Complete Guide to Revised ITR Forms for AY 2025–26

ITR Forms for AY 2025–26 have been comprehensively updated by the Central Board of Direct Taxes (CBDT) to reflect the latest provisions introduced by the Finance Act, 2024. These revised forms—including ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7—are designed to enhance compliance requirements, promote digital transparency, and improve the accuracy of reporting for various taxpayer categories in India. The changes cater to a wide range of individuals and entities, ensuring that tax filing is more streamlined and aligned with current regulatory standards. This detailed overview highlights all the significant updates and modifications introduced in the ITR forms for the Assessment Year 2025–26, helping taxpayers understand what to expect and how to comply effectively with the revised tax filing process.

ITR-1 & ITR-4 – Key Changes in ITR Forms

• LTCG Reporting Allowed: Taxpayers can now report long-term capital gains (LTCG) under Section 112A up to ₹1.25 lakh directly in ITR-1 and ITR-4 if there is no capital loss to carry forward.
• Presumptive Tax Threshold Increased: Under Section 44AD, the turnover limit has been enhanced to ₹3 crore for businesses and ₹75 lakh under Section 44ADA for professionals if 95% of transactions are digital.
• Wider Scope for ITR-1: Small investors with minor LTCG can now use ITR-1, subject to conditions.
• Tax Regime Declaration Mandatory: Taxpayers must choose between the old and new tax regimes and provide Form 10-IEA details when opting out of the new regime.
• Deduction Reporting Enhanced: Clause-wise selection of deductions under Sections 80C to 80U via a dropdown is now required, and the policy/account number is to be provided.
• Section 89A Reporting Simplified: Relief from foreign retirement funds has been made easier under Section 89A.
• Bank Account Disclosure: All active (non-dormant) bank accounts during the year must be reported.

ITR-2 – Key Changes in ITR Forms

• Capital Gains Reporting Split: Gains must be split based on whether they occurred before or after July 23, 2024.
• Effective October 1, 2024, a capital loss resulting from share buybacks will be recognized only if dividend income is disclosed under the category ‘Other Sources.’
• Asset Disclosure Threshold Increased: Asset and liability disclosure is now mandatory only if total income exceeds ₹1 crore (previously ₹50 lakh).
• Detailed Deductions and Exemptions: Expanded fields for accurate reporting of deductions under Section 80C, HRA exemptions, etc. Also, the policy/account number is to be provided.
• To make it apparent which TDS section applies, such as 194I for rent, a new field has been added to Schedule-TDS.

ITR-3 – Key Changes in ITR Forms

• Updated Capital Gain Reporting: Holding periods rationalized, LTCG/STCG rates revised, and mandatory segregation based on July 23, 2024.
• Buyback Loss Restrictions: Same as ITR-2.
• Higher Threshold for AL Reporting: A ₹1 crore gross income threshold now applies.
• New Business Reporting – Section 44BBC: Cruise shipping income to be reported under this new section.
• Detailed Deduction Schedules: Inputs like loan numbers, insurance policies, and HRA specifics are now required.
• Enhanced TDS Reporting: A new column has been introduced to delineate the specific TDS section under which each deduction is made.

ITR-5 – Key Changes in ITR Forms

• Capital Gains Reporting Date-wise: Schedule-CG revised to differentiate transactions before/after July 23, 2024.
• Buyback Loss Adjustments: Effective October 1, 2024, capital loss on buybacks is allowed only if a related dividend was reported.
• New Section 44BBC Included: Income from cruise shipping must be declared under this section (20% deemed taxable).
• Disclosure of TDS Section Codes: Required section code reporting in Schedule-TDS.

ITR-6 – Key Changes in ITR Forms

• Capital Gains Segregation by Date: Schedule-CG requires gains to be classified pre- and post-July 23, 2024.
• Buyback Loss Conditional Reporting: Only if a dividend is declared.
• Section 44BBC for Cruise Shipping Added.
• Schedule BP Updated: For rough diamond businesses, a 4% profit declaration under Rule 10TIA is now required.
• Expanded 24(b) Disclosure: For companies claiming housing loan interest deduction.
• Revised TDS Schedule: Section code reporting is now compulsory.

ITR-7 – Key Changes in ITR Forms

• Split Reporting of Capital Gains: Based on July 23, 2024.
• Buyback Loss Claims Limited: Must declare corresponding dividend income.
• Enhanced Section 24(b) Disclosures: Additional fields added.
• Mandatory TDS Section Code Reporting: For accurate tax credit verification.

Nine Key Common Changes in All ITR Forms

• Simplified ITR-1 & ITR-4 for taxpayers with LTCG up to ₹1.25 lakh.
• The Aadhaar Enrolment ID is no longer effective; it is now mandatory to provide an Aadhaar number.
• Detailed tax regime opt-out reporting is required via Form 10-IEA.
• Mandatory TDS section disclosure in TDS schedules.
• Capital gains are required to be divided before and after July 23, 2024.
• Unlisted debenture gains are to be treated as short-term post July 23 and taxed at the slab rate.
• Buyback proceeds are to be reported as deemed dividend income.
• The Section 80DD/80U disability deduction needs Form 10-IA acknowledgment.
• The ₹1 crore asset and liabilities reporting threshold has been raised.

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