ITR Filing for FY 2024-25 Just Got Simpler for Investors With LTCG Up to ₹1.25 Lakh

For taxpayers filing their Income Tax Returns (ITR) for the Financial Year 2024-25 (Assessment Year 2025-26): if your long-term capital gains (LTCG) from listed equities or equity mutual funds are up to ₹1.25 lakh, you can now use the simplified ITR-1 (Sahaj) form. Previously, even tax-exempt gains required the use of more complex forms like ITR-2 or ITR-3 making the process more time-consuming.

This change, introduced by the Income Tax Department, is a significant relief for salaried individuals and small investors, especially those under the new tax regime, who generally have fewer deductions and declarations.

What’s New in ITR-1 for FY 2024-25?

1. LTCG Up to ₹1.25 Lakh Allowed

Taxpayers can now report LTCG under Section 112A (on listed equity shares or equity-oriented mutual funds) directly in ITR-1, as long as the gains do not exceed ₹1.25 lakh and there are no carried forward or brought forward capital losses.

2. Detailed Deduction Reporting

A drop-down menu now allows users to specify the exact clause under which a deduction is claimed for example, selecting sub-sections under 80D for health insurance. This enhances accuracy and transparency.

Who Can Use ITR-1?

Resident individuals with the following incomes can use ITR-1

• Income from salary/pension.
• Income from one house property (self-occupied, let-out, or deemed let-out).
• Income from other sources (excluding lottery or racehorse winnings).
• LTCG from equity/equity mutual funds up to ₹1.25 lakh (new addition).

However, if you have more than one house property, capital gains above ₹1.25 lakh, or income from business, foreign assets, or crypto, you must still use ITR-2 or ITR-3.

Why This Change Matters

Previously, many small investors were forced to use the ITR-2 form for reporting even minor exempt LTCG, increasing the complexity of the process. With this update:

• Compliance becomes quicker and easier.
• Fewer errors are expected due to the simpler format.
• More individuals can file independently, without professional help.

Property Disclosure Still Crucial Under New Regime

• Disclosure is still key. Even under the new tax regime, experts recommend disclosing details of your self-occupied or let-out property to avoid scrutiny.
• This change only applies to FY 2024-25 onwards, and taxpayers must ensure that their income type and limits align with ITR-1’s permitted categories.

Read More: ITR Filing FY24-25: Is Dearness Allowance (DA) Taxable?

Conclusion

The update to ITR-1 is a welcome move aimed at reducing the burden on individual taxpayers, especially salaried professionals and small investors. With clearer deduction tracking and the inclusion of exempt LTCG up to ₹1.25 lakh, filing your returns is now faster, easier, and more transparent.

If you’re eligible, take advantage of this simplified form and ensure timely and accurate filing before July 31, 2025.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.