Individuals Earning up to ₹1.25 Lakh in LTCG Now Eligible to File ITR-1
The Income Tax Department has notified ITR Forms 1 and 4 for the Assessment Year 2025–26, making it easier for individual taxpayers and Hindu Undivided Families (HUFs) with income up to ₹50 lakh to file their returns. A significant update this year is that individuals earning up to ₹1.25 lakh in Long-Term Capital Gains (LTCG) can now also file ITR-1, which was earlier not permitted.
Previously, individuals with even small LTCG amounts had to file ITR-2. The new rules aim to simplify the return filing process, especially for small taxpayers and senior citizens with limited transactions.
Who Can File ITR-1 in AY 2025–26:
- Individuals, HUFs, or firms (other than LLPs) earning up to ₹50 lakh annually from salary, pension, one-house property, and other sources like interest income or dividend.
- Those having LTCG up to ₹1.25 lakh annually, including capital gains from shares or mutual funds.
- Taxpayers whose income is not affected by presumptive taxation or international income, and who are not directors or shareholders in unlisted companies.
This change is expected to benefit a large number of small investors, especially those with minor gains from capital markets. Additionally, ITR-4 will remain applicable for those using the presumptive taxation scheme under Section 44AD, 44ADA, and 44AE.
The department has also included AI-generated guidance in the return preparation system through the “Taxpayer Support and Assistance Module” to ensure better compliance and ease of filing.
