.
Also worth noting: a ready reckoner has been released to help taxpayers understand which rules apply depending on when they sold, bought, or transferred assets, especially since the July 23, 2024 date divides different tax treatments.
What You Should Do Before Filing
To take advantage of these changes and avoid mistakes:
- Check your LTCG amounts
Compute your long-term capital gains from listed equities / equity mutual funds. If they’re under ₹1,25,000 and no carry-forward loss, you may use ITR-1 or ITR-4. - Note the date of transactions
For transactions before vs after 23 July 2024, rules may differ—including tax rate, whether indexation applies, etc. - Confirm other income sources
If you have business income, profits, multiple house properties, foreign income, or unlisted equity holdings, you may not be eligible for simpler ITR forms. - Use the Excel utilities if needed
For ITR-2 or ITR-3 especially, download and use the Excel utility to prepare your ITR; helps avoid format errors. - Read the updated ITR-form instructions carefully
Ensure your form version is for AY 2025-26, check if the “new” schedules are included, fill in all required disclosures (TDS section codes, assets & liabilities if applicable, etc.). - File and verify on time
While there were suggestions about extended deadlines, check the latest official deadline for your category to avoid penalties.