How to File ITR-1 (Sahaj) Under the New Tax Regime for FY 2024-25 (AY 2025-26)

ITR-1

How to File ITR-1 (Sahaj) Under the New Tax Regime for FY 2024-25 (AY 2025-26)

ITR-1

The Indian income tax framework has undergone a transformation, with the new tax regime becoming the default system from Financial Year 2024-25 (Assessment Year 2025-26). Unless you specifically opt for the old regime, your tax will be computed under this simplified structure.

If you’re a salaried individual or pensioner with straightforward income sources, ITR-1 (Sahaj) is your go-to return form. This guide walks you through filing ITR-1 under the new tax regime using the Income Tax Department’s online portal, including updated features for AY 2025-26.

Documents Needed Before You Begin

Make the filing process seamless by keeping these documents ready:

  • PAN and Aadhaar

  • Form 16 from your employer (salary and TDS summary)

  • Form 26AS – Tax Credit Statement

  • AIS (Annual Information Statement) and TIS (Taxpayer Information Summary) for verifying pre-filled data

  • Bank Statements/Passbook & Interest Certificates (for savings and FD interest)

  • Investment proofs, if you’re comparing regimes or have deductions like NPS (80CCD(2))

  • Details of other income – freelance income, rent, dividends, etc.

  • Pre-validated bank account details for quick refunds

ITR-1

Step-by-Step Guide to Filing ITR-1 Online Under the New Regime

Step 1: Log in to the e-Filing Portal

Go to www.incometax.gov.in, click ‘Login’, and enter your PAN (User ID), password, and captcha.

Step 2: Start Filing

Navigate to:
e-File > Income Tax Returns > File Income Tax Return

  • Select Assessment Year: 2025–26

  • Choose Online Mode

  • Click ‘Start New Filing’ (or ‘Resume’ if you’ve saved a draft)

Step 3: Choose Status and ITR Form

  • Select ‘Individual’ as your filing status

  • Portal will recommend the correct form – select ITR-1 (Sahaj)

Step 4: Let’s Get Started!

  • Choose reason for filing ITR (e.g., “Income exceeds basic exemption limit” or “Claiming refund”)

Step 5: Personal Information – Choose Your Regime

  • Verify pre-filled personal details (PAN, Aadhaar, contact info)

  • Select nature of employment (private, government, pensioner, etc.)

  • Regime Selection:

    • You’ll see the prompt: “Do you want to opt out of the new tax regime?”

    • Select “No” to continue under the new regime

  • Confirm bank details for refund – update/pre-validate if needed

Step 6: Report Your Income

Data will be pre-filled using your Form 16, AIS, and 26AS. Cross-verify:

  • Salary/Pension: Standard deduction ₹75,000 is auto-applied; no HRA, LTA, or other exemptions

  • House Property:

    • Enter income if you have one house (self-occupied or let out)

    • For rental income, 30% standard deduction applies

    • Note: Interest on home loan is not allowed for self-occupied property

  • Other Sources:

    • Include interest from savings/FDs, dividends (gross), family pension (deduction allowed up to ₹25,000 or 33.33%)

New Addition for AY 2025-26: ITR-1 now allows you to report Long-Term Capital Gains (LTCG) up to ₹1.25 Lakhs under Section 112A.

Step 7: Limited Deductions Available

Since you’re under the new regime, most deductions under Chapter VI-A (80C, 80D, etc.) are inactive.

But you can still claim:

  • Section 80CCD(2) – Employer’s contribution to NPS (up to 10% of salary)

  • Section 80CCH – Agniveer Corpus Fund (if applicable)

Step 8: Taxes Paid – Cross-Check

  • TDS: Match TDS on salary, bank interest, etc., with Form 16, AIS, and 26AS

  • TCS: If applicable, check details

  • Advance Tax/Self-Assessment Tax: Enter any advance/self-assessment taxes paid

Step 9: Know Your Tax Liability (or Refund)

The system auto-calculates tax using New Regime slab rates:

Income SlabTax Rate
Up to ₹3,00,000Nil
₹3,00,001–₹7,00,0005%
₹7,00,001–₹10,00,00010%
₹10,00,001–₹12,00,00015%
₹12,00,001–₹15,00,00020%
Above ₹15,00,00030%

Add 4% Health & Education Cess on tax.

  • Refund: Will be shown clearly. Ensure your bank account is pre-validated.

  • Tax Due: You’ll be prompted to “Pay Now” before submission.

Step 10: Preview and Submit

Click ‘Preview Return’ to review all entries. Correct any errors before proceeding. Once satisfied, click ‘Submit’.

ITR-1

Step 11: E-Verify Within 30 Days

Your return is valid only after e-verification. Choose any of the following:

  • Aadhaar OTP (most common)

  • Net Banking login

  • Demat Account EVC

  • ATM-generated EVC

  • Digital Signature Certificate (DSC)

Once verified, you’ll receive an ITR-V acknowledgment via email.

Read More: ESOPs in India: Structure, Accounting, and Taxation Explained

You’ve Successfully Filed Your ITR-1 Under the New Regime!

With fewer deduction options, the new tax regime simplifies compliance – especially for salaried individuals with no complex income streams. However, always verify pre-filled details and keep financial records organized.

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ESOPs in India: Structure, Accounting, and Taxation Explained

ESOPs

ESOPs in India: Structure, Accounting, and Taxation Explained

ESOPs

Employee Stock Option Plans (ESOPs) are a popular incentive tool used by companies—especially startups and IT firms—to attract, retain, and motivate talent. ESOPs give employees a unique opportunity to become shareholders, allowing them to benefit directly from the company’s growth and success.

What is an ESOP?

An Employee Stock Option Plan (ESOP) is a scheme under which companies grant their employees the option (but not obligation) to purchase company shares at a pre-determined price after completing a specified vesting period. If the market value of the shares rises above the exercise price, employees can exercise the option, buy shares at the fixed price, and profit by selling at the prevailing market rate.

This structure not only rewards employees for their contribution but also aligns their interests with that of the company’s long-term goals.

ESOPs

Legal Framework Governing ESOPs in India

In India, the regulatory framework for ESOPs is governed by:

  • The Companies Act, 2013 – for both listed and unlisted companies

  • SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 – applicable to listed companies

  • Income Tax Act, 1961 – for taxation provisions

Accounting Treatment of ESOPs

From an accounting standpoint, ESOPs are considered part of employee compensation.

  • The cost of ESOPs is calculated based on the fair value or intrinsic value of the options.

  • This cost is amortized over the vesting period, i.e., the period between the grant date and the vesting date.

  • As per ICAI Guidance Notes and SEBI Guidelines, the cost is recognized as an employee benefit expense in the company’s financial statements.

This treatment ensures the cost is spread out over the period employees earn the benefit.

Tax Implications for Employees

Taxation of ESOPs in India happens in two stages – at the time of exercise and at the time of sale of shares.

1. Tax at the Time of Exercise

When the employee exercises the ESOP (i.e., buys the shares at the exercise price), the difference between the Fair Market Value (FMV) of the shares on the date of exercise and the exercise price is treated as a perquisite under the head “Income from Salary.”

Relevant Law:

As per Section 17(2)(vi) of the Income Tax Act, the value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer to the employee at free or concessional rate is considered a taxable perquisite.

Key Points:

  • Perquisite Value = FMV on exercise date – Exercise Price

  • The employer must deduct TDS on this amount in the year of exercise.

  • The FMV is determined as per rules prescribed under the Income Tax Act.

2. Tax at the Time of Sale

When the employee sells the shares acquired through ESOPs, capital gains tax applies.

  • The Cost of Acquisition is the FMV on the date of exercise.

  • The Period of Holding determines whether the gain is short-term or long-term:

    • Listed shares: Holding > 12 months → Long-Term Capital Gain (LTCG)

    • Unlisted shares: Holding > 24 months → LTCG

Tax Rates:

  • LTCG on listed shares (above ₹1 lakh): 10% without indexation

  • STCG on listed shares: 15%

  • Gains on unlisted shares: Taxed at applicable slab or 20% with indexation (for LTCG)

ESOP Taxation Example

Let’s consider a simple illustration:

  • Number of Options Granted: 1,000 shares

  • Exercise Price: ₹100 per share

  • FMV on Exercise Date: ₹300 per share

ESOPs

Tax on Exercise:

  • Perquisite Value per Share: ₹300 – ₹100 = ₹200

  • Total Taxable Perquisite: ₹200 × 1,000 = ₹2,00,000

  • This amount is taxable as salary income in the year of exercise, and the employer must deduct TDS accordingly.

Tax on Sale (if sold later at ₹350 per share):

  • Sale Price: ₹350

  • Cost of Acquisition: ₹300 (FMV on exercise date)

  • Capital Gain per Share: ₹350 – ₹300 = ₹50

  • Total Capital Gain: ₹50 × 1,000 = ₹50,000

  • Taxability depends on the holding period.

Read More: Salaried and Stressed: A Step-by-Step ITR Filing Guide

Conclusion

ESOPs are a valuable tool for employee engagement and wealth creation. However, both employers and employees need to be aware of the accounting and tax implications to ensure compliance and optimal planning.

Employers must account for ESOP costs accurately over the vesting period, while employees should understand the dual-stage taxation and keep track of FMV, exercise price, and holding period to compute perquisite and capital gains correctly.

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Interest on Delayed TDS Payment: Section 201(1A) Explained

TDS Payment

Interest on Delayed TDS Payment: Section 201(1A) Explained

TDS Payment

Timely deduction and payment of Tax Deducted at Source (TDS) is a statutory responsibility under the Income Tax Act, 1961. Any delay can trigger interest liability under Section 201(1A), and non-compliance may also attract further penalties. This blog provides a detailed overview of how interest under Section 201(1A) is calculated, with examples and practical insights for businesses and professionals.

What Is Section 201(1A) of the Income Tax Act?

Section 201(1A) lays down the interest liability in case of:

  1. Delayed deduction of TDS, and/or

  2. Delayed deposit of TDS with the government.

The intent is to ensure prompt compliance and timely remittance of tax that has been withheld at source.

Interest on Delayed Payment of TDS

When TDS is deducted but not deposited by the due date, interest is charged at the rate of 1.5% per month or part of a month, until the date of actual payment.

➤ Interest Computation Period:

From the date of deduction to the actual date of deposit.

➤ Note on Rounding:

Even a part of a calendar month is considered a full month for interest purposes.

Example 1:

ParticularsAmount
Professional fees (April)₹10,00,000
TDS deducted (10%)₹1,00,000
Date of deduction30-April
Due date of payment7-May
Actual payment date10-June
Interest rate1.5% per month
Interest calculation₹1,00,000 × 1.5% × 3 months = ₹4,500

Even though the delay is 40 days, the interest is calculated for 3 full months (April, May, June).

Interest on Delayed Deduction of TDS

If the TDS itself is not deducted on time, the interest is levied at 1% per month or part thereof, from the date it ought to have been deducted till the actual date of deduction.

If both deduction and payment are delayed, both interest liabilities apply.

Example 2:

ParticularsAmount
Professional fees (April)₹10,00,000
TDS liability₹1,00,000
Deduction delayed to May—
Payment date10-June
Due date (if deducted on time)7-May
Interest on late deduction₹1,00,000 × 1% × 2 months = ₹2,000
Interest on late payment₹1,00,000 × 1.5% × 2 months = ₹3,000
Total Interest₹5,000

How Is the Interest Period Counted?

  • The month is interpreted as a calendar month, not based on the actual number of days.

  • Even a one-day delay after the due date counts as one full month.

Practical Scenarios:

Date of DeductionDue Date of PaymentActual PaymentInterest Period
15-Apr-20257-May-20255-May-20250 month
15-Apr-20257-May-20257-May-20250 month
15-Apr-20257-May-20258-May-20252 months
15-Apr-20257-May-202531-May-20252 months
15-Apr-20257-May-20257-Jun-20253 months
15-Apr-20257-May-202530-Jun-20253 months

✅ Important: Interest is calculated from the date of deduction, not from the due date of payment.

Can This Interest Be Claimed as Expense?

No. As per the Income Tax Act, interest paid under Section 201(1A) is not deductible as a business expense. It is treated as a penal charge for non-compliance and thus is disallowed in the computation of taxable income.

Is Deferred Tax Created on This Interest?

No. Since this interest is permanently disallowed under the Act, it leads to a permanent difference in tax computation. As a result, no deferred tax asset or liability is created on account of interest under Section 201(1A).

Key Takeaways

  • Interest applies @1% per month for late deduction and @1.5% per month for late payment of TDS.

  • Part of a month is treated as a full month for calculation.

  • The interest is computed on the TDS amount, not on the gross amount paid to the vendor or employee.

  • No deduction allowed for such interest under income tax.

  • No deferred tax impact as this interest results in a permanent disallowance.

Read More: Salaried and Stressed: A Step-by-Step ITR Filing Guide

Staying compliant with TDS deadlines is not just good practice—it also helps avoid interest costs that cannot be claimed back. Businesses must track TDS timelines carefully and ensure timely deduction and deposit to stay out of trouble with the tax authorities.

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