ITR Filing 2025: Major updates in ITR forms for AY 2025–26, relief on LTCG, stricter disclosures for businesses and trusts

The Central Board of Direct Taxes (CBDT) has officially notified all Income Tax Return (ITR) forms for the Assessment Year 2025–26 (Financial Year 2024–25). While the basic structure of the forms remains largely unchanged, several important amendments aligned with the Finance Act 2024 have been introduced. These changes offer relief to small investors while also tightening compliance for high-value transactions, businesses, and trusts.

✅ Key Highlights of the Changes in ITR Forms for AY 2025–26:

ITR-1 (Sahaj): Relief on Small LTCG for Salaried Individuals

• Applicable to resident individuals with income up to ₹50 lakh from salary, one house property, and other sources.

• New provision: Taxpayers can now declare long-term capital gains (LTCG) up to ₹1.25 lakh under Section 112A in ITR-1, which earlier wasn’t permitted.

ITR-2: Capital Gains Reporting Made Stricter

• Suitable for those with capital gains, more than one house, or foreign assets.

• Key changes:

  • Separate disclosure of LTCG earned before and after 23 July 2024.

  • Unlisted bonds/debentures must be reported based on holding period.

  • Buyback proceeds post 1 October 2024 to be shown at “zero value” in capital gains and other income section.

  • Assets and liabilities threshold increased from ₹50 lakh to ₹1 crore for mandatory reporting.

ITR-3: Mandatory Reporting of High-Value Transactions

• Applicable for individuals and HUFs earning from business or profession.

• Mandatory to choose old or new tax regime using Form 10-IE or 10-IEA.

• Must report high-value transactions such as:

  • Cash deposits > ₹1 crore

  • Foreign travel expenses > ₹2 lakh

  • Electricity bills > ₹1 lakh

  • Credit card payments > ₹10 lakh

• Detailed disclosure of profits, losses, and foreign income is now essential.

ITR-4 (Sugam): LTCG Relief for Presumptive Taxpayers

• For small taxpayers opting for presumptive income (Section 44AD, 44ADA).

• Now allows LTCG reporting up to ₹1.25 lakh under Section 112A.

ITR-5: Verification Options Expanded

• Applies to LLPs, AOPs, BOIs and others not filing ITR-6 or ITR-7.

• Those not using e-verification can still submit signed ITR-V via speed post to CPC, Bengaluru within 30 days.

• E-verification can be done via Aadhaar OTP, net banking, or pre-validated demat/bank account.

ITR-6: Corporate Filers Must Report Buyback Losses, Sector-wise Data

• Applicable to companies not claiming exemption under Section 11.

• Major updates:

  • Separate capital gain reporting for pre- and post-23 July 2024.

  • Buyback losses valid only if dividend income is disclosed post 1 October 2024.

  • New sections added for cruise operators (44BBC) and diamond business profits (min. 4% of gross).

  • Detailed TDS codes and Schedule BP (business profits) reporting mandatory.

ITR-7: Tightened Rules for Trusts, Political Parties & Research Entities

• For institutions filing under Sections 139(4A) to 139(4D).

• Capital gains and buyback losses must be clearly reported.

• Interest deduction under Section 24(b) for housing loan to be mandatorily disclosed.

• TDS code-wise reporting now compulsory for better tax audit tracking.

📌 Conclusion:

The 2025 ITR forms reflect a strong focus on transparency, capital gains disclosure, and tracking high-value transactions. Small taxpayers, especially those with minor LTCG, can expect relief, while businesses, trusts, and high-income individuals must brace for detailed scrutiny. Ensure you choose the correct form and tax regime while filing your ITR this year.