Every taxpayer should file their Income Tax Return (ITR) correctly, but because of the new changes in FY 2024-25 (AY 2025-26), picking the correct ITR form can be confusing. This is a straightforward guide to which ITR you need to file during 2025, considering your sources of income, the type of transactions you have, and what the latest updates from the Income Tax Department say. Consulting a chartered accountants firm in Mumbai or experienced ca firms in Mumbai can also help you file accurately.
Key Changes in ITR Forms for 2025
Changes announced in Budget 2024 have been included in the ITR forms for AY 2025-26. Importantly, the ITR-1 and ITR-4 forms are now available to more individuals, limits on asset reporting have gone up, and reporting is now required for capital gains and buyback proceeds. These changes ease reporting for smaller tax bills and make things more straightforward for people with capital gains or a higher income.
ITR-1 (Sahaj): For Simple Salaried Individuals
Who can file:
- Anyone can file a case if they are over 18 years old.
- Not HUFs will be considered resident individuals if their income is over ₹50 lakhs
- Your income comprises your salary or pension, one house property, and additional interest or other income.
- Any agricultural income up to ₹5,000 is not taxed.
What’s new:
- For tax purposes, Section 112A permits reporting LTCG from shares or mutual funds up to ₹1.25 lakh, as long as there are no brought forward or carried forward capital losses.
Who can’t file:
- Directors of a company and those owning shares in unlisted companies, as well as investors in foreign assets or income
- Anyone who has a home property aside from their residence or gains from capital above ₹1.25 lakh
ITR-2: For individuals and HUFs who earn complicated types of income
Who can file:
- Anyone/HUF with salary earning, income from multiple houses, capital gain, holdings in foreign assets, or agricultural income over ₹5,000
- Business and professional income is not available.
Who can’t file:
- Anyone with income from a business or profession
ITR-3: For Business Owners and Professionals
Who can file:
- People and HUFs that earn from business or profession (including freelancers, consultants, and partners in companies)
- It covers income from employment, rent or sale of a house, profits from assets, and other places.
When to use:
- If you arrange a book of accounts or earn money as a member of a firm
- Should you earn from capital gains, investments abroad, or hold multiple real estate properties
ITR-4 (Sugam): For Presumptive Income
Who can file:
- Any resident Indian, HUF, or firm (not an LLP) declaring a total income of up to ₹50 lakh
- Sales or profits from business or profession listed in Sections 44AD, 44ADA, or 44AE
What’s new:
- Like ITR-1, taxpayers can now report LTCG from their equity shares or mutual funds up to ₹1.25 lakh, but only if they do not have any losses to claim later.
Who can’t file:
- Managerial directors and those with unlisted share ownership, plus assets or earnings elsewhere, must be included.
- Persons whose income is above ₹50 lakh or not reported on presumptive scheme
ITR-5, ITR-6, and ITR-7: For Entities
- ITR -5: The process for filing ITR-5 will apply to firms, LLPs, AOPs, BOIs, and anyone other than individuals, HUFs, companies, and ITR-7 filers.
- ITR-6: All companies except those claiming charitable or religious exemption under Section 11.
- ITR-7: For those persons or organizations that need to file under Sections 139(4A), 139(4B), 139(4C), and 139(4D) (namely, trusts, political parties, and certain institutions).
Other Important Updates for 2025
- While filling out ITR-1, 2, 3, and 5, you have to describe the TDS section for any income you’ve taxed.
- Up from ₹50 lakhs, only taxpayers with annual income greater than ₹1 crore are now required to file an ITR-5 to include their assets and liabilities.
- Companies that buy back their shares listed in India now must record the amounts received and report them as dividends.
How to Choose the Right ITR Form
- Make sure you include the entire list of your sources of income in your tax return: salary, capital gains, what you earn from business/profession, your house property, and other kinds of income.
- If your total income is not more than ₹50 lakh and if it’s simple, ITR-1 or ITR-4 may fit.
- People who own foreign assets, are directors, or have access to unlisted shares may need to use ITR-2 or ITR-3.
- There’s nothing wrong with looking at the Income Tax Department’s guidelines or contacting professionals when necessary. Trusted ca firms in Mumbai can guide you in selecting the right ITR and ensure correct filing.
Conclusion
Make sure you pick the proper ITR form to avoid errors and have a trouble-free filing. New laws, more eligibility, and tax rule updates mean seeking professional advice will save you time and help you follow regulations. A chartered accountants firm in Mumbai like Epsilon Accounts Anusthan Fintech LLP enables you to select the best form for your ITR, optimizes your taxes, and guides you through filing.
FAQs
Q. How much in assets do you need to report for ITR filing in 2025?
For the FY 2024-25 tax year and onwards, only those taxpayers whose gross total income is more than ₹1 crore must list their assets and liabilities in their ITR.
Q. Are ITR-1 or ITR-4 the correct forms if I have long-term capital gains?
Your LTCG on equity shares or mutual funds will be tax-free if it is not more than ₹1.25 lakh and you have no capital losses.
Q. Is specifying the TDS section mandatory in all ITR forms for 2025?
Yes, you must mention the TDS section for every income where tax was deducted in ITR-1, 2, 3, and 5.
