ITR-1 Explained: Eligibility, Recent Changes & Common Mistakes [AY 2025-26]

Tax season can feel a bit like decoding a secret language, right? But for most salaried folks and pensioners, ITR-1 (Sahaj) is your friendliest form. It’s designed to be simple. Still, things change, and it’s good to know what’s new and how to avoid common slip-ups. This guide will walk you through filing ITR-1 for Assessment Year (AY) 2025-26 (that’s for the income you earned between April 1, 2024, and March 31, 2025 – also called Financial Year 2024-25). We’ll also clear up how it’s different from ITR-2 and help you steer clear of filing mistakes.

What is ITR-1 (Sahaj) and Who Should Use It?

Think of ITR-1 as the “easy” tax form. You can use it if you’re an Indian resident (not an NRI) and your total income is up to ₹50 Lakh (₹5 million). It’s for you if your money comes from:

• Your salary or pension.
• Income from just ONE house property (like rent from one house, or if you live in your own house). But you can’t use it if you have carried-forward losses from previous years.
• Other simple income sources like interest from your savings account or fixed deposits. This doesn’t include lottery winnings, horse race income, or other special income.
• Farm income up to ₹5,000.
• Long-term capital gains (LTCG) up to ₹1.25 Lakh from selling listed shares or mutual funds, as long as you don’t have capital losses to carry forward.

You CAN’T use ITR-1 if:

• Your total income is over ₹50 Lakh.
• You have income from more than one house property.
• You have business or professional income.
• You have capital gains beyond the ₹1.25 lakh limit, or if you have any capital losses you need to adjust or carry forward.
• You’re a Director in a company or invested in unlisted shares.
• You have foreign income or assets.
• You’re a Non-Resident Indian (NRI) or a Resident Not Ordinarily Resident (RNOR).

Difference between ITR-1 and ITR-2 (AY 2025-26)

Particulars	ITR-1 (Sahaj)	ITR-2

Who Can File

Resident Individuals (Ordinary Residents)

Individuals and Hindu Undivided Families (HUFs)

Business/Profession Income

Not Allowed

Not Allowed (If you have business income, file ITR-3)

Income from Salary

✅ Allowed

✅ Allowed

Income from House Property

✅ Allowed (only for 1 house property)

✅ Allowed (for multiple house properties)

Income from Capital Gains

❌ Not Allowed

✅ Allowed (Short-term & Long-term Capital Gains)

Other Sources (Interest, etc.)

✅ Allowed (excluding Lottery, Race Horses, etc.)

✅ Allowed (including all types of other income)

Agricultural Income

Allowed only if up to ₹5,000

✅ Allowed (Even if above ₹5,000)

Foreign Income / Assets

❌ Not Allowed

✅ Mandatory to disclose

Clubbing of Income

❌ Not allowed

✅ Allowed (Minor/Spouse income clubbing cases)

Residential Status Eligibility

Only for Resident and Ordinarily Resident (ROR)

Both Residents & Non-Residents (NR/ RNOR) allowed

Capital Gains Carry Forward/Set Off

❌ Not Allowed

✅ Allowed

Applicable For

Simple taxpayers with income up to ₹50 lakh, with only one house property, no capital gains, no foreign income/assets

People with more than one house property, capital gains, foreign income, agricultural income > ₹5,000, or clubbing of minor/spouse income

Big Changes in ITR-1 for AY 2025-26

The government made some tweaks to make things clearer and simpler (for some):

• LTCG up to ₹1.25 Lakh Now Allowed: This is great news! Previously, if you had any capital gains, you’d have to file ITR-2. Now, if you have long-term gains up to ₹1.25 lakh from listed shares/mutual funds (and no past losses), you can use ITR-1.
• New Tax Regime is Default: You heard it right! The new tax rules (with lower tax rates but fewer deductions) are now the automatic choice. If you want your usual deductions (like 80C, HRA, etc.), you must specifically choose the old tax regime in the form.
• More Details Needed for Deductions (Old Regime): If you opt for the old regime and claim deductions, you’ll need to give more specific information. For instance, what kind of investment is your 80C deduction for (PPF, ELSS, etc.)? And who did you pay for your health insurance (for 80D)? This helps ensure everything is correct.
• New Section for Home Loan Interest Details: If you claim interest on a home loan, you’ll now need to share more info about your loan – like the bank’s name, loan account number, when it was sanctioned, and the total loan and interest amounts.
• Mention TDS Section: If tax was deducted from income other than your salary, you’ll need to specify the exact section under which it was deducted (e.g., Section 194A for interest).
• List All Active Bank Accounts: You need to report all your active bank accounts in India. You can leave out accounts that have been dormant (inactive) for more than two years.

Big Mistakes People Make While Filing ITR-1 (and How to Avoid Them)

Even with an “easy” form, it’s common to make little mistakes. Watch out for these:

1.Picking the Wrong Form:

• Mistake: Using ITR-1 when your income is too high or comes from sources not allowed for ITR-1 (like business income or complex capital gains).
• Fix: Always check the eligibility rules carefully (like the table above!) before you start.

2.Choosing the Wrong Year:

• Mistake: Getting confused between the Financial Year (when you earned the money) and the Assessment Year (the year you file taxes for it). Your income from April 2024 – March 2025 (FY 2024-25) is filed in AY 2025-26.
• Fix: Always select AY 2025-26 when filing for income earned in FY 2024-25.

3.Forgetting to Declare All Your Income:

• Mistake: Many people forget small amounts like interest from savings accounts or fixed deposits. The Income Tax Department knows about these through your AIS and Form 26AS
• Fix: Always cross-check all your income details with your AIS and Form 26AS. Declare every bit of income, even if you think it’s tiny.

4.Not Matching TDS Info with Form 26AS/AIS:

• Mistake: Not checking if the tax deducted by your employer or bank (shown on Form 16/TDS certificates) matches what the tax department has on record (in Form 26AS and AIS). Mismatches can cause problems.
• Fix: Download and compare your Form 16, Form 26AS, and AIS very carefully. If there’s a difference, ask your employer or bank to correct it before you file.

5.Wrong Personal or Bank Details:

• Mistake: Simple typos in your PAN, Aadhaar, name, address, email, phone number, or bank account. A wrong bank account can really delay your refund
• Fix: Double-check every single detail. Make sure your bank account is “pre-validated” on the e-filing portal so any refund comes quickly.

6.Not Choosing the Old Tax Regime (If You Want Deductions):

• Mistake: Assuming you’ll automatically get your usual deductions (like 80C) when filing, without realizing the new tax regime is now default.
• Fix: If you want to claim your deductions, you MUST explicitly choose to opt out of the new tax regime within the ITR-1 form.

7.Forgetting to E-Verify Your Return:

• Mistake: Many people submit their return but miss this critical last step. An unverified return is like an unsent letter – it won’t be processed
• Fix: Always e-verify your return within 30 days of filing. Aadhaar OTP is the fastest way to do it.

8.Claiming Wrong Deductions:

• Mistake: Claiming deductions you’re not actually eligible for, or without having the proper proofs.
• Fix: Only claim deductions you are genuinely eligible for and have evidence for. Remember, you might need to provide more specific details for deductions in AY 2025-26 if you’re using the old regime.

By understanding these points, staying updated with the small changes for AY 2025-26, and being careful to avoid these common errors, you can make your tax filing smooth and stress-free. Filing on time and correctly is key to a peaceful tax season.