Itr Filing 2025: Itr Forms 1, 2, 3, 4 And 5 Notified For Fy 2024-25; Key Differences Explained For Taxpayers 

ITR filing 2025:  The Income Tax Department has notified caller ITR forms for FY 2024-25, detailing eligibility and exclusions for each form. Forms cater to different payer categories, pinch updates including a caller conception for tax-exempt semipermanent superior gains.

The Income Tax Department has released nan Income Tax Return (ITR) forms 1, 2, 3, 4, and 5 for nan financial twelvemonth 2024-25. These forms were announced betwixt April 29 and May 3, 2025, to streamline nan filing process for individuals and entities. ITR-1 (Sahaj) and ITR-4 (Sugam) are designed for mini and mean taxpayers, allowing for simplified reporting of income. The Sahaj shape is for resident individuals pinch an income up to Rs 50 lakh from salary, 1 location property, interest, and cultivation income up to Rs 5,000. Sugam is applicable to individuals, Hindu Undivided Families (HUFs), and non-LLP firms pinch income up to Rs 50 lakh from business and profession. 

ITR-1, besides known arsenic Sahaj, is tailored for resident individuals pinch a full income not exceeding Rs 50 lakh. Eligible income includes salary, pension, income from 1 location property, and different sources specified arsenic liking from savings aliases fixed deposit accounts. Exclusions use to individuals who are institution directors, person investments successful unlisted equity shares, aliases person overseas assets aliases income. Additionally, those pinch superior gains exceeding nan specified threshold, aliases carrying guardant losses, cannot usage this form. The updated ITR-1 for AY 2025-26 now includes a conception for reporting tax-exempt semipermanent superior gains (LTCG) nether Section 112A.

For individuals and HUFs not eligible for ITR-1, ITR-2 is nan due form. This shape is intended for those without income from business aliases occupation but allows for income clubbing from a spouse aliases insignificant child, provided nan income fits wrong nan defined categories. ITR-3 is designated for individuals and HUFs progressive successful business aliases professions, requiring broad relationship maintenance. This shape is particularly applicable for professionals for illustration doctors, lawyers, and chartered accountants, whose net are calculated based connected existent business profits. 

Further simplifying taxation returns for mini businesses, ITR-4, aliases Sugam, tin beryllium utilized by resident individuals, HUFs, and firms (excluding LLPs) pinch income not exceeding Rs 50 lakh. This shape besides covers income from business and occupation computed connected a presumptive ground nether sections 44AD, 44ADA, aliases 44AE, alongside salary, pension, and different sources. Similar to ITR-1, nan caller ITR-4 shape for AY 2025-26 incorporates reporting of LTCG nether nan exemption limit of Rs 1.25 lakh arsenic per Section 112A.

Finally, ITR-5 is designated for filing by firms, Limited Liability Partnerships (LLPs), Associations of Persons (AOPs), Bodies of Individuals (BOIs), and Artificial Juridical Persons (AJPs). This ensures broad categorisation for divers payer profiles, enabling them to adhere to their taxation obligations efficiently. The latest updates successful these forms purpose to heighten transparency and compliance wrong nan taxation filing system. 

ITR Form 1 vs ITR Form 3

"ITR Form 1 aliases Sahaj is nan return filing shape for resident individuals pinch income not exceeding INR 50 lacs from salary, income from 1 location spot and different sources incomes for illustration interest. The said shape cannot beryllium utilized by taxpayers having income from business, taxable superior gains, lottery winnings etc. Of course, pinch a position to simplify nan reporting requirements, successful nan updated ITR Form 1 individual taxpayers tin now study income from semipermanent superior gains (sale of shares/ communal funds) not exceeding INR 1.25 lakhs covered nether conception 112A of nan Income Tax Act. Earlier, these taxpayers were required to record much elaborate and analyzable forms ITR-2/ITR-3," said Anita Basrur, Partner, Sudit K. Parekh & Co. LLP.

She added: "In comparison, ITR Form 3 is much broad and is intended for individuals (both residents and non-residents) and Hindu Undivided Families (HUFs) taxpayers pinch income from business aliases profession, superior gains, lottery winnings, aggregate location properties. The shape now provides for abstracted reporting of superior gains up to 23 July  2024 and thereafter. The shape requires parting pinch a batch much accusation specified arsenic reporting of specified precocious worth transactions, elaborate disclosure of income and profit & nonaccomplishment and requires reporting of assets and liabilities. A notable update successful nan ITR Form 3 for Assessment Year 2025–26 is that individual taxpayers are now required to capable successful nan Schedule AL (Assets & Liabilities) only if their full income exceeds Rs 1 crore. This revision is expected to easiness nan compliance load taxpayers whose income falls betwixt Rs 50 lakh and Rs 1 crore."

"The CBDT has officially notified nan ITR-3 for AY 2025-26, marking nan commencement of income taxation filing for FY 2024-25. Notable updates see nan divided of superior gains based connected nan Finance Act 2024, which requires taxpayers to categorise gains earlier and aft 23rd July 2024 for meticulous taxation calculation. The reporting limit for assets and liabilities has been raised to Rs 1 crore of full income, ensuring greater transparency for higher-income individuals. The shape besides includes provisions for cruise business taxation nether Section 44BBC, enhanced reporting for deductions for illustration 80C and HRA, and nan request to study TDS conception codes for amended tracking and compliance," said CA Mohammed Chokhawala, Tax Expert, ClearTax 

ITR Form 1 vs ITR Form 3 vs ITR Form 5

The Income Tax section has highlighted various changes successful nan ITR Form 5, pinch 1 important revision being nan preamble of a divided wrong nan Schedule-Capital Gain. Taxpayers are now required to study superior gains earlier and aft July 23rd, 2024.

Additionally, nan updated shape now allows for nan reporting of superior nonaccomplishment incurred connected stock buybacks, pinch nan information that corresponding dividend income from these transactions must beryllium declared arsenic "income from different sources." This request applies to transactions occurring aft October 1st, 2024.

Moreover, location is simply a caller reference to conception 44BBC of nan Income Tax Act included successful nan form. Another important update is nan necessity to specify nan Tax Deducted astatine Source (TDS) conception codification wrong Schedule-TDS.

"ITR 5 is designed for firms, Limited Liability Partnerships (LLPs), and including relation of persons (AOPs), assemblage of individuals (BOIs), artificial jurisdiction personification and different akin entities. Similar to ITR 3, nan shape provides for abstracted reporting of superior gains upto 23 July  2024 and thereafter. Further nan shape allows claiming nonaccomplishment connected relationship of bargain backmost of shares only if associated dividend is offered to taxation nether income from different sources. This keeps a cheque connected taxation payers and only allows genuine claims. The shape requires filling of TDS codes mandatorily," Basrur added.

Capital Gains Tax filing

Salaried individuals and those nether nan presumptive taxation strategy tin now record ITR-1 and ITR-4 for semipermanent superior gains (LTCG) up to Rs 1.25 lakh successful a fiscal year. Previously, they were required to record ITR-2.

According to nan Income Tax law, LTCG of up to Rs 1.25 lakh from nan waste of listed shares and communal costs are tax-exempt. Gains exceeding this magnitude are taxable to a 12.5% tax.

ITR 2 is applicable to a mostly of taxpayers, particularly those who are salaried labor and pensioners. The shape will beryllium applied retroactively from April 1, 2025, meaning it will use since nan opening of nan existent financial year.

The precocious updated ITR-2 includes 2 important changes successful nan superior gains (CG) schedule. The specifications of superior gains transactions conducted during nan twelvemonth are now to beryllium filled successful Schedule CG, recovered successful Part A of nan ITR-2 form. Taxpayers must now specify whether nan transportation of assets resulting successful long/short-term superior gains/losses occurred earlier aliases aft July 23, 2024.

EY India Tax Partner, Samir Kanabar, stated that this alteration to let individuals pinch minimal LTCG to usage ITR-1 aliases ITR-4 will simplify nan return filing process and trim nan load for taxpayers. This move intends to heighten payer services, beforehand voluntary compliance, trim accent related to filing, and make nan strategy much user-friendly for mini taxpayers.

"If your full superior gains from communal costs and listed shares transcend Rs 1 lakh—whether arsenic short-term superior gains (STCG) aliases semipermanent superior gains (LTCG)—you must record ITR-2. ITR-1 and ITR-4 let reporting of LTCG only up to Rs 1.25 lakh and do not support STCG aliases transportation guardant of superior losses. ITR-2 is specifically designed for individuals pinch superior gains supra Rs 1.25 lakh, STCG, aliases aggregate superior summation transactions. ITR-3 applies only if you besides person income from business or profession," said Amit Baid, Head of Tax, BTG Advaya.