Key ITR-4 Changes for AY 2025-26: LTCG, Limits, Disclosures & Compliance

The key changes in ITR‑4 (Sugam) for FY 2024‑25 (Assessment Year 2025‑26):

🧾 1. LTCG Reporting Allowed (up to ₹1.25 lakh)

• Taxpayers with long‑term capital gains (LTCG) up to ₹1.25 lakh under Section 112A—without any brought‑forward or carried‑forward capital losses—can now report it in ITR‑4 (or form ITR‑1). Previously, any capital gains pushed you to ITR‑2/3.
• A dedicated field, “Income on which no tax is payable: LTCG u/s 112A not chargeable to tax,” is now included.

2. Higher Presumptive Income Limits

• Section 44AD threshold (for small businesses) is increased from ₹2 cr to ₹3 cr—if ≥95% of transactions are digital.
• Section 44ADA threshold (for professionals) increases from ₹50 lakh to ₹75 lakh—also subject to the ‘digital transactions’ clause.

3. New Tax Regime Opt‑Out Requirements

• ITR‑4 now includes a section to declare your tax regime—old vs. new (Section 115BAC).
• If you’re opting out of the new regime for the first time, you must file Form 10-IEA before the ITR due date and include its acknowledgement number on the form. Continuing opt‑outs also require confirmation.

4. Aadhaar Enrollment ID No Longer Accepted

• Only the 12‑digit Aadhaar number is accepted now. The enrollment ID field has been removed.

5. TDS Section Must Be Specified

• You must list the exact TDS section (e.g., 192 for salary, 194A for interest) next to each entry in the Schedule‑TDS filing section.

6. Bank Account Disclosure

• All active bank accounts must be reported (except dormant ones), and one must be nominated for refund. If multiple are chosen, CPC determines the credit account.

7. Asset & Liability Reporting Threshold Raised

• Schedule AL (assets & liabilities) is now required only if total income exceeds ₹1 crore, up from the previous ₹50 lakh threshold.

8. Reporting Buy‑back as Dividend Income

• For buy‑backs after 1 Oct 2024, the proceeds are treated as deemed dividends (Schedule OS), with zero sale consideration in capital gains—to recognize capital loss.

9. Enhanced Disclosure Detail Across Deductions

• Claiming deductions under 80C–80U, HRA, home loan interest, health insurance, etc. now requires specific supporting fields:
  • policy/account numbers, insurer/lender names,
  • landlord details (for HRA),
  • interest amounts,
  • disability certificate acknowledgements.

📅 Timeline & Compliance Notes

• These changes are effective for returns filed from 1 Apr 2025 onwards, for FY 2024‑25 (AY 2025‑26).
• The normal due date for non‑audit Form ITR‑4 filing is 31 July 2025, extended to 15 Sep 2025 this year.

What You Should Do

1. Review your income: If you have LTCG ≤ ₹1.25 lakh with no capital losses, you can file ITR‑4 and use the exempt income field.
2. Decide on tax regime: If opting out of the new regime, file Form 10‑IEA on time and mention its reference in the return.
3. Collect detailed docs: Gather receipts, account/policy numbers, landlord PAN, etc., for all claimed deductions.
4. Update formats: Use the latest Excel/e-filing ITR‑4 utility—with updated validation rules—to avoid upload errors.

✅ Bottom Line

ITR‑4 for FY 2024‑25 (AY 2025‑26) has been upgraded to be more inclusive yet transparent: you can now include modest LTCG, but must supply much more detail—on deductions, bank accounts, TDS, and regime choice. If your income is below ₹50 lakh (and assets under ₹1 cr), ITR‑4 remains a useful, simplified option—but compliance with these new disclosure rules is essential.

Want help with filling Form 10‑IEA or choosing the right regime? Or need assistance on breakout of your deductions?

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