Major Update in ITR Forms for AY 2025–26: Capital Gains Now Allowed in ITR-1
In a significant move toward simplifying tax compliance for individual taxpayers, the Central Board of Direct Taxes (CBDT) has introduced a major update to the Income Tax Return (ITR) forms for Assessment Year 2025–26. Taxpayers filing ITR-1 (Sahaj) can now report certain types of capital gains under this form, which was previously restricted only to salaried individuals and those with limited income sources.
This change is a welcome step for middle-income taxpayers, many of whom have small capital gains from shares, mutual funds, or other investments. As a trusted Tax Consultant Company in Delhi, we’re here to break down what this update means, who can benefit, and how you can file your returns without complications.
What Is ITR-1 Sahaj?
ITR-1, also known as Sahaj, is a simplified return form meant for resident individuals with total income up to Rs. 50 lakh from:
- Salary or pension
- One house property
- Other sources (interest, dividend, etc.)
Until now, if you had any capital gains income, even if minor, you were not eligible to file ITR-1 and had to use ITR-2 or ITR-3.
" The inclusion of capital gains in ITR-1 is a game-changer for salaried taxpayers with minor investments. "
What Has Changed in AY 2025–26?
As per the new notification by the CBDT:
- Taxpayers with capital gains under specific conditions can now file ITR-1
- These must be short-term capital gains (STCG) taxable under section 111A (on equity shares or mutual funds)
- The capital gains should be reported in AIS/Form 26AS and must not exceed a threshold (likely Rs. 10 lakh - to be confirmed by final rules)
- Only resident individuals can claim this benefit
Why This Matters
Before this update, even individuals with small capital gains of a few thousand rupees from mutual funds or stock trades had to file detailed and complex forms like ITR-2. This discouraged early and honest tax compliance.
Now, with the ITR-1 form accommodating such gains, the process becomes:
- Easier to understand
- Faster to file
- Less error-prone
Who Stands to Benefit?
- Salaried professionals with SIPs in equity mutual funds
- Young investors experimenting with small investments in stocks
- Retired individuals earning capital gains on past investments
" This move recognizes the growing financial literacy and participation in equity markets by ordinary Indian taxpayers. "
Eligibility Criteria to File Capital Gains in ITR-1
You can avail this benefit if:
- You are a resident individual (not HUF or NRI)
- Your total income does not exceed Rs. 50 lakh
- Capital gains arise only from listed equity shares or mutual funds taxable under Section 111A
- No other capital gain (e.g., real estate, debt funds, or long-term capital gain) is included
Exclusions to Keep in Mind
You cannot use ITR-1 if:
- You have unlisted shares
- You earned long-term capital gains (LTCG)
- You have foreign income or assets
- You have more than one house property
" Don't assume all capital gains are now ITR-1 eligible. Review the nature of the gain carefully. "
How to File Using the New ITR-1
Here are the basic steps to file ITR-1 with capital gains for AY 2025–26:
- Download AIS (Annual Information Statement) and Form 26AS
- Check for capital gains entries listed
- Match them with your broker or AMC statements
- Fill out ITR-1 using the pre-filled utility from the Income Tax Portal
- Ensure capital gains are reported under the correct head (111A)
" Accuracy is key. The Income Tax Department has enhanced data matching tools. Mismatches could lead to notices. "
Precautions to Take
- Don’t under-report capital gains assuming they are too small
- Match PAN-linked AIS and 26AS data thoroughly
- Consult professionals offering Tax consultant services in Delhi to avoid mistakes
- Always verify the ITR after submission
How Tax Consultants Can Help
At our Tax Consultant Company in Delhi, we help you:
- Identify if you're eligible to use ITR-1
- Reconcile capital gains with tax statements
- Minimize tax legally using exemptions under Section 54F, 10(38), etc.
- File ITRs accurately with minimal documentation errors
- Handle queries or notices from the department
" A good tax consultant is not just a compliance partner but a long-term advisor for your financial growth. "
Why This Update Reflects Progressive Tax Reform
- Simplification: The biggest benefit is administrative ease for the taxpayer
- Wider Compliance: More people will be encouraged to report gains
- Tech Adoption: With AIS and auto-filled data, it's easier than ever to file correctly
Conclusion
The inclusion of capital gains under ITR-1 for AY 2025–26 is a strategic move that simplifies tax filing for lakhs of Indian investors. However, with this convenience comes the responsibility of accurate reporting and compliance.
Work with the Best Tax Consultant company in Delhi to ensure your returns are not only correct but also optimized. Our professional Tax consultant services in Delhi can guide you through eligibility checks, data reconciliation, and precise filing.
Make smart tax moves today – consult a trusted tax expert and stay ahead of compliance!
