Income tax return filing: Key changes you must know about
What's the story
The Central Board of Direct Taxes (CBDT) has released the Income Tax Return (ITR) forms for the Assessment Year (AY) 2025-26.
The updated forms include major changes introduced in the Finance Act.
These changes include relief to taxpayers with small long-term capital gains (LTCG), a higher threshold for asset disclosure, and more detailed capital gains reporting requirements.
Let's take a look.
Modifications
ITR-1 and ITR-2: Key changes explained
ITR-1 or Sahaj is meant for resident individuals with income of up to ₹50 lakh from salary, one house property, and other sources.
The updated form now permits reporting of LTCG up to ₹1.25 lakh under Section 112A from listed equity shares or equity mutual funds.
Meanwhile, ITR-2 has added separate LTCG reporting before and after July 23, 2024, owing to new rules on indexation and tax rates.
Transactions
Changes in ITR-3 and ITR-4
ITR-3, meant for individuals with business/professional income, now mandates the disclosure of tax regime selection (old/new) with Form 10-IE or 10-IEA.
It also features expanded business disclosures including profits/losses, foreign income/assets, and high-value transaction reporting.
Meanwhile, ITR-4 has been revised to allow reporting of LTCG under Section 112A of up to ₹1.25 lakh for those under presumptive taxation schemes.
Requirements
Updates for ITR-5, ITR-6, and ITR-7
ITR-5 continues to be the verification form for non-e-verified returns.
Corporate filers of ITR-6 have to bifurcate capital gains and report buyback losses.
Lastly, trusts/institutions filing under ITR-7 now have to bifurcate capital gains before/after July 23, 2024, report buyback-related losses like dividend income, report Section 24(b) deduction for housing loan interest, and mention TDS section codes for easier tax verification.