income tax

Copy Page

Published on 22 July 2025

ITR-1 and ITR-4 Updates for AY 2025–26: Key Changes and Filing Tips

ITR-1 & ITR-4 Excel Utility for AY 2025–26: Key Changes & Filing Guide

The Income Tax Department has rolled out updated Excel utilities for ITR-1 (Sahaj) and ITR-4 (Sugam) for Assessment Year (AY) 2025–26. These utilities come with smarter validations, better compliance checks, and stricter disclosure norms.

New Filing Deadline: September 15, 2025 (Extended from the usual July 31 to help taxpayers adapt.)

Who Can File ITR-1 and ITR-4?

ITR-1 (Sahaj) — For Simple Salary Cases

Eligible for:

  • Resident individuals (not “not ordinarily resident”)

  • Total income ≤ ₹50 lakh

  • Income from:

    • Salary or pension
    • One house property
    • Other sources (interest, dividends)
    • LTCG up to ₹1.25 lakh under Section 112A
    • Agricultural income ≤ ₹5,000

Not eligible if you have:

  • More than one house property
  • Business or professional income
  • Foreign income or assets
  • TDS under Section 194N (cash withdrawals)
  • Unlisted shares or are a company director

ITR-4 (Sugam) — For Presumptive Income

Eligible for:

  • Resident Individuals, HUFs, Firms (excluding LLPs)
  • Total income ≤ ₹50 lakh
  • Presumptive income under Sections 44AD, 44ADA, 44AE
  • LTCG under Section 112A up to ₹1.25 lakh

Top 7 Key Changes for AY 2025–26

1. Detailed Section-wise Deduction Disclosures

  • 80C: Mention type (e.g., PPF, ELSS), amount, and payee.
  • 80D: Include insurer name, policy number, split between self/family/parents.
  • HRA: Must enter landlord’s name and PAN (if rent > ₹1 lakh/year).
  • 80E / 80EEA: Add lender details, loan specifics, and interest paid.

2. LTCG Up to ₹1.25 Lakh Now Allowed

  • Small investors can now report capital gains on listed equity or equity mutual funds up to ₹1.25 lakh directly in ITR-1 and ITR-4—no need to move to ITR-2 unless limits exceeded.

3. Mandatory TDS Section Tagging

  • For every income entry, you must tag the relevant TDS section code (e.g., 192 for salary, 194A for interest).
  • Helps auto-match ITR with Form 26AS for quicker processing.

4. Asset Disclosure in ITR-4 Now Only If Income > ₹1 Cr

  • Earlier, asset/liability details were required if income exceeded ₹50 lakh.
  • Now, the threshold has been raised to ₹1 crore, easing compliance for mid-sized taxpayers.

5. Enhanced Home Loan Reporting

  • If claiming deduction on home loan interest:

    • Must provide lender’s name, PAN, interest paid, and property address.
    • Aims to reduce incorrect claims and mismatches.

6. Smarter Capital Gains Schedule

  • Special fields for grandfathered equity assets (purchased before Feb 1, 2018).
  • Auto-indexation prompts for non-equity gains.
  • Clearly split short-term and long-term gains for accurate tax computation.

7. Smarter Excel Utility Features

  • Instant field validations, tooltips, and correction tips.
  • Drop-down menus for deduction sections, TDS codes.
  • Real-time tax/refund calculations.
  • Consolidated error report for easy review.

Restrictions: TDS Code-Based Blocking in ITR-1

If your Form 26AS shows TDS under certain sections, you cannot file ITR-1, even if income is within limits. You'll need to use ITR-2 or another form.

TDS SectionIncome Type
194BLottery winnings
194BBHorse race winnings
194SCrypto/digital asset gains
194LACompensation on land/building
195Foreign remittances
196A/194Q/194RCertain business & cross-border income

Step-by-Step Guide to File ITR via Excel Utility

  1. Download the Utility Go to the Income Tax e-Filing portal → Downloads → Excel Utilities → Select AY 2025–26.

  2. Open & Fill the Sheet

    • Enter basic details, income sources, deductions, and taxes paid.
    • Use dropdowns and tooltip help for accuracy.

  3. Validate the Form

    • The utility flags any missing or incorrect data.
    • Errors must be cleared before generating XML.

  4. Generate XML File

    • Once validated, click "Generate XML" for submission.

  5. Upload to Portal & e-Verify

    • Log into the e-Filing portal → Upload XML under 'File Return'.
    • Complete e-verification within 30 days to avoid invalidation.

Final Tips for AY 2025–26

  • Double-check if ITR-1 or ITR-4 applies based on your income type and Form 26AS TDS codes.
  • Keep documents ready: salary slips, rent receipts, insurer details, investment proofs.
  • Don’t guess deduction details—new validations are stricter.
  • File early to avoid last-minute glitches and speed up refunds.
  • ⚠ If ineligible due to income/TDS source, use ITR-2 or ITR-3.
Share: