ITR forms AY 2025-26
9 Key Changes in ITR-1, ITR-2, ITR-3, and ITR-4 for FY 2024-25
(AY 2025-26) You Must Know
As the Income Tax Department has notified the
updated Income Tax Return (ITR) forms for Financial Year 2024-25 (Assessment
Year 2025-26), it’s important for taxpayers to stay informed about the
significant updates. These revisions reflect policy changes introduced in the
Union Budget 2024 and aim to simplify tax compliance for individuals and
businesses.
In this guide, we break down 9 crucial changes in ITR-1, ITR-2, ITR-3,
and ITR-4 that every taxpayer needs to be aware of for the
upcoming tax season.
1. Expanded Eligibility for ITR-1 and ITR-4
Taxpayers can now enjoy broader access to
simplified ITR filing. Individuals
with long-term capital gains (LTCG) from listed equity shares and equity mutual
funds—up to ₹1.25 lakh—can now file using ITR-1 or ITR-4,
provided:
·
There are no capital losses carried forward or
brought forward
·
LTCG is under the ₹1.25 lakh threshold
Why
it matters:
This change reduces the compliance burden for small investors, who previously
had to use more complex ITR-2 or ITR-3 forms even when no tax was payable.
2. Aadhaar Enrolment ID No Longer Accepted
Effective this year, taxpayers cannot use Aadhaar enrolment ID
while applying for PAN or filing ITR. The updated ITR forms (ITR 1, 2, 3, and
5) have removed the option to enter the Aadhaar enrolment number.
Key
takeaway:
Only a valid Aadhaar number will be accepted. Without it, filing your return is
no longer possible.
3. Opt-Out Declaration for New Tax Regime in
ITR-4
Business owners and professionals who wish to opt out of the new tax regime
must now provide detailed confirmation in ITR-4. The form asks:
·
Whether the taxpayer has previously filed Form
10-IEA
·
If they wish to continue opting out in the
current year
Important
note:
Taxpayers with business income can only switch tax regimes once, unlike
salaried individuals who can switch annually.
4. Mandatory TDS Section Disclosure
From FY 2024-25 onwards, taxpayers must
mention the specific TDS
section under which tax was deducted for income other than salary.
Implication:
This change improves transparency and aids the Income Tax Department in
reconciling TDS credits more accurately.
5. Updated Capital Gains Reporting Rules
New capital gains taxation rules took effect
on July 23, 2024.
The ITR forms now require:
·
Reporting of asset transfer dates
·
Differentiation between gains from transactions before and after July 23, 2024
Example:
A share sold on July 22, 2024, follows the old tax rules (including
indexation). The same share sold on July 23, 2024, is taxed under new rules.
6. Separate Disclosure for Gains from Unlisted
Bonds and Debentures
New rules for unlisted debt instruments apply
from July 23, 2024:
·
Any
gain on redemption or transfer after this date is
treated as short-term,
taxed at the taxpayer’s slab rate
·
Gains on transfers before this date are
treated as long-term,
taxed at 20% with indexation
Action
required:
Taxpayers must clearly report such capital gains in ITR-2, ITR-3, or ITR-5,
depending on their status.
7. Buy-Back Proceeds to Be Reported as
Dividends
Effective October 1, 2024, any income received
from buy-backs by listed
companies is treated as deemed
dividend income and not capital gains.
Reporting
mechanism:
·
Report the income under “Income from Other
Sources”
·
Mention zero
sale proceeds under the capital gains section, which may result
in a capital loss
(adjustable in future years)
8. Disability Deduction Now Requires
Certificate Details
To claim deductions under Section 80DD or 80U,
taxpayers must now provide:
·
Acknowledgement
number of the disability certificate
·
Form
10-IA (as required)
Applicable
forms:
This requirement is mandatory for ITR-2 and ITR-3 filers only.
9. Asset & Liability Reporting Only for
Income Over ₹1 Crore
Previously, individuals with income over ₹50
lakh had to report their assets and liabilities. From this year, this threshold
has been increased to ₹1 crore.
What
this means:
Only taxpayers whose gross
total income exceeds ₹1 crore need to disclose detailed
information about their assets and liabilities.
Conclusion
The changes to ITR forms for AY 2025-26 aim to
streamline filing, reduce complexities for small taxpayers, and increase
transparency in capital gains and deductions. While the e-filing utility is yet
to be released on the income tax portal, familiarizing yourself with these
updates can help you prepare better for a hassle-free ITR filing experience.
FAQs on ITR Changes for FY 2024-25
Q:
Can salaried individuals with small capital gains file ITR-1 this year?
Yes, if LTCG is below ₹1.25 lakh and there’s no carry-forward loss.
Q:
Is Aadhaar enrolment number valid for filing returns?
No. Only an actual Aadhaar number is now accepted.
Q:
Do I need to mention the TDS section in ITR-1?
Only if you have non-salary income where TDS was deducted.
DISCLAIMER
Airfinac.com, its author/writer and associates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.