ITR Filing 2025: Key Changes You Should Know About Capital Gains and Disclosures

The Income Tax Department has updated the ITR (Income Tax Return) forms for the year 2025, making it easier for taxpayers, especially those with capital gains from shares, mutual funds, or property, to report their income.

Simpler Process for Small Investors

If you earned money by selling shares, mutual funds, or property last year, filing your ITR this time will be easier. The government has made helpful changes in ITR Form 1, mainly benefiting salaried individuals, small business owners, and people who have sold property.

Read More, ITR Filing Schedule for FY 2024–25: Key Deadlines to Know. 

Change in Capital Gains Exemption Limit

In the last Union Budget, the exemption limit for long-term capital gains (LTCG) on listed shares and mutual funds was increased to ₹1.25 lakh under Section 112A. Earlier, even if your LTCG was below the exemption limit, you had to file more complex forms like ITR-2 or ITR-3. Now, that’s no longer required.

No Need for Complex ITR Forms

If your annual profit from selling shares or mutual funds is ₹1.25 lakh or less, you can now file the simpler ITR-1 (Sahaj) or ITR-4 (Sugam) forms. This is a relief for small investors and salaried individuals who also earn a little from investments.

New Tax Options for Property Sellers

If you purchased a house or land before July 23, 2024, and are selling it now, you can choose between two tax options:

• Pay 12.5% tax without indexation benefits, or
• Pay 20% tax with indexation benefits (adjusting cost for inflation)

ITR-2 has been updated to help taxpayers report property sales clearly before and after July 23, 2024.

Reporting Buyback Proceeds

If you received money from a buyback of shares after October 1, 2024, it must be reported in two places:

• Under ‘Income from Other Sources’, and
• As ‘Nil consideration’ under capital gains

Higher Limit for Asset Disclosure

Earlier, individuals with total assets over ₹50 lakh had to disclose detailed asset information in their ITRs (such as properties, vehicles, and loans). Now, this limit has been increased to ₹1 crore, giving relief to middle-class taxpayers.

Which ITR Form Should You Use?

• ITR-1 (Sahaj): For income from salary, interest, and one house (total income up to ₹50 lakh)
• ITR-4 (Sugam): For small traders and professionals under presumptive taxation
• ITR-2: For individuals with income from mutual funds or shares (but no business income)
• ITR-3: For individuals earning from business or profession
• ITR-5, 6, 7: For firms, companies, and trusts

Important Deadline

The final date to file your ITR for FY 2024–25 is July 31, 2025. Filing after this date may attract a late fee.

In Summary

Filing income tax returns has become simpler for small investors and salaried individuals. Capital gains from shares and property now have clearer rules and easier reporting options, and asset disclosure requirements have been relaxed to reduce compliance pressure on the middle class.

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.          

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.