To show only file name without the entire directory path

No need for Xargs and all , ls is more than enough.

ls -1 *.txt

displays row wise

ls whateveryouwant | xargs -n 1 basename

Does that work for you?

Otherwise you can (cd /the/directory && ls) (yes, parentheses intended)

There are several ways you can achieve this. One would be something like:

for filepath in /path/to/dir/*
do
    filename=$(basename $filepath)

    ... whatever you want to do with the file here
done

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