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New Indian Express
11-05-2025
- Business
- New Indian Express
Key changes in new ITR forms individual taxpayers should know about
The tax department has recently notified the Income Tax Return (ITR) forms for the Assessment Year 2025–26, which corresponds to the financial year 2024–25. While the forms largely retain their previous structure, some notable changes have been introduced, particularly concerning the reporting of long-term capital gains (LTCG) and the threshold for disclosing assets and liabilities. Individual taxpayers should familiarise themselves with these updates to ensure accurate and timely filing. ITR-1 (Sahaj): For salaried individuals The ITR-1, also known as 'Sahaj', is for resident individuals (other than not ordinarily resident) with a total income not exceeding Rs 50 lakh from salary or pension, one house property (excluding cases with brought-forward losses), and other sources such as interest. The new ITR-1 now also applies to individuals who earned up to Rs 1.25 lakh in the previous financial year from long-term capital gains (LTCG) through the sale of listed equity shares or equity-oriented mutual funds. Neeraj Agarwala, Partner at Nangia Andersen LLP, points out a significant relief for taxpayers with LTCG under Section 112A below Rs 1.25 lakh. Previously, they might have been required to file the more complex ITR-2. "This inconvenience is reduced with the new Form ITR-1 for AY 2025–26 incorporating a small section for reporting income in the nature of long-term capital gains on which tax is not payable by virtue of the exemption limit provided in Section 112A." However, he clarifies that if LTCG under Section 112A exceeds Rs 1.25 lakh, or if there are other types of capital gains (long-term or short-term), or carried forward/brought forward capital losses, individuals will still need to file ITR-2. ITR-4 (Sugam): For presumptive income ITR-4, or 'Sugam', is applicable to resident individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) with total income up to Rs 50 lakh. They must have income from business or profession computed under the presumptive taxation schemes. Similar to ITR-1, Sandeep Jhunjhunwala, Tax Partner at Nangia Andersen LLP, notes that the new ITR-4 also allows for reporting of LTCG under Section 112A up to Rs 1.25 lakh. ITR-2: Detailed reporting for wider income sources ITR Form 2 is for individuals (both residents and non-residents) and HUFs with total income excluding income from business or profession, but including income from salary, multiple house properties, capital gains, and other sources. Sanjoli Maheshwari, Executive Director at Nangia Andersen India, highlights several key changes in ITR-2 for AY 2025–26: Separate reporting of capital gains : Taxpayers must now report capital gains separately for periods before and after 23 July 2024, aligning with amendments in the Finance Act, 2024, including revised tax rates and indexation rules. Reporting of unlisted bonds and debentures : Gains from these are to be reported as short-term or long-term capital gains based on the holding period. Buy-back proceeds as dividend income : Buy-back proceeds received on or after 1 October 2024 are to be reported as dividend income under 'Income from Other Sources'. However, a separate disclosure as 'Nil' consideration with the cost of acquisition is also required under 'Capital Gains' for potential set-off and carry forward of capital loss. Revised threshold for assets and liabilities disclosure: Individuals with total income exceeding Rs 1 crore (up from Rs 50 lakh previously) are now required to furnish details of their assets and liabilities. ITR-3: For business and profession income ITR-3 is applicable to individuals and HUFs earning income from business or profession. Deepak Kumar Jain, Founder and CEO of TaxManager, outlines key changes in ITR-3 for AY 2025–26:
The Hindu
30-04-2025
- Business
- The Hindu
Govt notifies ITR forms; individuals with LTCG up to ₹1.25 lakh can file ITR 1, 4
The government has notified Income Tax Return (ITR) forms 1 and 4 for Assessment Year (AY) 2025-26, simplifying the filing process for individuals earning salary or presumptive income who have long-term capital gains (LTCG) up to ₹1.25 lakh from listed equities. Previously required to file the more complex ITR-2, these taxpayers can now use the simpler ITR-1 (Sahaj) and ITR-4 (Sugam) forms, respectively. This change addresses a specific inconvenience highlighted by tax experts. Sandeep Jhunjhunwala, Tax Partner at Nangia Andersen LLP, explained that previously, 'salaried individuals having income under the head capital gains were required to file form ITR-2 even where the capital gains were exempt by virtue of the threshold limit prescribed under Section 112A, resulting in elaborate disclosure requirements.' The new ITR-1 and ITR-4 forms for AY 2025-26 incorporate a section for reporting LTCG exempt under Section 112A up to the ₹1.25 lakh limit. According to the Income Tax law referenced in the notification context, LTCG up to ₹1.25 lakh per annum from the sale of listed shares and mutual funds are exempt, with gains exceeding this threshold subject to a 12.5 per cent tax. However, Mr. Jhunjhunwala clarified that salaried individuals must still use Form ITR-2 if their LTCG under Section 112A exceeds ₹1.25 lakh, if they have other types of LTCG or short-term capital gains, or if they have capital losses to carry forward or bring forward. A similar simplification for reporting exempt LTCG (up to ₹1.25 lakh under Section 112A) has been incorporated into the new ITR-4 form for taxpayers using the presumptive taxation scheme. Experts lauded the simplification. EY India Tax Partner Samir Kanabar stated that allowing those with minimal LTCG to use ITR-1 or ITR-4 'reduces the burden of navigating more complex forms.' He added, 'This move reflects a clear shift towards enhancing taxpayer services... [it] is expected to encourage greater voluntary compliance, reduce filing-related stress, and make the system more user-friendly for small taxpayers.' AKM Global Partner-Tax Sandeep Sehgal echoed this, noting the change 'streamlines the tax filing process, making it more accessible and less burdensome... thereby encouraging timely and accurate compliance'. ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) cater to small and medium taxpayers with total annual income up to ₹50 lakh. Sahaj is for resident individuals with income from salary, one house property, other sources (like interest), and agricultural income up to ₹5,000. Sugam is for individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) with income from business and profession under the presumptive scheme. ITR-2 is filed by individuals and HUFs without business or profession income. Beyond the LTCG change, the government has introduced other modifications. The forms now feature a drop-down menu in the utility for selecting deductions claimed under sections like 80C and 80GG. Additionally, assessees must furnish section-wise details regarding Tax Deducted at Source (TDS) deductions within the ITR. Consistent with last year, ITR-1 continues to seek details on expenditures exceeding ₹2 lakh on foreign travel and over ₹1 lakh on electricity consumption during the previous year. Regarding the timeline, the ITR forms are typically notified earlier, around February or March. The delay this year was attributed to Revenue Department officials being preoccupied with the new Income Tax Bill introduced in Parliament in February. Taxpayers can begin filing their returns for income earned in the 2024-25 financial year once the I-T department makes the filing utility available. The deadline for individuals not requiring an audit remains July 31.
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Business Standard
30-04-2025
- Business
- Business Standard
Individual taxpayers with LTCG up to ₹1.25 lakh can use simplified ITR-1
Individual taxpayers earning long-term capital gains (LTCG) up to ₹1.25 lakh under Section 112A of the Income Tax Act, 1961, can now file their income tax returns (ITRs) using the simplified ITR-1 (Sahaj) form for assessment year (AY) 2025-26. The Central Board of Direct Taxes (CBDT) notified ITR 1 and ITR 4 for AY 2025-26 on Tuesday. Section 112A of the IT Act provides for taxation of LTCG arising from the transfer of equity shares in a company or units of an equity-oriented fund or units of business trust where securities transaction tax (STT) has been paid on acquisition or transfer or on both, as provided in the section. According to the latest CBDT notification, the ITR-1 (Sahaj) form can be used by individual taxpayers meeting the following criteria: The individual is a resident (other than not ordinarily resident); Total income up to ₹50 lakh during the financial year; Income sources include: Salary or pension; Income from one house property (excluding cases with brought-forward losses); Income from other sources such as interest; LTCG under Section 112A, from the sale of listed equity shares or equity-oriented mutual funds, up to ₹1.25 lakh; Agricultural income up to ₹5,000. Until now, salaried individuals having income under the head LTCG were required to file Form ITR-2 even where the capital gains were exempt by virtue of the threshold limit prescribed under Section 112A. This resulted in elaborate disclosure requirements, including information about accrual or receipt of capital gains and details of securities, among others. 'This inconvenience is reduced with the new Form ITR-1 for AY 2025-26, incorporating a small section for reporting the income in the nature of LTCG on which tax is not payable by virtue of the exemption limit provided in Section 112A. However, in cases where the taxpayer earns LTCG under Section 112A of over ₹125,000 or where the taxpayer earns any other LTCG other than that taxable under Section 112A or earns short-term capital gains (STCG) or has carried forward or brought forward capital losses or derived income from any combination of the above, the salaried individual would have to resort to Form ITR-2 for filing return of income,' said Sandeep Jhunjhunwala, tax partner at Nangia Andersen LLP. A similar change has been made in Form ITR-4 which applies to taxpayers such as individuals, Hindu undivided families (HUFs) and firms, excluding limited liability partnerships (LLPs), resorting to presumptive taxation for their business income. The new ITR-4 form for AY 2025-26 subsumes reporting of LTCGs subject to tax under Section 112A of the IT Act within the limit of ₹1.25 lakh. ITR-4 cannot be used by individuals who are company directors, hold unlisted shares, have foreign assets or income, earn agricultural income exceeding ₹5,000, or have deferred tax on employee stock options (ESOPs). 'With the latest amendments, individuals can now utilise the simpler ITR-1 and ITR-4 forms if their LTCG under section 112A doesn't exceed ₹1.25 lakh. Also, if they have no capital losses to carry forward or set off,' said Sandeep Sehgal, partner at AKM Global.
News18
30-04-2025
- Business
- News18
Luxury Sportswear, Watches, Handbags Above Rs 10 Lakh To Attract 1% TCS
The income tax department outlined the affected categories in a notification issued on April 22, 2025. Sportswear, handbags, wristwatches, and footwear priced above ₹10 lakh will now attract a 1% tax collected at source (TCS). The income tax department outlined the affected categories in a notification issued on April 22, 2025. While TCS is not expected to generate significant additional revenue, the move aims to strengthen the department's ability to track high-value transactions, as Permanent Account Number (PAN) details are mandatory at the time of purchase. Buyers who file their income tax returns can claim credit for the TCS paid against their final tax liability. Check the list of luxury goods under the 1% TCS that cost more than Rs 10 lakh: Accessories: Sunglasses, shoes, handbags, and wrist watches. Transportation: Helicopter, yachts, rowing boat, and canoe. Art pieces: Antiques, paintings, and sculptures. Collectables: Stamps and coins. Sports gear: Ski-wear and golf kits Home theatre system Horses for polo games and racing. As part of the July Union Budget last year, the Finance Act 2024 established a provision for luxury items and cars that cost more than Rs 10 lakh. According to tax experts, the move will increase openness and close the loop on discretionary spending. Sandeep Jhunjhunwala, tax partner at Nangia Andersen LLP, told PTI that the notification strengthens the government's objective of closely monitoring high-value discretionary spending and improving the audit trail within the luxury goods segment. 'Sellers will now be required to ensure timely compliance with TCS provisions, while buyers of notified luxury goods may experience enhanced KYC requirements and documentation at the time of purchase," Jhunjhunwala told PTI. He went on to say that while the industry would face some transitional difficulties, formalisation and better regulatory monitoring are anticipated as a result of this action. What It Means: 1% TCS Will Be Attracted by Items Over Rs 10 Lakh An additional 1 per cent TCS will be applied to the purchase of luxury goods costing Rs 10 lakh or above. The goal is to increase the number of taxpayers and guarantee accurate income disclosures, not to raise more money. It is thought that many business owners and professionals underreport their income to evade taxes. The government is now paying more attention to high-value transactions to verify tax returns with real purchases and encourage people to amend their tax returns appropriately. First Published:
News18
28-04-2025
- Business
- News18
Buying Luxury Items? Sportswear, Watches, Handbags Above Rs 10 Lakh To Attract 1% TCS
Last Updated: In a notification issued by the Income Tax Department on April 22, a 1 percent Tax Collected at Source (TCS) will apply to luxury items that cost more than Rs 10 lakh. Sportswear, handbags, wristwatches, and footwear priced above ₹10 lakh will now attract a 1% tax collected at source (TCS). The income tax department outlined the affected categories in a notification issued on April 22, 2025. While TCS is not expected to generate significant additional revenue, the move aims to strengthen the department's ability to track high-value transactions, as Permanent Account Number (PAN) details are mandatory at the time of purchase. Buyers who file their income tax returns can claim credit for the TCS paid against their final tax liability. Check the list of luxury goods under the 1% TCS that cost more than Rs 10 lakh. As part of the July Union Budget last year, the Finance Act 2024 established a provision for luxury items and cars that cost more than Rs 10 lakh. According to tax experts, the move will increase openness and close the loop on discretionary spending. Sandeep Jhunjhunwala, tax partner at Nangia Andersen LLP, told PTI that the notification strengthens the government's objective of closely monitoring high-value discretionary spending and improving the audit trail within the luxury goods segment. 'Sellers will now be required to ensure timely compliance with TCS provisions, while buyers of notified luxury goods may experience enhanced KYC requirements and documentation at the time of purchase," Jhunjhunwala told PTI. He went on to say that while the industry would face some transitional difficulties, formalisation and better regulatory monitoring are anticipated as a result of this action. What It Means: 1% TCS Will Be Attracted by Items Over Rs 10 Lakh An additional 1 per cent TCS will be applied to the purchase of luxury goods costing Rs 10 lakh or above. The goal is to increase the number of taxpayers and guarantee accurate income disclosures, not to raise more money. It is thought that many business owners and professionals underreport their income to evade taxes. The government is now paying more attention to high-value transactions to verify tax returns with real purchases and encourage people to amend their tax returns appropriately. First Published:
