Let’s be honest: income tax forms rarely make headlines. But every so often, the devil hides in the dropdowns.
The CBDT has quietly released the updated ITR-1 (Sahaj) and ITR-4 (Sugam) forms for the upcoming tax season; they may look familiar, but they’ve got a few tricky questions.
Want to stay on the simple forms even if you’ve made some capital gains?
Unsure whether the new tax regime switch will haunt you later?
Still using your Aadhaar enrolment ID instead of the real thing?
It’s all here — in the fine print. But don’t worry, we’ve translated that fine print into a simple script..
Let’s decode everything that’s changed, what it signals for individual taxpayers and consultants, and why this year’s ITR forms are less about data entry — and more about choices.
Quick Recap: Who Actually Uses ITR-1 or ITR-4?
Consider ITR-1 as the form for “salary + savings interest + one house”. If you’re a salaried employee with total income under ₹50L and no messy foreign income, capital gains, or business revenue, you’ve likely filed ITR-1 before.
ITR-4, on the other hand, is the freelancer/consultant/side-hustler’s go-to. It’s built for those opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE. No books of accounts, no long-winded ledgers — just declare a fixed % of income as profit and move on.
This year, both forms got some well-meaning upgrades. But while they promise simplicity, they also ask more from you — especially if you’re toggling regimes, earning capital gains, or managing multiple bank accounts. Let’s dive in.
1. Capital Gains Under ₹1.25L? You Can Now Stick With ITR-1 or ITR-4
Here’s the big one: If your LTCG from listed shares or mutual funds is under ₹1.25 lakh, you don’t need to switch to ITR-2 anymore. Previously, any capital gains meant a forced form upgrade — even if it was just ₹10K from an index fund. That’s now fixed.
This aligns with Budget 2024’s move to raise the LTCG exemption limit to ₹1.25L under Section 112A. So if you’ve sold a few stocks, booked a tidy gain, and don’t have any capital losses to carry forward — breathe easy.
You can now stay on Sahaj or Sugam, and avoid the rabbit hole that is ITR-2.
What this signals:
The government’s nudging more people into simplified compliance, especially those with basic investing activity. It’s a quiet win for salaried employees and consultants who also dabble in equities.
2. Aadhaar Enrolment ID Is Dead. Use Your Full Aadhaar Number.
This one’s subtle, but important.
The updated forms have completely removed the Aadhaar Enrolment ID field. You now must provide your actual 12-digit Aadhaar number — nothing else will do.
Still waiting on your Aadhaar card? That enrolment slip won’t get you past the filing gate.
What this signals:
The Aadhaar-PAN linkage drive is entering its final lap. From now on, only a full-fledged Aadhaar counts — and yes, it must be properly linked to your PAN before you even open the ITR utility.
3. Tax Regime Disclosure is Now Mandatory — And You Might Need Form 10-IEA
This one’s big if you’re switching tax regimes. You now need to clearly state your choice between the old and new tax regimes right in the ITR. And if you're a business owner or professional opting out of the default new regime for the first time, you’ll need to:
- File Form 10-IEA, and
- Enter its acknowledgement number in your return
Already opted out last year? The ITR-4 form will still ask you to confirm whether you want to continue with that decision.
What this signals:
This is about locking in your choice. You can’t switch regimes every year like changing mutual funds. The form is now your digital handshake with the tax department, and it wants receipts — in the form of 10-IEA.
4. Deductions Now Have Dropdowns — Goodbye Free Text
No more vague “80C - ₹1,50,000” entries. The updated forms now give you dropdown menus to select the specific clause under each deduction section.
So under section 80C, you pick whether it’s LIC premium, PPF, ELSS, or tuition fees. Same goes for 80D, 80E, etc.
This is good and bad:
- Good: Less scope for typos or wrong claims
- Bad: You now need to know exactly what you're claiming — and under which clause
What this signals:
More structured data = cleaner processing = faster refunds. But you’ll need to be more organised this time.
5. Report Every Active Bank Account (Dormants Exempt)
This year, you're expected to report every bank account you actively used during FY 2024–25. "Active" means any account with any transaction — salary credits, ATM withdrawals, UPI spends, interest deposits, anything.
The good news: dormant accounts (inactive for 2+ years) are exempt.
The catch: joint accounts and secondary savings accounts count as active too.
You’ll need to:
- Enter account number
- Provide IFSC code
- And choose one account for receiving refunds
What this signals:
Stronger reconciliation, tighter compliance, better audit trails. For taxpayers, it’s a nudge toward financial hygiene. For CAs, it’s a logistical upgrade (read: spreadsheet time).
What This All Means for You
If you're a salaried employee:
- You can now report up to ₹1.25L in LTCG without leaving ITR-1
- Make sure your Aadhaar is fully linked, not just enrolled.
- Choose your tax regime up front — old vs new — and move on
- Have your deduction breakdown ready for the dropdown menus
- List your salary account and any other active accounts used this year
If you're a freelancer or consultant:
- If you're on presumptive taxation, the regime choice matters more than ever
- If you’re opting out of the new regime, file Form 10-IEA early
- Keep LTCG under ₹1.25L? You stay on ITR-4 — no forced upgrade
- Collect policy numbers, PPF statements, etc., for granular deduction claims
- List business and personal accounts used for income/expenses
If you're a CA or tax professional:
- More clients can stay on Sahaj/Sugam — if you guide them correctly
- Pre-fill Form 10-IEA acknowledgement numbers before April madness begins
- Guide clients on dropdown-driven deductions, especially the mix of 80C items
- Bank accounts tab = new hygiene checklist
- Regime selection is now a year-on-year narrative. Stay ahead of it.
The Bottom Line
The new ITR-1 and ITR-4 forms are more than just cosmetic updates. They reflect the Income Tax Department’s shift toward more structure, more clarity, and more accountability — from your side.
Yes, they make life easier in some ways:
You don’t need to jump to ITR-2 just because you sold a few mutual fund units.
You don’t need to type deduction codes like it’s 2005.
But they also ask more from you — disclosure, diligence, documentation.
If you’re organised, the forms will feel like a gentle nudge.
If not, April might sting a bit.
Either way, now’s the time to prep:
- Confirm your tax regime
- File 10-IEA if needed
- Gather your deduction slips
- List out your active bank accounts
- And yes, ditch that Aadhaar enrolment slip once and for all
TL;DR (But With Context)
| Change | What it means for taxpayers |
|---|---|
| LTCG under ₹1.25L allowed in ITR-1/4 | More people stay on simple forms |
| Aadhaar enrolment ID removed | Only full Aadhaar is accepted |
| Tax regime must be declared | Form 10-IEA required for business opt-outs |
| Deduction sections now have dropdowns | Specificity required (no freeform entries) |
| Must report all active bank accounts | Dormants exempt, refunds linked to one |
FAQs: Updated ITR-1 & ITR-4 Forms (AY 2025–26)
1. Can I still use ITR-1 if I earned capital gains from mutual funds or shares?
Yeah! You can continue using ITR-1 or ITR-4 if your equity LTCG is under ₹1.25 lakh. No need to switch to ITR-2.
2. Is Aadhaar enrolment ID still accepted for filing returns?
No. The new forms mandate your full 12-digit Aadhaar number. The Aadhaar enrolment ID option has been removed entirely.
3. What is Form 10-IEA and who needs to file it?
Form 10-IEA is used to opt out of the default new tax regime. It’s mandatory for business/professional taxpayers doing this for the first time in AY 2025–26.
4. Do I have to report all my bank accounts while filing?
Only active bank accounts used during the year must be reported — dormant accounts (inactive for 2+ years) can be skipped.
