ITR Filing 2025: Key Changes in ITR Forms 1 to 5 for FY 2024–25
By Author / May 7, 2025
Income Tax Recent News – 2025
New ITR Forms Notified for FY 2024–25
The Income Tax Department has notified ITR forms 1, 2, 3, 4, and 5 for FY 2024–25. These were released between April 29 and May 3, 2025. The updated forms aim to streamline the filing process for individuals and businesses.
Overview of ITR-1 and ITR-4
ITR-1 (Sahaj) is meant for resident individuals with income up to ₹50 lakh from salary, one house property, interest, and agricultural income up to ₹5,000.
ITR-4 (Sugam) applies to individuals, HUFs, and non-LLP firms with income up to ₹50 lakh from business or profession under presumptive taxation.
Both forms now allow reporting of tax-exempt long-term capital gains (LTCG) up to ₹1.25 lakh under Section 112A. Individuals with capital gains above this threshold, foreign income, or directorships cannot use these simplified forms.
ITR-2 and ITR-3: Who Should File?
ITR-2 suits individuals and HUFs without business income but with capital gains, multiple properties, or clubbed income from a spouse or minor child.
ITR-3 is designed for professionals and business owners. It includes detailed disclosures on capital gains, income statements, and assets. From AY 2025–26, Schedule AL (Assets & Liabilities) is mandatory only if total income exceeds ₹1 crore.
ITR-5: For Firms, LLPs, and Other Entities
ITR-5 covers filing for:
- Firms
- LLPs
- Associations of Persons (AOPs)
- Bodies of Individuals (BOIs)
- Artificial Juridical Persons (AJPs)
The form now requires capital gains to be split into two periods: before and after July 23, 2024, as per the Finance Act 2024. It also includes buyback loss provisions and mandatory TDS code disclosures.
ITR Form Comparison: 1 vs 3
“ITR-1 is ideal for salaried individuals with income below ₹50 lakh,” said a tax expert. “But it cannot be used if you earn capital gains, lottery winnings, or business income.”
The expert added:
“ITR-3 is more comprehensive and requires full reporting of income, capital gains, and high-value transactions. It also includes cruise business taxation under Section 44BBC and improved reporting for deductions like HRA and 80C.”
What’s New in ITR-5?
The Income Tax Department introduced key updates:
- Separate capital gains reporting before and after July 23, 2024
- Disclosure of capital loss on buybacks only if related dividend income is declared
- Inclusion of Section 44BBC
- Mandatory reporting of TDS section codes
“These changes help prevent misuse of exemptions and improve tracking,” the expert noted.
LTCG Filing Simplified for Salaried and Presumptive Taxpayers
Salaried taxpayers and those under presumptive taxation can now use ITR-1 or ITR-4 to report LTCG up to ₹1.25 lakh. Earlier, they had to file ITR-2, even for small capital gains.
LTCG from listed shares and mutual funds is tax-exempt up to ₹1.25 lakh. Gains above this are taxed at 12.5%.
Changes in ITR-2 for FY 2024–25
ITR-2 remains the go-to form for:
- Salaried employees
- Pensioners with capital gains
- Individuals with multiple properties
It includes an updated Schedule CG that now requires taxpayers to specify if a gain or loss occurred before or after July 23, 2024.
Which ITR Form Should You Use?
“If your LTCG exceeds ₹1.25 lakh or includes STCG, ITR-2 is mandatory,” a tax expert said. “ITR-1 and ITR-4 support only LTCG within the ₹1.25 lakh exemption. They don’t allow reporting of STCG or carrying forward of losses.”
ITR-3 is required if you also earn from business or profession.
