ITR-1 Sahaj for AY 2025-26

Filing your Income Tax Return (ITR) can often feel like a complex task, but for many salaried individuals across India, the ITR-1 Sahaj form aims to simplify this crucial aspect of your financial responsibilities for the Assessment Year 2025-26 (covering income earned in Financial Year 2024-25). This guide is designed to be your go-to resource, breaking down everything you need to know about ITR-1 Sahaj – from who is eligible and the latest updates, to understanding how to report your income correctly and make sure your ITR return filing is smooth and accurate this year. Let’s navigate the essentials of this important tax form together and ensure your tax filing is smooth and accurate this year.

What is ITR-1 Sahaj Form?

The Income Tax Department offers various forms for taxpayers to declare their income and pay taxes, and ITR-1, also known as ‘Sahaj,’ is designed to be the simplest of them all. “Sahaj” in Hindi means “easy” or “simple,” reflecting the form’s core purpose: to make the income tax filing process straightforward for resident individuals with a relatively basic income structure, specifically for income earned in the Financial Year 2024-25 (which corresponds to the Assessment Year 2025-26).

ITR-1 applicability generally extends to individuals whose primary income sources are salary or pension, income from a single house property, and interest income, provided their total income stays within a specified limit. Filing your Income Tax Return, including the income tax Sahaj form (ITR-1) if you’re eligible, isn’t just about fulfilling a legal requirement; it also brings several benefits. These include the ability to claim tax refunds if excess tax has been deducted, creating a crucial financial record for loan applications or visa processing, and ensuring you meet your tax obligations by keeping track of the ITR Filing Deadline.

Who Can File ITR-1 Sahaj for AY 2025-26 in India? Key Eligibility Criteria

Knowing exactly who can use the ITR-1 Sahaj form is the first crucial step in your tax filing journey for the Assessment Year 2025-26. This form is specifically designed for individuals with a fairly simple income profile. Here are the key conditions you must meet to be eligible:

1. Residential Status: You must be a Resident Individual in India. This form is not applicable if you are a Non-Resident Indian (NRI) or a Resident Not Ordinarily Resident (RNOR).
2. Total Income Limit: Your total income from all sources for the Financial Year 2024-25 (the income on which tax is calculated for AY 2025-26) must not exceed ₹50 lakh.

Beyond these primary conditions, your income must arise from specific, permissible sources:

• Income from Salary or Pension: This includes your monthly salary, any arrears of salary, and pension received. It doesn’t matter if you’ve worked with one or multiple employers during the financial year. (This makes ITR-1 a common choice for salaried employees).
• Income from One House Property: You can report income (or loss, subject to certain limits within ITR-1) from a single house property. This property can be self-occupied (where you live), let out (rented), or deemed to be let out.
• Income from Other Sources: This typically includes:
  • Interest earned from savings bank accounts.
  • Interest from fixed deposits (FDs) or recurring deposits with banks, post offices, or cooperative societies.
  • Family pension received.
  • Dividend income.
  • Interest received on an income tax refund.
  • (Note: Income from winnings from lotteries or racehorses cannot be reported in ITR-1).
• Agricultural Income: If you have agricultural income, it must be up to ₹5,000 to use ITR-1.

Big News for AY 2025-26: Limited Capital Gains Now Permitted in ITR-1!

One of the most significant updates for Assessment Year 2025-26 is that individuals can now report certain Long Term Capital Gains (LTCG) in ITR-1 Sahaj. Specifically, if you have LTCG from the sale of listed equity shares or equity-oriented mutual funds (falling under Section 112A of the Income Tax Act) up to ₹1.25 lakh, you can still use ITR-1.

However, this comes with important riders: * You must not have any other type of capital gains (like short-term capital gains on shares, gains from property sale, debt mutual funds, gold, etc.). * You should not have any brought forward capital losses or any capital losses to be carried forward from the current year.

Understanding ITR-1 for whom it is intended and these eligibility criteria, including who can file based on income types like salary and the new capital gain in ITR-1 provision, is key to ensuring you select the correct ITR-1 form for your ITR filing for AY 2025-26.

Who CANNOT File ITR-1 Sahaj for AY 2025-26? Important Exclusions to Know

While ITR-1 Sahaj is designed for simplicity, there are specific situations and income types that make an individual ineligible to use this form for the Assessment Year 2025-26, even if their total income is below ₹50 lakh. If any of the following conditions apply to you, you’ll need to use a different ITR form (like ITR-2, ITR-3, or ITR-4):

• You are a Director in any company.
• You have held unlisted equity shares at any point during the Financial Year 2024-25.
• You have any assets located outside India, including financial interest in any foreign entity.
• You have signing authority in any account located outside India.
• You have earned any income from sources outside India (foreign income).
• Tax has been deducted under Section 194N of the Income Tax Act (related to cash withdrawals exceeding specified limits).
• Payment or deduction of tax has been deferred on Employee Stock Options (ESOPs).
• You have any brought forward losses from previous years or losses to be carried forward to future years under any head of income (e.g., capital losses, business losses).
• You have income from a business or profession.
• You have capital gains that are not covered by the new limited provision for LTCG under Section 112A (up to ₹1.25 lakh) in ITR-1. This means if you have short-term capital gains, LTCG from sources other than listed equities/equity MFs, LTCG from equities exceeding ₹1.25 lakh, or any capital losses (current year, brought forward, or to be carried forward), you cannot use ITR-1.
• You have income from more than one house property.
• Your residential status is Non-Resident Indian (NRI) or Resident Not Ordinarily Resident (RNOR).
• Your agricultural income exceeds ₹5,000 during the financial year.
• You have income from winnings from lotteries, racehorses, legal gambling, or other similar activities taxable at special rates.

ITR-1 vs. ITR-2 and Other Forms: Which is the Correct ITR Form for You (AY 2025-26)?

Choosing the right ITR form is the first crucial step for accurate tax filing for Assessment Year 2025-26. While ITR-1 (Sahaj) is the simplest, many taxpayers wonder if it’s suitable for them, especially when comparing ITR-1 and ITR-2, or considering if ITR-4 might be needed. Here’s a clearer comparison to help your ITR form selection:

When to File ITR-1 (Sahaj): As a quick recap, ITR-1 is for resident individuals with total income up to ₹50 lakh from:

• Salary/Pension
• One House Property
• Other Sources (like interest, dividends, family pension – excluding lottery/racehorse winnings)
• Agricultural Income up to ₹5,000
• New for AY 2025-26: Long Term Capital Gains (LTCG) from listed equities/equity MFs (u/s 112A) up to ₹1.25 lakh, provided you have no other capital gains or any capital losses.

When You Might Need ITR-2 (Instead of ITR-1): ITR-2 becomes necessary if you are an individual or HUF (not having business/professional income) but your situation includes:

• Capital Gains Beyond ITR-1 Scope:
  • If you have Long Term Capital Gains (LTCG) from equities/equity MFs exceeding ₹1.25 lakh.
  • If you have any Short-Term Capital Gains (STCG) from shares or other assets.
  • If you have capital gains from selling property, gold, debt mutual funds, etc.
  • If you have any capital losses to report or carry forward.
• Income from More Than One House Property.
• Foreign Income or Foreign Assets (including financial interest or signing authority in foreign accounts).
• If you are a Director in a company.
• If you hold unlisted equity shares.
• If your total income exceeds ₹50 lakh (and you don’t have business income).

When to Consider ITR-4 (Sugam) (Instead of ITR-1 or ITR-3): ITR-4 (Sugam) is for resident individuals, HUFs, or firms (other than LLPs) who opt for the presumptive taxation scheme for their business or professional income (under Sec 44AD, 44ADA, or 44AE), and their total income is up to ₹50 lakh.

• You would typically consider ITR-4 if you have income from a business or profession and are eligible for presumptive taxation (e.g., you’re a freelancer, consultant, or small business owner meeting the criteria).
• Like ITR-1, ITR-4 also now allows reporting the limited LTCG from equities (u/s 112A up to ₹1.25 lakh).
• If you have business/professional income but are not opting for or eligible for the presumptive scheme, you would generally file ITR-3.

Key Changes & Updates in ITR-1 Sahaj for AY 2025-26

For Assessment Year 2025-26, keep these critical updates for ITR-1 Sahaj in mind:

• Limited LTCG from Equities Now in ITR-1: You can report Long-Term Capital Gains (LTCG) under Section 112A (from listed equity shares/equity MFs) up to ₹1.25 lakh directly in ITR-1.
  • Condition: This is only if you have no other capital gains (like STCG or gains from other assets) and no capital losses to report or carry forward.
• Aadhaar Number Mandatory: Your 12-digit Aadhaar number is compulsory for filing. Aadhaar Enrolment ID is no longer accepted. Ensure PAN-Aadhaar linkage.
• Tax Regime Selection: You must clearly choose between the New Tax Regime (default for those without business income, under Sec 115BAC) and the Old Tax Regime.
• Specific TDS Section Reporting: For TDS on income other than salary (e.g., interest), you may need to specify the particular Income Tax Act section under which tax was deducted.
• Updated Deduction Disclosures (Old Regime): If opting for the old regime, selecting deductions (like those under 80C to 80U) in the e-filing utility might involve more detailed drop-down selections for specific clauses/sub-sections for enhanced accuracy.