ITR forms updated for AY 2025-26: ITR-1, ITR-4 now allow reporting of two properties

ITR filing 2026: The Income Tax Department has notified the updated ITR-1 (Sahaj) and ITR-4 (Sugam) forms for the assessment year (AY) 2025-26, introducing a series of changes aimed at simplifying tax compliance for salaried individuals and small taxpayers.

ITR-1 and ITR-4 continue to be among the most widely used income tax return forms. While ITR-1 is typically filed by salaried individuals and pensioners, ITR-4 is used by individuals, Hindu Undivided Families (HUFs), and firms opting for the presumptive taxation scheme under Sections 44AD, 44ADA, and 44AE.

What has changed this year

A key highlight this year is the expansion of eligibility criteria. Taxpayers can now report income from up to two house properties using the ITR-1 and ITR-4 forms. Earlier, individuals with more than one house property were required to switch to more complex forms such as ITR-2 or ITR-3, which involved more detailed disclosures and higher compliance burden.

Reduced compliance burden

Tax experts view this as a significant step toward simplifying filing. “Taxpayers owning up to two house properties—whether self-occupied, let out, or a combination—can now report income or loss directly in ITR-1. This expands eligibility and allows more taxpayers to continue using simplified forms,” said CA Chandni Anandan, Tax Expert at ClearTax.

She added that the move reduces the need for taxpayers to migrate to more complex return forms, thereby easing compliance, especially for salaried individuals with modest additional income streams.

Core distinction

The distinction between forms, however, remains unchanged. ITR-1 is applicable to resident individuals with total income up to ₹50 lakh from salary, house property, and other sources such as interest or family pension. ITR-4, on the other hand, is designed for taxpayers opting for presumptive taxation, where income is declared at a prescribed rate without maintaining detailed books of accounts.

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New disclosures

Beyond eligibility expansion, the updated forms introduce several structural changes to improve transparency and accuracy in reporting. A new field has been added to disclose unrealised rent, enabling taxpayers to reflect situations where rental income could not be recovered.

Capital gains fields

In line with changes in the tax framework, fields related to earlier capital gains tax rates—such as 15% short-term capital gains (STCG) and 10% long-term capital gains (LTCG) on listed equities—have been removed. This aligns the forms with the revised taxation structure applicable for the financial year.

Tax regime selection

The process for opting into or out of the new tax regime has also been streamlined. The updated forms include clearer and more detailed disclosures, addressing confusion that previously existed around Form 10-IEA, particularly for taxpayers with business income.

Representative assessee added

Additionally, all ITR forms now include a specific field to indicate whether the return is being filed by a representative assessee, enhancing reporting clarity and compliance tracking.

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Section 89A relief

Certain provisions have also been rationalised. The option to claim relief under Section 89A - applicable to foreign retirement accounts - has been removed from ITR-1 and ITR-4. Taxpayers seeking such relief will now have to file more detailed forms like ITR-2 or ITR-3.

Deductions under 80G

Further, disclosure requirements for deductions under Section 80G have been tightened. Taxpayers must now provide additional details such as transaction reference numbers and IFSC codes for donations. In the case of political donations, the name and PAN of the political party must also be disclosed.

Caution on eligibility still remains

Despite the simplification measures, experts caution that taxpayers must carefully evaluate their eligibility before choosing a form. Individuals with capital gains, foreign income, foreign assets, or income exceeding prescribed thresholds will still need to file more comprehensive returns.

Simpler, more efficient tax filing

Overall, the latest changes reflect the government’s broader objective of simplifying tax compliance while improving transparency and accuracy in reporting. By expanding the scope of simplified forms and refining disclosure requirements, the updated ITR framework aims to make the filing process more efficient for a larger base of taxpayers.