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As the new financial year progresses, taxpayers across India are gearing up to file their Income Tax Returns (ITRs) for FY 2024–25. If you're planning your tax filing soon, it's important to note that the Income Tax Department has introduced key changes to two of the most commonly used ITR forms — ITR-1 (Sahaj) and ITR-4 (Sugam).

These updates are expected to make tax filing more inclusive and streamlined for a wider range of taxpayers. Here’s everything you need to know about these changes, how they may affect you, and why timely and accurate ITR filing remains crucial.

✅ What’s New in ITR-1 and ITR-4 for FY 2024–25? 📌 ITR-1 (Sahaj) – Now Covers More Taxpayers

ITR-1 is primarily used by resident individuals with a total income of up to ₹50 lakh from salary, one house property, and other sources (like interest income).

Key Change:

• Inclusion of more taxpayers: Certain categories of taxpayers who were previously excluded—due to specific financial disclosures—can now file using ITR-1, provided they meet updated eligibility norms.

• Relaxed criteria around agricultural income, capital gains reporting (of a certain threshold), and minor foreign income have been slightly broadened for ease of filing.

📌 ITR-4 (Sugam) – Expanded Scope for Presumptive Taxpayers

ITR-4 is used by individuals, HUFs, and firms (other than LLPs) opting for the presumptive income scheme under Sections 44AD, 44ADA, or 44AE.

Key Updates:

• Higher turnover limit: The revised form now allows presumptive tax filers with turnover up to ₹3 crore (from earlier ₹2 crore) for businesses, and ₹75 lakh (from ₹50 lakh) for professionals, provided digital transactions account for more than 95% of receipts and payments.

• New disclosure requirements: Taxpayers must now report certain personal expenditure data such as travel bills, hotel expenses, and high electricity bills, especially if such lifestyle expenses are not in line with declared income.

• More detailed income categorization: Users will be required to specify income sources more clearly, improving transparency and reducing scrutiny.

🔁 What About ITR-2 and ITR-3?

While no major structural changes have been announced in ITR-2 and ITR-3, minor improvements in data fields, pre-filled information, and cross-verification features have been implemented to make the filing process smoother and more error-proof.

🧾 Choosing the Right ITR Form: Why It Matters

Selecting the right ITR form is essential. Filing the incorrect form could lead to return rejection, delays in refund, or even penalty notices from the Income Tax Department. Here’s a quick tip:

• Use ITR-1 if you’re salaried with income under ₹50 lakh and simple assets.

• Use ITR-4 if you are self-employed under the presumptive taxation scheme.

• Switch to ITR-2 or ITR-3 if you have multiple properties, foreign income, capital gains, or business income that doesn’t fall under the presumptive scheme.

📅 Why Timely ITR Filing Is Critical

Filing your ITR on time ensures:

• Faster refunds

• Avoidance of penalties and interest

• Proof of income for loans, visas, and tenders

• Carry-forward of losses for future tax benefits

Even if your income is below the taxable threshold, filing an ITR can help maintain financial records and support future legal or financial requirements.

🎯 Final Takeaway

The government’s updates to ITR-1 and ITR-4 reflect a broader push toward simplification and digital inclusion in tax filing. However, with new disclosure requirements and expanded eligibility, taxpayers must be more diligent than ever. Consulting a chartered accountant or tax advisor is highly recommended, especially if you’re unsure about which form to file or how new rules apply to you.

Stay compliant, stay informed, and make sure your tax journey for FY 2024–25 is smooth and hassle-free.

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