ITR filing FY 2024-25: What’s new, who can and cannot use ITR-1, 2, 3 and 4

The new ITR form facilitates choosing exemptions under various provisions (drop-down list) for those opting for the earlier tax system.
The new ITR form facilitates choosing exemptions under various provisions (drop-down list) for those opting for the earlier tax system.
The new ITR form facilitates choosing exemptions under various provisions (drop-down list) for those opting for the earlier tax system.
The Central Board of Direct Taxes (CBDT) has made major changes to Income Tax Return (ITR) forms for the financial year, 2024-25. The changes were announced through a notification, 40/2025, issued on April 29. The altered ITR is likely available on the I-T department's website shortly, along with instructions to furnish the returns.
General changes
The new ITR form facilitates choosing exemptions under various provisions (drop-down list) for those opting for the earlier tax system. For instance, if the taxpayer seeks exemptions under Section 80C, the individual should specify the heads under which the exemption is sought. For example, premiums for life insurance, tuition fees, investment in a provident fund, or repayment of home loan capital, etc.
The taxpayer should also furnish the details of his/her non-dormant bank accounts. Additionally, besides providing the tax amount deducted at source, the taxpayer should mention in the ITR the section under which the tax deduction has been allowed.
Individual return forms
Similar to previous years, individuals have four forms to file their tax returns: A nine-page ITR-1, a 39-page ITR-2, a 63-page ITR-3, and a seven-page ITR-4. Submitting the tax returns in the wrong form will be considered invalid.
Major changes
ITR-1
ITR-1 could be used for recording long-term capital gains of up to ₹1.25 lakh from the sale of equity shares or units of an equity-oriented mutual fund, in accordance with Section 112A of the I-T Act. Salaried taxpayers, too, could use the same form for providing details of minor capital gains. However, this form should not be used for detailing other capital gains or losses, or if it should be adjusted in the tax.
Changes in ITR-2 and ITR-3
Capital gains and losses made before July 23, 2024, should be recorded separately. The ceiling for the mandatory reporting of the worth assets and liabilities has been increased to ₹1 crore from ₹50 lakh.
ITR-4 (Sugam)
According to Section 112A of the I-T Act, those with long-term capital gains of up to ₹1.25 lakh can use the ITR-4 form from this year. All changes made to ITR-1 apply to ITR-4 as well. Additionally, those seeking exemption on rent under Section 80GG should electronically submit Form 10-BA along with their I-T returns.
Different categories of taxpayers and forms
ITR-1 (Sahaj)
Who should use the form:
- Exclusive for permanent residents of India
- Those with the rent of a single house as income
- Salary or pension
- Other income, including interest
- Total income not exceeding ₹50 lakh
- Long-term capital gain of up to ₹1.25 lakh according to Section 112A
- Income from agriculture not exceeding ₹5,000
Those who cannot use ITR-1 include:
- Merchants
- Professionals
- Company directors
- Investors in unlisted equities
- Those with TDS for withdrawing money, exceeding the limit under Section 194N, from banks
- Those with assets or monetary investments in companies overseas
- Winnings in lotteries, horse races, and futures trading
- Capital gains above the limit specified in Section 112A
ITR-2
Who should use the form:
- Hindu undivided families (HUF)
- Salary or pension
- Those with rental income from more than one property
- Capital gains exceeding ₹1.25 lakh
- Those with no revenue from business or profession
- Those not allowed to use Form Sahaj
- Those with winnings in lotteries, horse races, and futures trading
- Those with assets or income overseas
- Non-permanent residents of India
- Company directors
Those who cannot use ITR-2 include:
Those with revenue from business or profession and HUF
ITR-3
Who should use the form:
Those with revenue from business or profession and HUF
Who shouldn't use the form:
Those paying self-assessment tax
ITR-4 (Sugam)
Who should use the form
- Those paying self-assessment tax
- Total income not exceeding ₹50 lakh
- Permanent residents of India, HUF, partnerships
- Salary or pension
- Rental income from one house
- Other income, including interest
- Long-term capital gain of up to ₹1.25 lakh according to Section 112A
- Income from agriculture not exceeding ₹5,000
Those who cannot use Sugam include:
- Besides those mentioned below, people who cannot use ITR-1, too, are prohibited from using ITR-4
- Limited liability partnership (LLP)
- Assets or monetary investments in companies overseas
- Those with overseas income
- Those fixing income based on futures trade or agency business
- Those with commissions or brokerages
- Those who have to adjust losses.