Detailed Guide on New ITR-1 & ITR-4 Rules for FY 2024–25

Every year, the Income Tax Department introduces changes to simplify return filing, expand compliance, and bring more taxpayers under the umbrella of transparency. For FY 2024–25, significant updates have been made to ITR-1 (Sahaj) and ITR-4 (Sugam). These changes are aimed at salaried individuals, pensioners, small business owners, and professionals who rely on these return forms for straightforward filing.

In this detailed guide, we’ll break down the latest rules for ITR-1 and ITR-4, eligibility, exclusions, and what you need to keep in mind before filing your returns this year.

1. What is ITR-1 (Sahaj)?

   ITR-1 is the simplest return form designed for resident individuals who earn income primarily from salaries, pensions, one house property, or other income such as interest. It is meant for individuals whose total income is up to ₹50 lakh in a financial year.

   Key points to know about ITR-1:

   • For resident individuals only, not for NRIs.
   • Income sources allowed: salary/pension, one house property, and other sources (excluding winnings, lotteries, etc.).
   • Total income should not exceed ₹50 lakh.
   • Agricultural income up to ₹5,000 is permitted.

2. Who Cannot File ITR-1?

   Even if your income is below ₹50 lakh, you cannot file ITR-1 if:

   • You are a director in a company.
   • You own unlisted equity shares.
   • You have capital gains income (short-term or long-term).
   • You hold assets or financial interest in a foreign country.
   • You have agricultural income exceeding ₹5,000.
   • You earn income from more than one house property.

3. What is ITR-4 (Sugam)?

   ITR-4 is designed for individuals, HUFs, and firms (excluding LLPs) who have opted for the presumptive taxation scheme under Section 44AD, 44ADA, or 44AE. It allows small businesses and professionals to declare income at a prescribed rate without maintaining extensive books of accounts.

   Eligibility highlights for ITR-4:

   • Resident individuals, HUFs, and firms with total income up to ₹50 lakh.
   • Income from business under Section 44AD.
   • Income from profession under Section 44ADA.
   • Income from goods carriage under Section 44AE.
   • Salary or pension income is also allowed along with presumptive income.

4. Who Cannot File ITR-4?

   You are not eligible to file ITR-4 if:

   • Your income exceeds ₹50 lakh.
   • You have income from more than one house property.
   • You own foreign assets or have foreign income.
   • You are a director in a company.
   • You own unlisted equity shares.
   • You earn capital gains income.
   • You have agricultural income exceeding ₹5,000.

5. New Updates in ITR-1 & ITR-4 for FY 2024–25

   This year, several updates have been introduced to enhance transparency and align with the new tax regime:

   • Mandatory Disclosure of Regime Opted: Taxpayers must clearly mention whether they are opting for the old tax regime with deductions or the new tax regime with lower slab rates.
   • Income from Crypto and Virtual Assets: Taxpayers earning from Virtual Digital Assets (VDAs) like cryptocurrency are not allowed to file ITR-1 or ITR-4. They must use ITR-2 or ITR-3.
   • Expanded TDS and TCS Reporting: The new forms capture more details on TDS/TCS reported in Form 26AS and AIS to avoid mismatches.
   • Pensioners Information: Pensioners must disclose pension type (government, public sector, or private) for better classification.
   • Presumptive Taxation Clarifications: Businesses declaring income under Section 44AD/44ADA/44AE must provide turnover and gross receipts details in a simplified table format.

6. Comparison Between ITR-1 and ITR-4

   Here’s a quick comparison to help you decide which return applies to you:

   Criteria	ITR-1	ITR-4
   Applicable to	Resident Individuals	Individuals, HUFs, Firms (not LLPs)
   Income Limit	Up to ₹50 lakh	Up to ₹50 lakh
   Sources of Income	Salary, Pension, One House Property, Other Income	Salary, Pension, Presumptive Business or Profession, One House Property, Other Income
   Agricultural Income	Up to ₹5,000	Up to ₹5,000
   Capital Gains Allowed?	No	No

7. Tips for Filing ITR-1 & ITR-4 Accurately

   • Cross-check your Form 26AS, AIS, and TIS before filing.
   • Ensure correct bank account details for refund processing.
   • Report exempt income like PPF interest, EPF maturity, or agricultural income.
   • If you switch from presumptive taxation, maintain proper books of accounts from the next year.
   • Disclose correct regime selection (old vs new) while filing.

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Final Thoughts

For FY 2024–25, the government has simplified reporting in ITR-1 and ITR-4, but at the same time, it has tightened disclosures to ensure better compliance. As a taxpayer, choosing the right form is crucial, and accuracy is non-negotiable.

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