Taxpayers, take note! The Income Tax Department has officially released ITR forms 1 to 5 for Assessment Year 2025-26. Here’s a complete breakdown of the changes compared to last year.
In a major development for Indian taxpayers, the Income Tax Department has notified Income Tax Return (ITR) forms 1, 2, 3, 4, and 5 for the financial year 2024-25 (assessment year 2025-26). The department rolled out the forms gradually between April 29 and May 3, 2025, allowing ample time for individuals and entities to prepare for the return filing season.
Each ITR form is designed for specific categories of taxpayers based on their income type, profession, and residency status. Let’s explore which form is right for you and what changes have been introduced this year compared to last year.
ITR-1, also known as Sahaj, is meant for salaried individuals earning up to ₹50 lakh annually, with income from salary, one house property, and other sources like interest income.
What’s New:
Taxpayers can now report long-term capital gains (LTCG) up to ₹1.25 lakh from listed shares and mutual funds, which was earlier only permitted in ITR-2 and ITR-3.
Mandatory selection between the old and new tax regime is now enforced.
ITR-2 is applicable to individuals and Hindu Undivided Families (HUFs) who don’t earn income from business or profession but may have capital gains, foreign income, or multiple properties.
New Additions:
Legal Entity Identifier (LEI) field introduced.
Mandatory reporting of deposits made under the Capital Gains Account Scheme (CGAS).
Requirement to disclose dividends received from IFSC units.
Clear declaration of chosen tax regime is now compulsory.
This form is suitable for individuals and HUFs with income from business or profession.
Major Changes:
A new section for reporting income from online gaming has been added to improve transparency in this fast-growing sector.
Disclosure of delays in payments to MSMEs is now mandatory.
Fields for LEI and CGAS deposits are now part of the form.
ITR-4 is designed for small business owners, professionals, and freelancers who opt for the presumptive taxation scheme.
Key Updates:
LTCG up to ₹1.25 lakh from listed shares and mutual funds can now be reported.
The presumptive income limit under Sections 44AD/44ADA has been raised from ₹2 crore to ₹3 crore, provided cash transactions are less than 5%.
Filing of Form 10-IEA is now mandatory to opt in or out of the new tax regime.
This form is applicable to firms, LLPs, Associations of Persons (AOPs), Bodies of Individuals (BOIs), and other non-company entities that are not required to file ITR-7.
New Features:
Inclusion of LEI and CGAS details through newly added columns.
To exit the new tax regime, entities must now file Form 10-IEA.
With several technical and structural changes introduced across the ITR forms, it is crucial for taxpayers to choose the correct form based on their income source and tax profile. The earlier rollout of these forms also gives ample time for tax planning.
Whether you're a salaried individual, a freelancer, an investor, or part of a business entity, staying updated with the latest tax form requirements can ensure a smooth and error-free filing process for the year ahead.
