Navigating India’s tax regulations can feel overwhelming, especially with frequent updates shaping how taxpayers file their returns. But this time, things have changed for the better.
With the Income tax (Twelfth Amendment) Rules, 2025, effective April 1, the Indian government has streamlined tax filing for salaried professionals, freelancers, pensioners, and small business owners.
Less paperwork, fewer complications, and smarter filing options - this amendment removes unnecessary hurdles, making tax season easier than ever.
Let’s dive into how these changes will help you file taxes with confidence in 2025.
Easier Tax Filing in 2025: Unpacking the 12th Amendment Changes
The biggest takeaways from the new tax filing rules:
ITR–1: Updates in April 2025
Previously, any long–term capital gains (LTCG), even a small amount, required taxpayers to file more complex ITR forms.
Under the Income–tax (Twelfth Amendment) Rules, 2025, effective April 1, ITR–1 now allows LTCG from equity–oriented investments (Section 112A) up to ₹1.25 lakh, as long as there are no carry–forward losses.
Important Condition: Your total income must remain within ₹50 lakh to be eligible for ITR–1.
ITR–4: Updates in April 2025
Freelancers, consultants, and small businesses using presumptive taxation (Sections 44AD, 44ADA, or 44AE) can continue filing ITR–4. The latest tax update clarifies that taxpayers earning LTCG from equity–oriented investments (Section 112A) up to ₹1.25 lakh can still use ITR–4, as long as their total income remains within ₹50 lakh.
Mandatory Submission of Form 10BA (Effective April 1, 2025)
Taxpayers claiming deductions for house rent under Section 80GG must now submit Form 10BA along with their return. This ensures compliance and prevents processing delays or rejections.
The Fine Print: Additional Tax Clarifications You Need to Know
Capital Gains
The ₹1.25 lakh limit applies only to long-term capital gains (LTCG) arising from equity-oriented investments under Section 112A. If your LTCG originates from any other source, you must file ITR-2 or ITR-3 instead.
Total Income Ceiling Enforcement
If your total annual income exceeds ₹50 lakh, you cannot use ITR-1 or ITR-4. Instead, filing must be done using ITR-2 or ITR-3.
Mandatory Form 10BA Upload for Rent Deduction (Section 80GG)
Taxpayers claiming rent deductions under Section 80GG must now submit Form 10BA along with their income tax return. Failure to submit this form at the time of filing could result in rejection or processing delays.
Presumptive Taxation and LTCG Limits in ITR-4
Taxpayers opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE remain eligible to file ITR-4 provided their long-term capital gains under Section 112A do not exceed ₹1.25 lakh, and their total income stays below ₹50 lakh.
Agricultural Income Limits
Taxpayers earning agricultural income exceeding ₹5,000 cannot file ITR-1 or ITR-4. They are required to file using ITR-2.
Tax Regime Considerations (Old vs. New)
The choice between the old or new tax regime under Section 115BAC does not affect eligibility for using ITR-1 or ITR-4. Eligibility conditions remain consistent irrespective of the chosen regime.
Updated Tax Filing Utility for FY 2024–25
To comply with the latest Income-tax (Twelfth Amendment) Rules, 2025, organizations filing directly should download the most recent tax filing utility (JSON/Java version) once it becomes available – expected by mid-June 2025. Alternatively, businesses can simplify compliance through integrated tax filing solutions like ClearTax from greytHR’s Unite Marketplace.
ITR-1 vs. ITR-4: Which Form Should You Use?
ITR-1 Eligibility (FY 2024-25)
| You Can Use ITR-1 If... | You Cannot Use ITR-1 If... |
|---|---|
| You’re a resident individual (excluding ‘Not Ordinarily Resident’) | Your total income exceeds ₹50 lakh |
| You earn from salary/pension, one house property (loss capped at ₹2 lakh), and other sources (interest, dividends, family pensions) | You have business or professional income |
| Your agricultural income does not exceed ₹5,000 | You earn capital gains other than Section 112A (equity-oriented) |
| You have LTCG under Section 112A up to ₹1.25 lakh without carry-forward losses | You claim income from lottery winnings or race betting |
| You have no foreign income/assets, unlisted equity shares, or deferred ESOP tax | You’re a company director or claiming TDS credit under Section 194N |
ITR-4 Eligibility (FY 2024-25)
| You Can Use ITR-4 If... | You Cannot Use ITR-4 If... |
|---|---|
| You’re a resident individual, HUF, or partnership firm (excluding LLPs) | You’re a non-resident |
| Your income is from presumptive taxation (Sections 44AD, 44ADA, 44AE) | Your total income exceeds ₹50 lakh |
| You earn LTCG from equity-oriented investments (Section 112A) up to ₹1.25 lakh | Your capital gains come from non-equity sources |
| You have agricultural income up to ₹5,000 | You own foreign assets, unlisted equity shares, or deferred ESOP tax |
| You’re not a company director | You’re a company director or claiming TDS under Section 194N |
Final Thoughts: A Simpler Tax Filing Experience in 2025
The Income-tax (Twelfth Amendment) Rules, 2025 have made tax filing more streamlined, reducing unnecessary complexities. With expanded eligibility for ITR-1 and ITR-4, more taxpayers can continue using simpler forms without switching to higher categories. The mandatory Form 10BA submission ensures accurate rent deductions, and the ₹50 lakh income ceiling and LTCG limits provide clarity in filing requirements.
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FAQs
What are the major income tax changes for FY 2024–25 (Assessment Year 2025–26)?
The major changes for FY 2024–25 include the new tax regime becoming the default (per Finance Act 2023, effective AY 2024–25).
This brought a higher basic exemption limit of ₹3 lakh and an enhanced rebate under Section 87A. Salaried individuals and pensioners in the new regime also became eligible for standard deduction. Rules for taxation of online gaming and virtual digital assets (introduced in earlier Finance Acts and notifications) were already in effect.
The Income Tax (Twelfth Amendment) Rules, 2025 (announced April 29, 2025, effective April 1, 2025) further simplify filing for ITR–1 and ITR–4 in certain cases involving long – term capital gains.
Is the old tax regime still available?
Yes, the old tax regime remains optional. Taxpayers need to explicitly opt–in. The new tax regime became the default (effective AY 2024–25).
What is the basic exemption limit in the new tax regime for FY 2024–25?
The basic exemption limit under the new tax regime for all individuals is ₹3 lakh (effective AY 2024–25).
What is the tax rebate under Section 87A in the new tax regime?
The enhanced tax rebate under Section 87a in the new tax regime, making zero tax payable for income up to ₹7 lakh, was effective from AY 2024–25.
Can I claim standard deduction in the new tax regime?
Yes, for FY 2024–25, standard deduction is available in the new tax regime (effective AY 2024–25): ₹50,000 for salaried individuals and ₹15,000 for pensioners.
What are the new rules for ITR form 1 and 4 from April 1, 2025?
Effective April 1, 2025 (announced via Income–tax (Twelfth Amendment) Rules, 2025), ITR–1 and ITR–taxpayers can use 4 with long–term capital gains from equity–oriented investments (Section 112A) up to ₹1.25 lakh (without carry–forward losses), provided their total income is within ₹50 lakh.
What is Form 10BA for tax return?
Form 10BA is a declaration form for house rent deduction under Section 80GG, with mandatory submission effective April 1, 2025 (as per Income–tax (Twelfth Amendment) Rules, 2025)What if Long Term Capital Gain(LTCG) is more than 1.25 lakh in ITR?
If LTCG from equity–oriented investments exceeds ₹1.25 lakh or is from other sources, you'll likely need to file ITR–2 or ITR–3, based on income and sources, as per the general tax rules for FY 2024–25.
Does the choice between the old and new tax regime affect ITR form eligibility?
No, the choice of tax regime does not directly impact ITR–1 and ITR–4 eligibility for FY 2024–25. Eligibility is based on income and its sources, according to the prevailing tax rules.
Where to download new tax filing utility in India?
The updated tax filing utility for FY 2024–25 will be available on the official website under downloads section.
