Filing your Income Tax Return (ITR) can feel like navigating a maze, especially with evolving rules, deductions, and the shift to the new tax regime. In this blog post, we’ll walk you through a step-by-step guide to filing ITR 1 for the financial year 2024-25 (AY 2025-26) under the new tax regime. We'll explain how to account for salary income, rental income, notional housing loan interest, term deposit interest, and deductions like medical insurance and investments under section 80C.
Understanding ITR 1 Under New Tax Regime
ITR 1 (Sahaj) is applicable for resident individuals having:
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Total income up to ₹50 lakh,
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Income from salary/pension,
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One house property (self-occupied or let-out),
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Other sources like interest.
Note: The new tax regime does not allow most exemptions or deductions like HRA, 80C, or interest on home loan for self-occupied property.
Step-by-Step Guide to Filing ITR 1 for AY 2025-26
1. Collect All Income Proofs
Start by collecting:
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Form 16 from your employer (₹18,00,000 salary),
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Rent receipts (₹1,20,000 annual rental income),
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Bank interest certificates (₹80,000 term deposit interest),
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Loan interest certificate (₹2,50,000 notional interest on housing loan),
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Medical Insurance receipt (₹27,000 premium),
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Investment proof under 80C (₹1,50,000 PPF/LIC/etc.)
2. Log In to the Income Tax Portal
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Visit https://incometax.gov.in
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Use your PAN to log in or register.
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Go to ‘File Income Tax Return’ > Assessment Year 2025-26
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Choose ITR 1 (online) and select New Tax Regime
3. Pre-Fill Your Data
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The portal auto-fills details from your Form 16, TDS, PAN-linked bank interest.
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Check and confirm salary, interest income, and rental income.
4. Input House Property Details
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Enter rental income ₹1,20,000.
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Do not claim ₹2,50,000 notional interest deduction under new tax regime.
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Add gross rent and property taxes, if any (leave empty if none).
5. Enter Other Income
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Enter ₹80,000 under ‘Income from Other Sources’ for term deposit interest.
6. Medical Insurance and 80C – Be Cautious
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₹27,000 under 80D and ₹1,50,000 under 80C are not allowed in the new tax regime.
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The portal will not allow these deductions under the selected regime.
7. Review Tax Computation
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Salary ₹18,00,000
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Rental Income ₹1,20,000
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Term Deposit Interest ₹80,000
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Total Gross Income = ₹20,00,000
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Deductions under New Regime = Nil
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Taxes computed as per new slabs (no exemptions)
👉 Expert Opinion:
“Taxpayers opting for the new regime must understand that most traditional deductions such as 80C or housing loan interest will not reduce their taxable income. The decision should be made by comparing both regimes,” says CA Radhika Mehta, a Bengaluru-based Chartered Accountant.
8. Verify and E-File
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Check all figures.
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Choose verification method: Aadhaar OTP, Net Banking, or ITR-V upload
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Click Submit
Key Things to Remember
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New regime is beneficial only if your total deductions are below approx. ₹3 lakh.
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Housing loan interest on self-occupied property is not allowed in new regime.
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Compare with old regime using the built-in tax calculator.
Final Checklist Before Submission
✅ Form 16 matched
✅ Rental income added
✅ Interest income added
✅ New regime selected
✅ No 80C/80D deductions claimed
✅ Aadhaar OTP used for verification
Quick Recap: Structured Bullet Points
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💼 Salary Income: ₹18,00,000
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🏠 Rental Income: ₹1,20,000
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🧾 Notional Interest (Home Loan): ₹2,50,000 (ignored under new regime)
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💵 Interest Income: ₹80,000
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🛡️ Medical Insurance: ₹27,000 (not deductible)
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💰 80C Investments: ₹1,50,000 (not deductible)
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📜 Form Used: ITR 1
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📆 Assessment Year: 2025–26
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👤 Age: Below 60
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🧮 Tax Regime Chosen: New
Disclaimer: This post is for informational purposes only. Please refer to our full disclaimer for more details.