CBDT Notifies ITR forms for AY 2025-26 - Key Changes & Updates

The CBDT has rolled out revised ITR forms—ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, and ITR-6—for AY 2025–26, incorporating several significant changes to align with evolving tax norms and policy objectives. These amendments affect a wide range of taxpayers and cover modifications to eligibility criteria, capital gains reporting, deduction disclosures, presumptive taxation rules, and more. The changes are designed to enhance the comprehensiveness of tax filings and ensure more detailed and accurate income reporting. In this article, we will take a closer look at the newly notified ITR forms for AY 2025–26, highlighting the key changes and their implications for different categories of taxpayers.

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ITR-1 & ITR-4 for FY 2024–25: Key Updates and Changes

The CBDT has made several notable changes to the ITR-1 and ITR-4 forms for the Assessment Year 2025–26, aiming to expand eligibility, simplify compliance, and enhance the accuracy of reporting.

• LTCG Reporting Permitted: Taxpayers can now report long-term capital gains (LTCG) under Section 112A up to ₹1.25 lakh directly in ITR-1 and ITR-4, provided there are no capital losses to carry forward.
• Enhanced Presumptive Tax Limits: The turnover threshold under Section 44AD has been raised to ₹3 crore for businesses, and to ₹75 lakh under Section 44ADA for professionals, if 95% or more of transactions are digital.
• Wider Scope for ITR-1: The updated ITR-1 form allows small investors with limited LTCG to file under this simpler form, provided certain conditions are met.
• Mandatory Tax Regime Disclosure: Taxpayers must explicitly declare their choice between the old and new tax regimes. First-time opt-outs from the new regime must submit Form 10-IEA and mention the acknowledgement number.
• Form 10-IEA Requirements: Those switching from the new to the old tax regime in AY 2025–26 are required to provide the Form 10-IEA acknowledgement number in their return and justify any delay in filing it.
• Clause-Level Deduction Reporting: Deductions under Sections 80C to 80U must now be selected from a detailed drop-down list, improving transparency and precision in claims.
• Simplified Relief for Foreign Retirement Accounts: Taxpayers claiming relief under Section 89A for income from foreign retirement funds will benefit from a streamlined reporting process.
• Mandatory Reporting of Active Bank Accounts: All non-dormant bank accounts held in India during the financial year must be reported. Dormant accounts inactive for over two years are exempt.
• Expanded Eligibility for Simplified Returns: More taxpayers can now use ITR-1 and ITR-4 due to the expanded scope and relaxed thresholds, provided their income profiles meet the revised criteria.

Attached are the PDF versions of the updated ITR 1 and ITR 4 forms for AY 2025–26:

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

The Central Board of Direct Taxes (CBDT) has released the updated ITR-2 form for Assessment Year 2025–26, incorporating key amendments aligned with the Finance Act, 2024.  The most notable updates include:

• Separate Reporting of Capital Gains: Capital gains must now be reported separately for transactions executed before and after July 23, 2024, in light of structural changes introduced by the Finance Act, 2024.
• Capital Loss on Share Buybacks: From October 1, 2024, capital losses on share buybacks can be claimed only if the related dividend income has been disclosed under the head "Income from Other Sources."
• Increased Threshold for Asset and Liability Disclosure: The income threshold for mandatory disclosure of assets and liabilities has been increased from ₹50 lakh to ₹1 crore.
• Detailed Deduction Reporting: The form now provides expanded fields for reporting deductions under key sections such as 80C and 10(13A), enabling more precise classification of exemptions and investments.
• New Column in Schedule-TDS: A dedicated column has been added to indicate the specific section under which TDS was deducted (e.g., 194I for rent, 194J for professional fees), enhancing traceability and accuracy in credit claims.

Here are the latest PDF versions of ITR 2 form for Assessment Year 2025–26.

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

The Central Board of Direct Taxes (CBDT), through Notification No. 41/2025 dated April 30, 2025, has released the updated ITR-3 form for Assessment Year 2025–26, effective from April 1, 2025. The revised form introduces significant changes to align with amendments brought in by the Finance Act, 2024. These updates are applicable to individuals and Hindu Undivided Families (HUFs) having income from business or profession. Key Changes in ITR-3 for AY 2025–26:

Capital Gains (Schedule CG)

• Rationalized Holding Periods for better classification between long-term and short-term capital assets.
• Updated LTCG/STCG Rates as per the latest tax rules.
• Revised Indexation Norms for calculating the indexed cost of acquisition and improvement.
• Mandatory segregation of capital gains for transactions executed before and after July 23, 2024.

Capital Loss from Buyback of Shares

• Capital losses on buybacks after October 1, 2024 can be claimed only if the corresponding dividend income is disclosed under Section 2(22)(f) in Schedule OS.
• Higher Threshold for Asset and Liability Reporting
• The income threshold for mandatory disclosure of assets and liabilities has been increased from ₹50 lakh to ₹1 crore.

Business or Profession Income

A new section, Section 44BBC, has been introduced to report income from the cruise shipping business.

Expanded Deduction Disclosures

• More detailed reporting is now required in deduction schedules such as Sections 80C, 80E, 80EE, 24(b), and 10(13A).
• Taxpayers must provide specific supporting details like loan account numbers, insurance policy numbers, and HRA details.

Enhanced Schedule-TDS

The form now includes a field to specify the section under which TDS was deducted (e.g., 194I for rent), ensuring better traceability and validation of TDS claims.

The updated ITR-3 form for AY 2025–26 are available below in PDF format.

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

On May 1, 2025, the Central Board of Direct Taxes (CBDT) released the revised ITR-5 form for the Assessment Year 2025–26. The updated form incorporates several key changes in alignment with the Finance Act, 2024.

The ITR-5 form is applicable to firms, LLPs, AOPs, BOIs, and other entities not filing returns under ITR-1 to ITR-4 or ITR-6. Key Changes in ITR-5 for AY 2025–26:

Capital Gains Segregation by Transfer Date

The revised Schedule-CG mandates separate reporting of capital gains for transactions conducted before and after July 23, 2024—the date on which the relevant provisions of the Finance Act, 2024, became effective. This change enables more precise classification and tax treatment under the updated capital gains regime.

Capital Loss on Share Buybacks

Effective October 1, 2024, capital losses arising from share buybacks may now be claimed only if the related dividend income has been previously reported under "Income from Other Sources." This corrects earlier inconsistencies and brings uniformity in taxation.

Inclusion of Section 44BBC – Cruise Shipping Business

The ITR-5 form now includes a reference to the newly introduced Section 44BBC, which pertains to the presumptive taxation of non-resident cruise operators. Under this section, 20% of the gross receipts from passenger carriage is deemed taxable. This addition ensures clear and proper disclosure of income from the cruise shipping business.

Mandatory Disclosure of TDS Section Code

In Schedule-TDS, taxpayers are now required to mention the specific section of the Income Tax Act under which TDS was deducted (e.g., 194I, 194J). This enhancement promotes better traceability, cross-verification, and transparency in tax credit claims.

You can find the revised PDF formats of ITR 5 for AY 2025–26 below:

ITR-6 Form for AY 2025–26: Key Updates and Changes

The Central Board of Direct Taxes (CBDT) has issued the updated ITR-6 form for the Assessment Year 2025–26 through Notification No. 44/2025, dated May 6, 2025. This form is applicable to companies (other than those claiming exemption under Section 11) and incorporates several important changes to align with the Finance Act, 2024, with a focus on improved accuracy and compliance in corporate tax reporting. Key Changes in ITR-6 for AY 2025–26:

Capital Gains Segregation by Date

• In Schedule-CG, companies must now report capital gains separately for transactions executed before and after July 23, 2024. This segregation supports the revised capital gains structure under the amended tax laws.
• Capital Loss on Share BuybacksFrom October 1, 2024, capital losses on share buybacks are allowable only if the corresponding dividend income has been declared under the head ‘Income from Other Sources.’ This provides clarity and consistency in the treatment of buyback-related losses.
  
• Reference to Section 44BBC – Cruise ShippingThe form introduces a new disclosure requirement under Section 44BBC, which covers presumptive taxation for non-resident cruise operators. Under this provision, 20% of the gross receipts from passenger carriage is deemed as income.

Update to Schedule BP (Business and Profession)

• A specific disclosure under Rule 10TIA is now required for businesses dealing in rough diamonds. The declared profit must be at least 4% of gross receipts, ensuring compliance with transfer pricing norms.

Enhanced Disclosure under Section 24(b)

• For companies claiming interest deductions on housing loans, Schedule 24(b) has been expanded to capture additional information ,such as loan details, improving transparency.

Revised Schedule-TDS

• A new field has been added to require the section code under which TDS was deducted (e.g., 194A, 194C). This change facilitates better reconciliation with Form 26AS and the TDS returns filed by deductors.

Enclosed below are the updated PDF form of ITR 6 for the Assessment Year 2025–26.

CBDT Releases Revised ITR-7 Form for AY 2025–26

The Central Board of Direct Taxes (CBDT) has issued the revised ITR-7 form. The updated form incorporates several important changes in line with the amendments introduced by the Finance Act, 2024. 

Key Updates in ITR-7 for AY 2025–26:

• Split Reporting in Schedule-Capital Gains: Taxpayers are now required to report capital gains separately for periods before and after 23.07.2024, reflecting the applicability date of Finance Act, 2024 provisions.
• Capital Loss on Share Buyback: A capital loss from share buyback transactions will be permitted only if the corresponding dividend income is disclosed under ‘Income from Other Sources’. This is effective from 01.10.2024.
• Enhanced Section 24(b) Disclosure: Additional fields have been introduced to capture detailed deductions claimed under Section 24(b), specifically relating to interest on borrowed capital.
• Mandatory TDS Section Codes: In Schedule-TDS, taxpayers must now specify the relevant TDS section codes, enabling better accuracy and cross-verification of tax deducted at source.

The official CBDT notification detailing these revisions to the ITR-7 form is attached below for reference.

Nine Key changes for ITR Filing FY 2024-25 (AY 2025-26)

Here are nine key changes that will ease the return filing experience for individuals and small businesses this year:

1. Simplified ITR 1 and ITR 4 for Capital Gains up to ₹1.25 Lakh

The eligibility criteria for filing ITR-1 and ITR-4 have been relaxed. Taxpayers with long-term capital gains (LTCG) up to ₹1.25 lakh from listed equity shares and mutual funds can now use these simplified forms—provided they don’t have any capital loss to carry forward or set off.

Previously, even if the gains were within the exemption limit (earlier ₹1 lakh), taxpayers had to opt for complex forms like ITR-2 or ITR-3. This change reduces the compliance burden for small investors.

2. Aadhaar Enrolment ID No Longer Accepted

From this year, PAN applications and ITR filings cannot be made using Aadhaar Enrolment ID. Taxpayers must now provide an actual Aadhaar number. Consequently, the Aadhaar Enrolment ID field has been removed from all ITR forms (ITR 1, 2, 3, and 5).

3. Detailed Disclosure for Opting Out of the New Tax Regime

Business owners switching from the new to the old tax regime must now provide detailed disclosures in ITR-4. This includes past filings of Form 10-IEA and confirmation on whether they wish to continue opting out of the new regime.

Previously, a simple confirmation sufficed. The revised disclosure requirement aims to bring more clarity and consistency in tax regime selection.

4. Mandatory Mention of TDS Section

Starting this year, if your income (other than salary) has tax deducted at source (TDS), you’ll need to mention the specific TDS section (such as 194J, 194C, etc.) in your ITR form to claim the tax credit. This applies to ITR 1, 2, 3, and 5.

Earlier, taxpayers could claim TDS credits without specifying the section.

5. New Capital Gains Rules from July 23, 2024

Budget 2024 brought revised taxation rules for capital gains, effective July 23, 2024. The ITR forms now require you to report the date of transfer of capital assets to determine whether old or new tax rules apply.

For instance:

• Transfers before July 23, 2024: Old rules with indexation benefits and concessional tax rates apply.
• Transfers on or after July 23, 2024: New rules with different tax treatments come into effect.

6. Separate Reporting for Gains on Unlisted Bonds/Debentures

Taxation of unlisted debentures and bonds has also changed. If such instruments are redeemed or sold on or after July 23, 2024, the gains will be treated as short-term, irrespective of the holding period, and taxed at slab rates.

However, if the transfer happens before that date, the old long-term capital gains rules (20% tax with indexation) will apply. These gains must be reported separately in ITR 2, 3, or 5.

7. Buyback Proceeds to Be Reported as Deemed Dividends

From October 1, 2024, proceeds from buybacks by domestic listed companies are to be treated as deemed dividends in the shareholder’s hands. ITR-2, 3, and 5 have been updated to reflect this change.

Taxpayers must report the buyback amount under "Income from Other Sources" and show zero sale consideration under capital gains. The resulting capital loss can be carried forward and set off against future gains.

8. Disability Deduction Requires Certificate Acknowledgement

Taxpayers claiming deductions under Section 80DD or 80U must now provide the acknowledgement number of the disability certificate in addition to Form 10-IA.

This applies to ITR 2 and 3, and ensures better verification of such claims. There's no change in ITR-1 in this regard.

9. Asset and Liability Reporting Threshold Raised to ₹1 Crore

Previously, taxpayers with income over ₹50 lakh had to disclose their assets and liabilities in Schedule AL of the ITR. Now, this requirement applies only if gross total income exceeds ₹1 crore.

This is a welcome relief for many high-income taxpayers, reducing unnecessary reporting for those in the ₹50 lakh to ₹1 crore income range. The revised threshold applies to ITR-2 and ITR-3.

Final Thoughts

These updates are aimed at simplifying the ITR filing process and making it more taxpayer-friendly—especially for small investors, salaried individuals, and small business owners. However, the changes also reflect the government’s continued push toward greater transparency and accuracy in tax reporting.

Taxpayers should carefully review the new ITR forms once the e-filing utilities are released to ensure accurate compliance.

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Updated on: May 16th, 2025