ITR Filing 2025: Confused Between ITR 1 And 4? Know Key Differences To File Correct Income Tax Return

Last Updated:May 30, 2025, 11:27 IST

The income tax dept has introduced Excel utilities for ITR-1 (Sahaj) and ITR-4 (Sugam) for FY 2024-25; here’s who is eligible to file their income tax returns through these forms.

ITR-1 Vs ITR-4: The income tax department has enabled the Excel utilities of ITR-1 (Sahaj) and ITR-4 (Sugam) for the financial year 2024-25 (assessment year 2025-26), thus allowing offline return filing. Online ITR forms will be enabled soon. Tax experts say it is necessary to choose the correct ITR form to avoid any future income tax notice.

The Central Board of Direct Taxes (CBDT), the country’s apex direct taxes body under the finance ministry, has already notified the latest ITR forms to be used for filing this year. As per the forms, both ITR-1 and ITR-4 have a provision to report long-term capital gains (LTCG) under Section 112A up to Rs 1.25 lakh (exemption limit), to simplify income tax return filing. Earlier, taxpayers had to file ITR-2 and ITR-3 for reporting any capital gain.

Section 112A of the Income Tax Act deals with LTCG tax on the sale of listed shares and equity mutual funds. According to the Budget 2024 announcement, LTCG up to Rs 1.25 lakh is exempt.

The Budget also announced several tax changes that were applicable with effect from July 23, 2024, (the Budget announcement date). The latest forms also have a provision to report both pre-July 23, 2024, gains and post-July 23, 2024, gains separately.

The CBDT has also made certain changes in the forms with regard to deductions claimed under 80C, 80GG and other sections and has provided a drop down menu in the utility for tax filers to select from. Also, assessees will have to furnish in the ITR section-wise details with regard to TDS deductions.

Here’s the difference between ITR-1 and ITR-4 as per the latest forms notified by the finance ministry, and which one should you choose for filing.

ITR-1 Vs ITR-4: Key Differences, Which One Should You Choose?

Selecting the correct income tax return (ITR) form holds significant importance for both individuals and businesses. It ensures adherence to tax laws, minimising the likelihood of penalties or legal issues.

Who is eligible to file ITR-1 Sahaj?

According to the notified forms, ITR-1 can be filed by a resident individual whose:

• Total income does not exceed Rs 50 lakh during the FY.
• Income is from salary, one house property, family pension income
• Long-term capital gains up to Rs 1.25 lakh under Section 112A.
• Agricultural income (up to Rs 5,000)
• Other sources, including interest income.

ITR 4 Sugam

According to the latest government notification, a similar change has been made to form ITR-4 which applies to taxpayers resorting to presumptive taxation for their business income. The new ITR-4 form for AY 2025-26 also subsumes reporting of LTCG subject to tax under Section 112A of the IT Act within the limit of Rs 1.25 lakh.

Who is eligible to file ITR-4?

ITR-4 is for resident individuals, HUFs and firms (other than LLP) having total income up to Rs 50 lakh and having income from business and profession which is computed under Sections 44AD, 44ADA or 44AE and agricultural income up to Rs 5,000.

• ITR-4 can be filed by a Resident Individual / HUF / Firm (other than LLP) who has:
• Income not exceeding Rs 50 Lakh during the FY
• Income from Business and Profession which is computed on a presumptive basis u/s 44AD, 44ADA or 44AE
• Income from Salary/Pension, one House Property, Agricultural Income (up to Rs 5,000/-)
• Long-term capital gains up to Rs 1.25 lakh under Section 112A.
• Other sources include (excluding winning from Lottery and Income from Race Horses):-Interest from Savings Account-Interest from Deposit (Bank / Post Office / Cooperative Society)-Interest from Income Tax Refund-Family Pension-Interest received on enhanced compensation-Any other Interest Income (e.g., Interest Income from an unsecured loan).

Documents Needed To File ITR

PAN and Aadhaar Card, Form 16, Form 26AS and AIS (annual information statement), bank account details, interest certificates, investment proofs for deductions (Section 80C, 80D, etc.) if going for old tax regime, home loan & property-related documents (if applicable), capital gains statements, foreign income & assets (if applicable), business or freelance income details, advance tax and self-assessment tax challans, old tax notices and previous year ITR.

When Will You Receive Form 16?

Though the ITR filing has started with the offline utilities available, tax experts advise the salaried individuals to file ITR after they receive their Form 16.

Form 16 is a critical document for salaried taxpayers. It is issued by employers and provides a detailed summary of the salary paid and the tax deducted at source (TDS) during the financial year. As per the income tax rules, employers must issue Form 16 by June 15, 2025.

Mohammad Haris

Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso…Read More

Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso… Read More

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