Filing your Income Tax Return (ITR) for FY 2024-25 (Assessment Year 2025-26) requires careful selection of the appropriate ITR form, as using the wrong form can lead to a defective return. The Central Board of Direct Taxes (CBDT) has notified seven different ITR forms, each designed for taxpayers with specific income sources and circumstances. The applicability of these forms varies depending on the type and amount of income earned, and the category of the taxpayer.

ITR-1 (Sahaj)

ITR-1, also known as Sahaj, is the simplest form and is suitable for resident individuals with a total income of up to ₹50 lakh. This income can be from the following sources:

• Salary or pension.
• One house property (excluding cases where loss is brought forward from previous years).
• Other sources, such as interest income (excluding winnings from lottery and income from race horses).
• Agricultural income up to ₹5,000.
• Long-term capital gains income up to Rs. 1.25 lakhs under Section 112A (having no brought-forward or carry-forward capital loss).

However, ITR-1 cannot be used if your total income exceeds ₹50 lakh, if you have agricultural income exceeding ₹5,000, if you have income from more than one house property, or if you have taxable capital gains. It is also not applicable for directors of a company, individuals with investments in unlisted equity shares, non-residents, or those with foreign income or assets.

ITR-2

ITR-2 is applicable to individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession. It is designed for those with more complex income structures. You can file ITR-2 if your income includes:

• Salary or pension.
• Income from house property (including multiple properties).
• Capital gains or losses from the sale of investments or property.
• Income from other sources (including winnings from lotteries and horse races).
• Agricultural income exceeding ₹5,000.
• Foreign income or assets.
• Being a Resident Not Ordinarily Resident (RNOR) or a Non-Resident.
• If you are a director in a company or have investments in unlisted equity shares.

ITR-3

ITR-3 is for individuals and HUFs having income from a business or profession. If you have income from your business, along with salary, capital gains, or other sources, ITR-3 is the form you should use. It is more detailed than ITR-1 and ITR-2, covering business income that may require maintenance of books and separate reporting of expenses.

ITR for Capital Gains

If you have capital gains, the ITR form you choose depends on whether you also have business income. If you do not have business income, ITR-2 is the appropriate form. If you have business income, you must use ITR-3. It is now possible to report long-term capital gains (LTCG) under Section 112A up to ₹1.25 lakh in ITR-1 and ITR-4, simplifying the process for small taxpayers with equity gains. For capital gains exceeding ₹1.25 lakh, or if you need to carry forward losses, you should use ITR-3. The ITR-2 and ITR-3 forms now require separate reporting for capital gains from transactions conducted before and after July 23, 2024.

ITR for F&O Income

Income from Futures and Options (F&O) trading is considered non-speculative business income. As such, if you have income from F&O trading, you are required to file ITR-3, even if you are a salaried individual.

Key Updates and Considerations

• New Tax Regime: The selection of the ITR form depends on income sources, not the tax regime chosen. However, it's essential to accurately report income and deductions based on your chosen regime.
• Mandatory Filing: Filing ITR is mandatory if your gross total income exceeds the basic exemption limit (₹2.5 lakh for individuals below 60 years). It is also mandatory if you have:
  • Incurred electricity expenditure of more than Rs.1 lakh.
  • Deposited more than ₹1 crore in a current account or ₹50 lakh or more in a savings account.
  • TDS/TCS exceeds Rs 25,000 (Rs 50,000 for senior citizens).
  • Business turnover is more than Rs 60 lakh.
  • Professional income is more than Rs 10 lakh.
• Due Date: The due date for filing ITR for FY 2024-25 is September 15, 2025, for individuals and HUFs who do not require an audit.
• Aadhaar Linking: It is mandatory to link your Aadhaar card with your PAN.
• Bank Account Details: You must report all active bank accounts held during the financial year, irrespective of whether there is an income tax refund or not.
• Offline Utility: The Income Tax Department has launched an offline utility for filing ITR-1 and ITR-4 in Excel format, allowing you to prepare your return offline and upload the JSON file later.

By carefully evaluating your income sources and referring to the guidelines for each ITR form, you can select the correct form and ensure accurate and timely filing of your income tax return.