CBDT Releases ITR Forms for AY 2025–26: Key Changes

Introduction

The Central Board of Direct Taxes (CBDT) has released revised Income Tax Return (ITR) forms—ITR-1 through ITR-6—for Assessment Year (AY) 2025–26. These updates reflect significant changes aimed at aligning with current tax policies and compliance standards. Key modifications impact a broad spectrum of taxpayers and include updates to eligibility criteria, capital gains reporting, deduction disclosures, and presumptive taxation rules. The revisions are intended to improve the accuracy and transparency of income reporting. In this article, we’ll explore the newly notified ITR forms and break down the major changes and their implications for various taxpayer categories

ITR-1 & ITR-4 for FY 2024–25: Key Changes for AY 2025–26

The Central Board of Direct Taxes (CBDT) has introduced several important updates to ITR-1 and ITR-4 forms for Assessment Year (AY) 2025–26. These changes aim to broaden taxpayer eligibility, simplify compliance, and improve the accuracy of income reporting.

1. LTCG Reporting Enabled in ITR-1 and ITR-4

Taxpayers can now report long-term capital gains (LTCG) under Section 112A up to ₹1.25 lakh directly within ITR-1 and ITR-4, provided there are no carry-forward capital losses.

2. Higher Presumptive Tax Limits

The turnover threshold for presumptive taxation has been increased:

₹3 crore under Section 44AD for businesses
₹75 lakh under Section 44ADA for professionals
This applies where at least 95% of receipts are through digital transactions.

3. Expanded Eligibility for ITR-1

The updated ITR-1 form now accommodates small investors with limited LTCG, enabling them to file under the simplified form, subject to specific conditions.

4. Mandatory Disclosure of Tax Regime Selection

Taxpayers must clearly declare whether they are opting for the old or new tax regime. First-time opt-outs from the new regime are required to submit Form 10-IEA and provide the acknowledgement number in the return.

5. Form 10-IEA Details Required

Those shifting from the new to the old regime in AY 2025–26 must furnish the Form 10-IEA acknowledgement number and explain any delay in submission within the return.

6. Clause-Level Deduction Reporting

Deductions claimed under Sections 80C to 80U must now be selected from a detailed dropdown menu, increasing precision and transparency in reporting.

7. Simplified Section 89A Reporting

Taxpayers claiming relief under Section 89A for income from foreign retirement funds can now benefit from a more streamlined and user-friendly reporting format.

8. Mandatory Disclosure of Active Bank Accounts

All active (non-dormant) bank accounts held in India during the financial year must be reported. Dormant accounts—those inactive for over two years—are exempt from this requirement.

9. Wider Access to Simplified Forms

Due to relaxed thresholds and expanded criteria, a broader set of taxpayers can now use ITR-1 and ITR-4—provided their income sources and profiles align with the revised eligibility norms

ITR-2 Form for AY 2025–26: Key Changes and Updates

The Central Board of Direct Taxes (CBDT) has issued the updated ITR-2 form for Assessment Year (AY) 2025–26, reflecting important amendments introduced by the Finance Act, 2024. Below are the major updates taxpayers should be aware of:

1. Capital Gains Reporting – Pre and Post July 23, 2024

In line with changes introduced in the Finance Act, 2024, taxpayers must now report capital gains separately for transactions executed before and after July 23, 2024. This aims to ensure clarity and compliance with revised taxation rules.

2. Capital Loss on Share Buybacks – New Condition

Effective October 1, 2024, capital losses on share buybacks can be claimed only if the corresponding dividend income has been declared under “Income from Other Sources.”

3. Higher Threshold for Asset & Liability Disclosure

The income threshold for mandatory reporting of assets and liabilities has been increased from ₹50 lakh to ₹1 crore, reducing compliance requirements for middle-income taxpayers.

4. Expanded Deduction Reporting

The ITR-2 now includes detailed input fields for deductions under key sections like 80C and 10(13A), allowing for more accurate classification of investments and exemptions.

5. New Column in Schedule-TDS

A separate column has been introduced in Schedule-TDS to specify the section under which TDS was deducted—such as Section 194I (rent) or Section 194J (professional fees)—enhancing the precision of TDS credit claims

ITR-3 Form for AY 2025–26: Major Updates and Key Changes

The Central Board of Direct Taxes (CBDT) has notified the revised ITR-3 form for Assessment Year 2025–26 via Notification No. 41/2025 dated April 30, 2025, effective from April 1, 2025. The updated form incorporates significant changes in line with the amendments introduced by the Finance Act, 2024, and applies to individuals and Hindu Undivided Families (HUFs) earning income from business or profession.

Key Updates in the Revised ITR-3:

1. Capital Gains (Schedule CG)

Rationalized Holding Periods to better distinguish between short-term and long-term capital assets.
Updated LTCG/STCG Tax Rates in line with revised provisions.
Revised Indexation Rules for improved accuracy in calculating the indexed cost of acquisition and improvement.
Mandatory Split of Capital Gains for transactions executed before and after July 23, 2024, to reflect policy updates from the Finance Act.

2. Capital Loss on Share Buybacks

From October 1, 2024, capital losses on share buybacks can only be claimed if the related dividend income is reported under Section 2(22)(f) in Schedule OS.

3. Enhanced Asset and Liability Reporting Threshold

The income threshold for mandatory disclosure of assets and liabilities has been raised from ₹50 lakh to ₹1 crore, easing compliance for mid-income taxpayers.

4. Reporting Income from Cruise Shipping

A new section—Section 44BBC—has been introduced to declare income from the cruise shipping business, marking a step toward industry-specific disclosures.

5. Expanded Deduction Disclosures

More granular reporting is now required for deductions under Sections 80C, 80E, 80EE, 24(b), and 10(13A).
Taxpayers must provide detailed supporting information, such as loan account numbers, insurance policy details, and HRA components.

6. Improved TDS Reporting (Schedule-TDS)

A dedicated field has been added to specify the exact section under which TDS was deducted (e.g., 194I for rent, 194J for professional fees), enhancing the transparency and accuracy of TDS credit claims

ITR-5 Form for AY 2025–26: Key Amendments and Notable Updates

The Central Board of Direct Taxes (CBDT) released the updated ITR-5 form on May 1, 2025, for Assessment Year 2025–26, introducing several important changes aligned with the provisions of the Finance Act, 2024.

Applicable to firms, LLPs, AOPs, BOIs, and other entities not eligible to file ITR-1 to ITR-4 or ITR-6, the revised ITR-5 form incorporates enhanced reporting requirements and new disclosure fields to improve accuracy, transparency, and compliance.

Key Updates in the Revised ITR-5 Form:

Capital Gains Reporting by Date of Transfer:
Capital gains must now be reported separately for transactions before and after July 23, 2024, to align with the revised capital gains framework introduced by the Finance Act, 2024.
Claiming Capital Loss on Share Buybacks:
From October 1, 2024, entities can claim capital losses on share buybacks only if the associated dividend income is reported under “Income from Other Sources.”
Introduction of Section 44BBC – Cruise Shipping Income:
A new section has been added for presumptive taxation of non-resident cruise operators. Under Section 44BBC, 20% of gross receipts from passenger transport is deemed as taxable income.
TDS Section Code Disclosure:
In Schedule-TDS, taxpayers must now specify the exact section under which TDS was deducted (e.g., 194I for rent or 194J for professional fees), improving cross-verification and credit tracking

ITR-6 Form for AY 2025–26: Key Changes and Disclosures for Corporate Filers

The Central Board of Direct Taxes (CBDT) has notified the revised ITR-6 form for Assessment Year 2025–26 via Notification No. 44/2025 dated May 6, 2025. Applicable to companies not claiming exemption under Section 11, the updated form reflects critical amendments brought in by the Finance Act, 2024, with a focus on enhanced disclosure, tax accuracy, and compliance for corporate taxpayers.

Major Updates in the ITR-6 Form for AY 2025–26:

Capital Gains Segregation by Transfer Date
Companies must now report capital gains separately for transactions conducted before and after July 23, 2024, in accordance with the revised capital gains tax regime.
Buyback-Related Capital Loss Restriction
From October 1, 2024, capital losses on share buybacks are allowed only if the related dividend income has been disclosed under ‘Income from Other Sources’, ensuring proper alignment of income and loss reporting.
Disclosure under Section 44BBC – Cruise Shipping Income
A new field has been added for companies to declare income under Section 44BBC, applicable to non-resident cruise operators. Under this presumptive scheme, 20% of gross receipts is treated as taxable income.
Schedule BP (Business or Profession) – Rule 10TIA Compliance
Entities engaged in rough diamond trading must now disclose profits in line with Rule 10TIA, with a minimum declared profit of 4% of gross receipts, to ensure adherence to transfer pricing standards.
Expanded Interest Deduction Disclosure – Section 24(b)
Companies claiming interest on housing loans must provide detailed loan information in the enhanced Schedule 24(b) to improve clarity and support claim validation.
TDS Schedule Enhancements
A dedicated field now requires companies to specify the exact TDS section (e.g., 194A, 194C) under which tax was deducted, aiding reconciliation with Form 26AS and ensuring accurate credit claims

CBDT Notifies Updated ITR-7 Form for AY 2025–26

The Central Board of Direct Taxes (CBDT) has released the revised ITR-7 form for Assessment Year 2025–26, reflecting key updates introduced under the Finance Act, 2024. The changes are aimed at improving compliance, transparency, and alignment with the latest tax provisions applicable to entities such as trusts, political parties, research institutions, and others required to file under ITR-7

Key Changes in ITR-7 for AY 2025–26

Capital Gains Reporting by Date:
Schedule-CG now requires taxpayers to report capital gains separately for transactions conducted before and after July 23, 2024, aligning with the effective date of key amendments under the Finance Act, 2024.
Buyback-Related Capital Loss Condition:
From October 1, 2024, capital losses from share buybacks can only be claimed if the corresponding dividend income is reported under ‘Income from Other Sources’, ensuring consistency in tax treatment.
Expanded Section 24(b) Disclosure:
Additional reporting fields have been added to capture detailed information on interest deductions claimed on borrowed capital under Section 24(b), enhancing transparency.
Mandatory Disclosure of TDS Section Codes:
In Schedule-TDS, taxpayers are now required to specify the exact section of the Income Tax Act under which TDS has been deducted (e.g., 194A, 194J), improving the accuracy of tax credit claims and enabling seamless verification

9 Major Changes in ITR Filing for FY 2024–25 (AY 2025–26)

The Central Board of Direct Taxes (CBDT) has introduced several taxpayer-centric updates to streamline income tax return (ITR) filing for individuals and small businesses. Here are the nine key changes you should know:

1. Simplified ITR-1 and ITR-4 for LTCG up to ₹1.25 Lakh
Taxpayers earning up to ₹1.25 lakh in long-term capital gains (LTCG) from listed equity shares or mutual funds—without any capital loss—can now use ITR-1 or ITR-4. This eliminates the need to shift to more complex forms like ITR-2 or ITR-3 for small gains.

2. Aadhaar Enrolment ID Removed
ITR forms will no longer accept Aadhaar Enrolment IDs. Only valid Aadhaar numbers are now accepted for PAN applications and return filing. All references to Aadhaar Enrolment ID have been removed from ITR-1, 2, 3, and 5.

3. Detailed Opt-Out Disclosure from New Tax Regime
Business taxpayers opting out of the new tax regime must now furnish additional details in ITR-4, including prior Form 10-IEA filings and their intent to continue under the old regime. This enhances compliance clarity.

4. Mandatory Mention of TDS Section Codes
Taxpayers must now specify the exact section (e.g., 194J, 194C) under which TDS was deducted, applicable across ITR-1, 2, 3, and 5. This aids accurate reconciliation with Form 26AS and TDS returns.

5. New Capital Gains Rules from July 23, 2024
The Finance Act, 2024 introduces separate tax treatments based on the date of transfer:

Before July 23, 2024: Old regime with indexation benefits applies.
On or after July 23, 2024: New capital gains tax rules apply.
Reporting must now indicate transfer dates clearly.

6. Separate Disclosure for Unlisted Bonds/Debentures
Gains from redemption or sale of unlisted debentures post-July 23, 2024, are treated as short-term and taxed at slab rates. Earlier transfers follow long-term capital gains rules. Forms ITR-2, 3, and 5 have been updated accordingly.

7. Buyback Proceeds as Deemed Dividend
From October 1, 2024, proceeds from share buybacks by domestic listed companies must be declared as ‘deemed dividend’ under ‘Income from Other Sources’ in ITR-2, 3, and 5. No sale consideration is to be reported under capital gains.

8. Disability Deduction Requires Certificate Acknowledgement
To claim deductions under Sections 80DD and 80U, taxpayers must now provide the acknowledgement number of the disability certificate (Form 10-IA). This requirement applies to ITR-2 and ITR-3.

9. Asset Disclosure Threshold Raised to ₹1 Crore
The reporting requirement for assets and liabilities (Schedule AL) now applies only if gross total income exceeds ₹1 crore—up from the earlier ₹50 lakh limit. This eases the compliance burden for many high-income individuals.

Final Note

These updates aim to ease tax compliance, reduce complexities for small taxpayers, and enhance accuracy in income and deduction reporting. Taxpayers are advised to review the final ITR forms and e-filing utilities before submission

Expert Support for Smooth ITR Filing – FY 2024–25

Filing your income tax return amid evolving tax rules can be challenging. At IndiaFilings, our team of tax professionals is here to simplify the process. Whether you’re navigating new ITR forms, managing deductions, or adapting to recent changes in the law, we provide end-to-end assistance to ensure your filings are accurate, timely, and fully compliant

About the Author

Rohit

Rohit is a seasoned legal writer known for simplifying complex legal concepts into practical, easy-to-understand guidance. His insights empower entrepreneurs to navigate regulatory requirements with clarity and confidence—supporting them at every stage of launching, managing, and scaling their businesses

June 17, 2025