May 5, 2025 - The Income Tax Department (IT) has introduced simplified Income Tax Return (ITR) forms for the Financial Year 2024-25 (Assessment Year 2025-26) to streamline the filing process for taxpayers with long-term capital gains (LTCG) of up to Rs 1.25 lakh.

The department has notified ITR Form 1 (Sahaj) and Form 4 (Sugam) with a major change in ITR Form 1. Individuals with LTCG up to Rs 1.25 lakh from stocks or equity mutual funds, can now file their ITR using the Sahaj form. Earlier, such taxpayers were required to file ITR Form 2.

Until now, the Sahaj form did not allow for reporting of capital gains.

The Central Board of Direct Taxes (CBDT) released the revised forms with the intention of reducing the burden of compliance for small taxpayers. Taxpayers will still need to use ITR-2, though, if the LTCG exceeds Rs 1.25 lakh or if there are short-term capital gains, LTCG from immovable property, or carried-forward capital losses.

Experts believe this change will provide significant relief to salaried taxpayers. This reform aims to make the return filing process simpler and less burdensome.

Individuals not eligible to use these forms include:

• Directors in a company
• Investors in unlisted shares
• Those with deferred tax on ESOPs
• Individuals earning agricultural income over Rs 5,000
• Persons holding foreign assets or financial interest abroad

With Media Inputs