New ITR-1 Form Announced for FY 2024-25 Tax Filing
The Income Tax Department has introduced new Income Tax Return (ITR) forms for the financial year 2024-25, specifically ITR-1 and ITR-4, aimed at simplifying the filing process for individual taxpayers. These updates are particularly beneficial for those with long-term capital gains of up to Rs 1.25 lakh from listed equities. The new forms include modifications to deductions and require more detailed information regarding TDS deductions. Taxpayers can begin filing once the utility for the fiscal year is released, with the submission deadline for individuals remaining July 31.
Changes in ITR Forms for FY 2024-25
The newly released ITR-1 and ITR-4 forms are designed to streamline the tax filing process for individuals and small taxpayers. The ITR-1 form, also known as Sahaj, is available for resident individuals earning up to Rs 50 lakh annually. This form is applicable for those receiving income through salaries, owning a single property, and earning additional income from interest or farming, provided the latter does not exceed Rs 5,000 annually. Notably, individuals with long-term capital gains (LTCG) up to Rs 1.25 lakh from listed shares and mutual funds can now file using ITR-1, a significant change from previous requirements that mandated the use of ITR-2 for similar cases.
The revised forms also include a dropdown menu for easier navigation and modifications concerning deductions under various sections, such as 80C and 80GG. Taxpayers will need to provide detailed section-wise information for TDS deductions, enhancing transparency in the filing process. The Income Tax Department typically releases these forms before the fiscal year ends, but this year’s delay was attributed to officials focusing on the new Income Tax Bill presented to Parliament in February.
Implications for Taxpayers
The introduction of the new ITR-1 form is seen as a significant step towards improving taxpayer services. Tax experts believe that these changes will simplify the filing process for individuals with long-term capital gains, thereby reducing the complexity associated with tax returns. Samir Kanabar, a Tax Partner at EY India, emphasized that this shift allows taxpayers to file simpler returns without the burden of navigating more complex forms. He noted that this change is expected to encourage voluntary compliance and alleviate filing-related stress for small taxpayers.
Sandeep Jhunjhunwala, a Tax Partner at Nangia Andersen LLP, highlighted that previously, salaried individuals with capital gains income were required to file ITR-2, even when their gains were exempt under Section 112A. This necessitated comprehensive disclosures, including details about capital gain accrual and securities. The new ITR-1 form now includes a dedicated section for reporting tax-exempt LTCG income, which simplifies the filing process for eligible taxpayers. However, those earning LTCG exceeding Rs 1.25 lakh or other types of capital gains will still need to use ITR-2.
Filing Deadlines and Future Expectations
Taxpayers should be aware that the deadline for filing ITR remains July 31 for individuals and those not requiring account audits. This timeline is crucial for ensuring compliance with tax regulations. The Income Tax Department is expected to release the utility for the 2024-25 fiscal year soon, allowing taxpayers to begin the filing process.
The changes in the ITR forms reflect a broader effort by the government to simplify tax compliance and make the system more user-friendly. As the tax landscape continues to evolve, taxpayers can anticipate further enhancements aimed at improving the overall experience of filing returns. The introduction of these new forms is just one step in a series of reforms aimed at fostering a more inclusive and efficient tax system in India.
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