The Income Tax Department has released the Excel utilities for ITR-1 and ITR-4 pertaining to AY 2025-26. Several changes have been introduced, particularly for taxpayers opting for the old tax regime (OTR).
Over the years, verifying deductions like HRA, 80C, 80G, etc., has been a challenge for the department. In its push for greater transparency and auto-verification, the ITR forms have been gradually evolving. With this year’s utility, four new disclosure schedules are activated when the OTR is selected in Part A – General Information. Here’s a breakdown of what’s changed and what taxpayers need to prepare.
Schedule EA – Section 10(13A): HRA Taxpayers claiming HRA exemption are now required to disclose whether their place of work is in a metro or non-metro city. This detail directly impacts the HRA computation, which is the least of the following:
Actual HRA received or 50% of salary (basic + DA) for metro cities / 40% for non-metros or rent paid minus 10% of salary.
Only Mumbai, Delhi, Kolkata, and Chennai qualify as metro cities under Section 10(13A). The form mentions this, but taxpayers unfamiliar with the rule might still misclassify their city, leading to incorrect HRA claims.
Schedule 24(b): Interest on Borrowed Capital For home loan interest deduction, earlier versions of ITR-1 and ITR-4 only asked for the interest amount claimed under Section 24(b). However, from AY 2025–26, taxpayers must now also report: name of the lender (bank or financial institution), loan account number, date of loan sanction, total sanctioned loan amount and outstanding loan balance. Taxpayers must keep their home loan interest certificates handy while filing.
Section 80C deductions
ITR-1 and ITR-4 now introduce a separate schedule for Section 80C deductions. Taxpayers now need to report: policy or certificate numbers for life insurance, PPF, NSC, ELSS, etc. This measure supports the auto-verification process and discourages unverifiable deduction claims.
Section 80E series
Here, deductions on education, housing and EV loans require additional disclosures such as name of the lender, loan account number, date of loan sanction, total sanctioned loan amount and outstanding loan balance.
ITR-1 and ITR-4, once known as Sahaj or simple form, now have been aligned for auto verification. Further, these schedules are expected to be added to ITR-2 and ITR-3 also. While the increased requirements may seem burdensome—especially for salaried individuals and self-filers—the underlying objective is to ensure accurate, verifiable deductions. Whether or not these changes cause friction during the filing season will become clear in the coming months. However, the direction is evident: more transparency, more data and fewer unverifiable claims.
The writer is partner, Nangia & Company. Inputs from Neetu Brahma