by The Income Tax Department has introduced significant updates to the ITR-1 (Sahaj) form for the Assessment Year 2025–26. This form is for residents with income up to ₹50 lakhs. The new version requires more accuracy, transparency, and proof for deductions and income claims.
This detailed blog explains:
✅ Changes in ITR-1
- The new ITR-1 form requires more accuracy and transparency for deductions and income claims.
- Taxpayers must provide more details for HRA, 80C, and 80D claims.
- You need to report long-term capital gains directly in ITR-1.
- Taxpayers must specify the TDS section for each income source.
- A drop-down menu will help select deductions under various sections.
🧾 What Is ITR-1 and Who Can File It?
ITR-1 (Sahaj) is the simplest of the seven income tax return forms. It is applicable for a resident individual whose total income is up to ₹50,00,000 and consists of:
- Salary or pension
- Income from one house property (not a loss brought forward)
- Other sources (like interest, family pension, etc.)
- Agricultural income up to ₹5,000
❌ Not Eligible to Use ITR-1:
You cannot use ITR-1 if you:
- Are a Non-Resident (NRI) or Resident but Not Ordinarily Resident (RNOR)
- Have capital gains (short or long-term)
- Own more than one house property
- Earned foreign income or hold foreign assets
- Have business or professional income
- Are a director in a company or hold unlisted equity shares
🔍 Key Changes in ITR-1 for AY 2025–26
The 2025–26 version introduces not just format changes, but functional changes that can affect how you claim deductions, choose tax regimes, and calculate refunds. Let’s break them down.
🔸 1. Tax Regime Selection and Form 10-IEA Mandatory
The government has made the new tax regime (115BAC) the default from AY 2024–25 onward.
What Changed:
- A new section in ITR-1 asks:
“Have you opted out of the new tax regime under Section 115BAC(6)?” - If you choose the old regime, you must:
- File Form 10-IEA before due date.
- Provide the date of filing and acknowledgement number in the return.
- File Form 10-IEA before due date.
Why It Matters:
Failure to file Form 10-IEA will lead to auto-application of the new regime — potentially resulting in higher tax if you were depending on deductions.
🔸 2. Granular Disclosure of Salary Components
Each section covers specific components of the salary:
- Basic Salary
- Allowances (taxable and exempt)
- Perquisites (e.g., rent-free accommodation, stock options)
- Profits in lieu of salary
- Standard Deduction (auto-filled)
This matches Form 16 and AIS (Annual Information Statement) to avoid mismatch or audit risk.
🔸 3. Expanded Chapter VI-A Deduction Reporting
The most critical change: Detailed breakup of every deduction under Section 80C to 80U.
Example:
- Under Section 80C, the ITR-1 now expects:
- LIC Policy Number
- Tuition Fee Details (Child’s Name, School Name)
- PPF Account Number
- ELSS Mutual Fund Name and Folio
- Under Section 80D (Health Insurance):
- Name of Insurer
- Policy Number
- Relation of insured (self/spouse/parents)
Under Section 80E (Education Loan):
- Loan Account Number
- Name of Financial Institution
- Year of Loan Sanction
This ensures that we accept only eligible and genuine claims. Mismatches may trigger notices.
🔸 4. Exempt Income Reporting Made Mandatory
Now, you must clearly declare previously optional or brief exempt incomes.
- Interest on PPF
- Tax-free bonds
- Dividend income (even if below taxable limits)
- Agricultural income (up to ₹5,000)
- Maturity proceeds of LIC under Section 10(10D)
Report each of these, even if exempt, as they may match with AIS.
🔸 5. New Deduction: Section 80CCH for Agniveers
- Introduced for contributions made to the Agnipath Scheme (by Agniveers only).
- If applicable, you’ll need to provide contribution details and employer certificate.
🔸 6. Bank Account for Refund Must Be Pre-Validated
They will issue refunds only to a bank account linked to your PAN and pre-validated.
Ensure:
- Ensure your name matches the PAN records.
- Ensure the IFSC and account number are correct; otherwise, the refund will fail.
- ITR validation happens before submission.
You can pre-validate on the Income Tax Portal.
📂 Detailed Document Checklist (With Proofs Required)
Here’s a table you can refer to or even share with clients/interns:
| 🧾 Deduction / Income Type | ✅ Proofs to Keep Ready |
| 80C – LIC | Policy number, premium receipt |
| 80C – PPF/NSC | Account number, deposit receipt |
| 80C – ELSS | Fund name, folio number, AMC PAN |
| 80C – Tuition Fees | Child’s school receipt, name, class |
| 80D – Medical Insurance | Insurer name, policy number, amount |
| 80E – Education Loan | Loan statement, bank name, sanction date |
| 80TTA – SB Interest | Passbook/Interest Certificate |
| 24(b) – Home Loan | Interest certificate, lender name, loan account number |
| Dividend Income (Exempt) | Demat statement, company name |
| PPF Interest / Bonds (Exempt) | Passbook, bond certificate |
| Refund Bank A/c | Pre-validation confirmation from portal |
| Form 10-IEA | Filing date & acknowledgment number |
⚠️ Common Mistakes to Avoid This Year
- Failing to file Form 10-IEA will automatically tax you under the new regime instead of the old one.
- To avoid mismatch in salary, match the exact figures from Form 16 and AIS instead of rounding off.
- Skipping exempt income: Even if not taxable, unreported exempt income could raise red flags.
- Refund will fail if the bank account isn’t pre-validated.
- Claiming wrong deductions: Double-check eligibility (e.g., 80E only for higher education loans, not school loans).
