ITR Filing 2025: Complete Guide to New ITR Forms 1 to 5 for FY 2024-25 and Key Differences for Taxpayers
ITR Filing 2025: Complete Guide to New ITR Forms 1 to 5 for FY 2024-25 and Key Differences for Taxpayers
Introduction
Filing your income tax return (ITR) is an essential annual responsibility for every taxpayer. For the financial year 2024–25 (assessment year 2025–26), the Income Tax Department of India has notified ITR forms 1 to 5 early to allow better planning and hassle-free return filing. These updated forms bring key changes tailored to different categories of taxpayers.
In this comprehensive guide from CMA Knowledge, we explain the applicability, major updates, and differences between ITR-1, ITR-2, ITR-3, ITR-4, and ITR-5 to help you make an informed choice.
ITR-1 (Sahaj): For Salaried Individuals with Simple Incomes
Who can file ITR-1?
- Resident individuals (not HUF or companies)
- Total income up to ₹50 lakh
- Sources of income:
- Salary/pension
- One house property
- Other sources (interest, etc.)
- Agricultural income up to ₹5,000
Who cannot file ITR-1?
- Individuals with capital gains
- Those with foreign income or assets
- Directors in a company
- Individuals holding unlisted equity shares
Key Change for FY 2024–25:
- A new section allows salaried taxpayers to report long-term capital gains (LTCG) exempt under Section 112A up to ₹1.25 lakh—a major relief that reduces the need to file ITR-2 in such cases.
ITR-2: For Individuals and HUFs Without Business Income
Who can file ITR-2?
- Individuals and Hindu Undivided Families (HUFs)
- Income sources include:
- Salary
- Multiple house properties
- Capital gains
- Foreign income/assets
- Agricultural income exceeding ₹5,000
- Other sources
Who cannot file ITR-2?
- Individuals/HUFs earning income from business or profession
Why file ITR-2? If you have:
- More than one house property
- Capital gains from stocks or mutual funds
- Foreign investments
- Income exceeding ₹50 lakh then ITR-2 is the right form for you.
ITR-3: For Business Professionals and Proprietors
Who can file ITR-3?
- Individuals and HUFs earning income from:
- Business or profession
- Partnership income
- Freelance services
- Intraday/share trading
Key Update for AY 2025–26:
- Clearer segmentation of capital gains for periods before and after July 23, 2024, helping better tax computation and reporting accuracy.
Ideal For:
- Professionals such as doctors, lawyers, consultants
- Sole proprietors
- Stock market traders
ITR-4 (Sugam): For Small Businesses and Presumptive Income
Who can file ITR-4?
- Resident Individuals, HUFs, and Firms (not LLPs)
- Total income up to ₹50 lakh
- Income from:
- Business under Section 44AD
- Profession under Section 44ADA
- Transport business under Section 44AE
Who cannot file ITR-4?
- Those with income from capital gains, foreign income, or more than one house property
- Directors or individuals holding unlisted shares
Latest Addition:
- Just like ITR-1, a section has been added to report tax-exempt LTCG up to ₹1.25 lakh under Section 112A, making it easier for small business owners who have occasional stock investments.
ITR-5: For Firms, LLPs, and Other Entities
Who can file ITR-5?
- Firms (excluding individuals and HUFs)
- LLPs (Limited Liability Partnerships)
- Associations of Persons (AOPs)
- Bodies of Individuals (BOIs)
- Artificial Juridical Persons (AJPs)
Who cannot file ITR-5?
- Companies (they must use ITR-6)
- Individuals and HUFs
Features:
- Designed for non-individual entities
- Allows detailed disclosures for business income, deductions, taxes paid, partner share, etc.
Key Differences Between ITR Forms 1 to 5
| Feature | ITR-1 | ITR-2 | ITR-3 | ITR-4 | ITR-5 |
|---|---|---|---|---|---|
| Salary Income | Yes | Yes | Yes | Yes | No |
| Business/Profession Income | No | No | Yes | Yes (presumptive) | Yes |
| Capital Gains | No | Yes | Yes | No (only exempt LTCG up to ₹1.25 lakh) | Yes |
| Foreign Income/Assets | No | Yes | Yes | No | Yes |
| Applicable to Firms/LLPs | No | No | No | Yes (Firms only) | Yes |
Important Reminders for AY 2025–26
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Verify Your Form Selection: Choosing the correct ITR form is crucial. Wrong selection can lead to notice or invalid return.
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File Early to Avoid Rush: Early filing helps in faster processing of refunds and error correction.
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Keep Documents Handy: Form 16, AIS/TIS, capital gains statements, bank interest certificates, and investment proofs should be ready before filing.
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Understand Exempt Income: Section 112A exemption (LTCG up to ₹1.25 lakh) is now easier to report in ITR-1 and ITR-4.
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Professional Help is Beneficial: For business, capital gains, or foreign income cases, always consider hiring a CMA, CA, or tax advisor.
Final Thoughts from CMA Knowledge
The Income Tax Department’s move to simplify return forms for FY 2024–25 is a positive step for taxpayers. Especially the inclusion of exempt LTCG in ITR-1 and ITR-4 will help thousands of small investors and salaried individuals avoid unnecessary complexity.
At CMA Knowledge, we recommend staying up to date with such changes to avoid filing errors, penalties, and delays in refunds. Use the right form based on your income type and consult a professional for complex cases.
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