Income Tax Filing 2025: CBDT Notifies All ITR Forms for AY 2025–26 with Significant Updates

The Central Board of Direct Taxes (CBDT) has released the Income Tax Return (ITR) forms for Assessment Year (AY) 2025–26, pertaining to the FY 2024–25. Key changes in notified forms include relief measures for small long-term capital gains (LTCG), revised thresholds for asset disclosures, and enhanced capital gains reporting requirements.

ITR-1: Expanded to Include Small LTCG Reporting

ITR-1, commonly known as Sahaj, continues to be applicable to resident individuals (excluding those who are not ordinarily residents) with income up to ₹50 lakh from salary, one residential property, and other sources.

Taxpayers can now report LTCG up to ₹1.25 lakh under Section 112A on the sale of listed equity shares or equity mutual funds, offering compliance relief for small investors.

ITR-2: Enhanced Capital Gains and Asset Reporting

Applicable to individuals and HUFs with capital gains, multiple properties, or foreign assets, ITR-2 has seen key enhancements:

• Separate LTCG disclosures for gains arising before and after July 23, 2024, to account for changes in indexation and applicable tax rates.
• Unlisted bonds and debentures must now be reported separately, classified by holding periods.
• Buyback proceeds received post October 1, 2024, must be reported under both "Income from Other Sources" and as "Nil consideration" under the capital gains schedule.
• Revised disclosure threshold: Individuals with total income exceeding ₹1 crore (previously ₹50 lakh) are now required to report details of assets and liabilities.

ITR-3: Mandatory Tax Regime Selection and High-Value Transaction Disclosures

ITR-3, designed for individuals and HUFs earning income from business or profession, now includes:

• Compulsory declaration of the selected tax regime (old or new), supported by Form 10-IE or 10-IEA.
• Expanded disclosures relating to business profits/losses and foreign income/assets.
• High-value transactions reporting, including:
• Cash deposits exceeding ₹1 crore in current accounts
• Foreign travel expenses above ₹2 lakh
• Electricity bills over ₹1 lakh
• Credit card payments exceeding ₹10 lakh

ITR-4 (Sugam): LTCG Reporting Extended to Presumptive Taxpayers

Targeted at individuals, HUFs, and firms (excluding LLPs) under presumptive taxation (Sections 44AD, 44ADA, 44AE), ITR-4 now allows:

• Reporting of LTCG up to ₹1.25 lakh under Section 112A, offering a simplified compliance route for small traders and professionals with modest capital gains.

ITR-5: Physical Verification Still Available

The ITR-V continues to serve as the physical verification form for taxpayers who do not e-verify their returns. It must be signed and sent via speed post to the CPC office in Bengaluru within 30 days of filing. Alternatively, returns can be verified digitally using Aadhaar OTP, net banking, or a validated bank/demat account.

ITR-6: Corporates Must Split Gains and Report Buyback Losses

Applicable to companies not claiming exemption under ITR-7, the updated ITR-6 form (notified via Gazette on May 6, 2025) now includes:

• Split capital gains reporting for transactions executed before and after July 23, 2024.
• Buyback-related capital losses are permitted, provided the corresponding dividend income is declared after October 1, 2024.
• Updates aligned with Section 44BBC for cruise operators and a minimum profit declaration of 4% of gross receipts on diamond sales.
• Expanded Schedule BP and compulsory TDS code disclosures for improved transparency.

ITR-7: Updated Disclosure Framework for Exempt Entities

Notified on May 9, 2025, ITR-7 caters to trusts, religious and charitable institutions, political parties, and other entities claiming exemption under Sections 139(4A) through 139(4D).

Key updates include:

• Bifurcation of capital gains into pre- and post-July 23, 2024 transactions.
• Reporting of buyback-related capital losses where dividend income is claimed after October 1, 2024.
• Inclusion of Section 24(b) deductions for housing loan interest.
• Mandatory mention of TDS section codes to facilitate tax reconciliation and verification.

Also Read: How to Adjust Capital Gains Under Old and New Tax Regime?

Conclusion

These updates aim to align tax reporting requirements with recent legislative changes while improving compliance clarity for both individuals and entities. Taxpayers are advised to carefully review the relevant ITR form instructions and consult tax professionals as needed to ensure accurate and timely filing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.