ITR filing alert 2025-26: Excel utilities for ITR-1, ITR-4 now support LTCG, rent receipts, new tax regime

The Income Tax Department has released updated Excel utilities for ITR-1 (Sahaj) and ITR-4 (Sugam) for the Assessment Year 2025–26 (Financial Year 2024–25), incorporating critical compliance and disclosure changes aligned with the Finance Act, 2024.

These utilities, available on incometax.gov.in, are intended for salaried individuals, Hindu Undivided Families (HUFs), and small businesses under the presumptive taxation scheme. The updated Excel-based forms now allow for offline data entry, validation, and JSON file generation for uploading to the portal, even as full online filing access is awaited.

The ITR-1 (Sahaj) form is designed for resident individuals who have straightforward income sources, such as salaries, one house property, and other sources like interest, with a total income below Rs. 50 lakh. 

On the contrary, the ITR-4 (Sugam) form is tailored for resident individuals, HUFs, and firms (excluding LLPs) with income from business or profession under presumptive taxation schemes (Sections 44AD, 44ADA, etc.). The recent updates to these forms incorporate changes in tax laws, including revised tax slabs, increased deductions, and new validation rules to ensure compliance and accuracy.

LTCG reporting in ITR-1 and ITR-4

A major change is the introduction of fields for reporting exempt long-term capital gains (LTCG) under Section 112A in both ITR-1 and ITR-4. Until now, taxpayers earning such exempt LTCG—such as gains on the sale of listed equity shares or equity mutual funds within the Rs 1.25 lakh exemption limit—had to switch to more complex forms like ITR-2.

Now, per CBDT Notification No. 40/2025 dated April 29, both forms include specific fields for these exempt gains:

In ITR-1, a new dropdown option has been added under ‘Exempt Income’ to report LTCG under Section 112A.

In ITR-4, a line item has been introduced titled: “Income on which no tax is payable: Long-Term Capital Gains under Section 112A.”

However, carry-forward or set-off of capital losses is still not allowed in these simplified forms.

"As per the revised Form ITR-1 (Sahaj), a new option has been introduced under the 'Exempt Income' category in the dropdown menu, providing a specific field for reporting Long-Term Capital Gains (LTCG) under Section 112A that are not chargeable to Income-tax i.e., gains within the exemption limit of Rs. 1.25 lakhs on which no tax is payable," CA Dr Suresh Surana told Business Today.

"The revised Form ITR-4 (Sugam) now includes a separate line item titled 'Income on which no tax is payable: Long-Term Capital Gains under Section 112A not chargeable to Income-tax,' also allowing taxpayers to report such exempt LTCG. This update enables taxpayers who are otherwise eligible to use ITR-1 or ITR-4 and who also have exempt LTCG income under Section 112A (such as gains from the sale of listed equity shares or units of equity-oriented mutual funds) to report such income directly within these simplified forms," Dr Surana added. 

"ITR-1 and ITR-4 utilities have been released late by the IT Department. If we have equity-based long-term capital gains up to Rs 1.25 lakh, we can now report that in ITR-1 and ITR-4. Earlier, one had to file ITR-2 and ITR-3, respectively, in such cases. This is a major change. Further, deduction details are now being sought in a more elaborate manner. This needs to be kept in mind by tax filers while filing ITR-1 and ITR-4. The IT Department has released only the Excel utility for ITR-1 and ITR-4. The Java utility is still pending. Taxpayers can file ITR-1 and ITR-4 using the JSON generated from the Excel utility," said Sujit Sudhakar Bangar, Founder, TaxBuddy.com.

New compliance mandate for rent deduction under 80GG

Another update targets individuals claiming rent deduction under Section 80GG, typically applicable to those who don’t receive HRA. From AY2025–26, taxpayers must now file Form 10BA along with the return, confirming rent details and eligibility. This replaces the earlier flexible timeline for Form 10BA submission.

The Income Tax Department has introduced a significant compliance requirement for individuals claiming deductions under Section 80GG of the IT Act, which permits deduction of rent paid by taxpayers not receiving HRA. Accordingly, in order to avail this benefit, it is mandatory to file a declaration in Form No. 10BA. While earlier there was no specific deadline prescribed under the IT Rules for submitting this form, CBDT via Notification No. 40/2025 dated 29th April 2025, has now mandated that Form 10BA must be furnished along with the return of income.

"Individuals who do not own a residential property at their place of work or residence, and do not receive House Rent Allowance (HRA) as part of their salary can claim rent deduction u/s 80GG of the IT Act. The benefit is available to self-employed persons and salaried individuals alike," Dr Surana said. 

ITR-4 adds new regime continuity check

The updated ITR-4 also introduces a new field asking whether the taxpayer had filed Form 10-IEA in the previous year, and whether they wish to continue or opt out of the new tax regime for the current year. This aims to ensure clarity and consistency in regime selection from one year to the next.

These changes mark a push towards simplifying tax compliance while also tightening reporting standards and deadlines.