ITR Form Changes for AY 2025-26: What’s New for Taxpayers
- PRITI SIRDESHMUKH
- 32 minutes ago
- 9 min read
The Assessment Year 2025–26 brings one of the most comprehensive updates to India’s Income Tax Return (ITR) forms in recent years. These revisions aim to improve transparency, simplify reporting, and make compliance smoother for individual taxpayers and small businesses. The forms now feature refined layouts, new disclosure fields, and expanded eligibility criteria for ITR-1 and ITR-4. Updates from Budget 2024 and subsequent CBDT notifications have shaped these changes, ensuring taxpayers have better clarity and fewer errors while filing their returns online.
Table of Contents
11. Conclusion
12. FAQs
Expansion of ITR-1 and ITR-4 Eligibility
For the Assessment Year 2025–26, one of the most noteworthy changes is the expansion of eligibility for ITR-1 (Sahaj) and ITR-4 (Sugam). Individuals who earn long-term capital gains (LTCG) from listed equity shares or equity-oriented mutual funds under Section 112A can now file using these simplified forms—provided the LTCG amount does not exceed ₹1,25,000 and there are no carry-forward losses. Previously, taxpayers with any form of capital gain were excluded from using ITR-1 and ITR-4, forcing them to file the more complex ITR-2 or ITR-3. This relaxation simplifies compliance for small investors and salaried individuals who only have minimal capital market income. By widening the scope of these forms, the Income Tax Department aims to reduce the overall burden of reporting and improve filing accessibility for a larger group of taxpayers.
Detailed Capital Gains Reporting Requirements
The new ITR forms for AY 2025–26 introduce improved and more granular reporting sections for capital gains. Taxpayers are now required to provide transaction-level details of long-term capital gains from listed equity and mutual fund investments. This change aligns with the updated taxation norms under Section 112A and ensures that income from different sources is disclosed accurately. The revised layout includes clearer columns for acquisition cost, sale consideration, and indexed cost adjustments. These enhancements aim to reduce misreporting and make verification more straightforward for both taxpayers and the tax department. The move also supports digital validation of capital gains through Annual Information Statement (AIS) data, thereby improving accuracy and consistency in tax return assessments.
Removal of Aadhaar Enrollment ID for ITR Filing
A major identity-related change in AY 2025–26 is the discontinuation of Aadhaar Enrollment ID as an accepted form of identification for PAN application or ITR filing. Only the actual Aadhaar number is now valid for linking with PAN or filing an income tax return. This reform strengthens identity verification and helps the government eliminate errors or duplications in taxpayer records. The update also improves the authentication process when logging into the income tax e-filing portal and ensures compliance with KYC standards. Taxpayers who previously used their Enrollment ID must now update their details with the actual Aadhaar number before initiating any filing activity to avoid validation failures.
Enhanced Layout and Simplified Instructions
The Income Tax Department has refined the ITR form design to make it more intuitive and user-friendly. The latest version provides simplified instructions and structured examples for each section, including deductions under Sections 80C, 80D, and 80G. Auto-fill features and pre-validated data integrations have been improved to minimize manual errors. Each segment of income—such as salary, business, or capital gains—now contains detailed field explanations, making it easier for taxpayers to report their income correctly. This update particularly benefits those who file independently without professional assistance, ensuring they can understand form requirements without needing expert interpretation.
New Tax Regime Default and Opt-Out Procedure (Form 10-IEA)
AY 2025–26 continues the government’s policy of keeping the new tax regime under Section 115BAC as the default option for all taxpayers. Those wishing to continue under the old regime must submit Form 10-IEA before the due date of filing their return. This form serves as an official declaration to opt out of the new regime. However, individuals with income from business or profession should note that they can opt out only once—subsequent reversals are restricted. This procedural change promotes uniformity and encourages wider adoption of the simplified new tax regime. The clarity around the opt-out process helps taxpayers make better-informed decisions regarding their tax planning while avoiding filing discrepancies.
Extended Filing Deadlines and Penalty Relief
Recognizing the additional disclosures and changes in the new forms, the Income Tax Department extended the filing deadline for AY 2025–26 by 45 days beyond the usual due date. This extension gives taxpayers and professionals more time to adapt to the updated reporting structure. Alongside this, there is enhanced flexibility through the updated ITR-U facility, allowing taxpayers to rectify errors or omissions from previously filed returns without facing heavy penalties. These updates collectively aim to encourage voluntary compliance and reduce last-minute rushes during the filing season.
Clearer Income Disclosure Segments in ITR Forms
To further reduce confusion, the ITR forms have been reorganized into distinct sections that separate income categories clearly. Salary, business or profession, capital gains, and other income sources are now laid out in well-defined portions. This segmentation prevents overlap and ensures that taxpayers allocate each income type to the correct head. The clarity also assists in automatic computation of tax liability and in cross-verification of figures from Form 26AS, AIS, and TIS. Such transparency helps minimize disputes during scrutiny and enhances the accuracy of e-verification and processing by the department.
Impact of ITR Form Changes on Different Taxpayers
The updated ITR forms are designed to reduce complexity across taxpayer categories. Salaried individuals will benefit from pre-filled fields, simpler deductions, and improved layouts. Professionals and small business owners gain clarity in declaring business income, presumptive taxation, and depreciation details. Investors will appreciate the smoother capital gains reporting, which now integrates seamlessly with data available on the income tax portal. These updates also simplify compliance for first-time filers by reducing technical language and enhancing logical form flow. Overall, the changes bring uniformity and efficiency to the return filing process for diverse taxpayer segments.
Key Benefits of the Revised ITR Forms for AY 2025-26
The revised ITR forms deliver a more transparent, user-centric experience with several tangible benefits. Taxpayers can expect easier data input, reduced chances of rejection due to technical errors, and faster processing of refunds. Auto-validation of income data ensures that mismatches between AIS and declared income are minimized. Clearer instructions and improved digital tools help both individual filers and professionals save time during preparation. Additionally, the widened eligibility criteria for ITR-1 and ITR-4 encourage more individuals to use simplified forms, aligning with the government’s goal of enhancing voluntary compliance.
How TaxBuddy Simplifies ITR Filing Under the New Forms
Navigating these form updates can still be complex for many taxpayers, especially those dealing with multiple income sources or capital gains. TaxBuddy offers a practical solution through its AI-driven filing platform that simplifies every stage of the process—from document upload and data extraction to automated validation. The platform supports both self-filing and expert-assisted plans, ensuring that even those unfamiliar with tax forms can complete their return confidently. TaxBuddy’s system automatically matches TDS data, fills relevant sections, and checks for possible errors or omissions before submission, resulting in an efficient, error-free filing experience.
Conclusion
The ITR form changes for AY 2025–26 represent a significant step toward greater simplicity, transparency, and digital accuracy in India’s tax ecosystem. By improving reporting formats, refining identity verification, and extending deadlines, the government has made the filing experience more accessible for all taxpayers. For those who wish to ensure accuracy and convenience while adapting to these new requirements, using reliable online platforms can make a real difference. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides both self-filing and expert-assisted plans to suit the needs of different taxpayers. The self-filing plan allows individuals to upload documents like Form 16, TDS certificates, and bank statements, after which the AI-driven platform auto-fills the ITR with pre-validated data. This is ideal for salaried individuals with straightforward tax cases. The expert-assisted plan, on the other hand, connects taxpayers with qualified tax professionals who review income details, deductions, and documents before submission. This ensures accuracy, especially for those with complex cases such as capital gains, business income, or foreign assets.
Q2. Which is the best site to file ITR?
The official Income Tax Department portal remains the statutory platform for filing income tax returns in India. However, many taxpayers prefer using private, government-recognized intermediaries like TaxBuddy for a more seamless experience. TaxBuddy’s AI-driven system automates data validation, detects mismatches in Form 26AS or AIS, and ensures error-free submissions. Its intuitive interface and dedicated post-filing support make it one of the most reliable and efficient platforms for ITR filing in 2025.
Q3. Where to file an income tax return?
Income tax returns can be filed online through the government’s official e-filing website, www.incometax.gov.in. Taxpayers can log in using their PAN or Aadhaar number to access the pre-filled ITR utility. Alternatively, using platforms like TaxBuddy simplifies this process further, as the platform integrates directly with the income tax portal for secure submission. This eliminates the need for manual data entry and ensures timely filing without errors.
Q4. What are the major ITR form changes for AY 2025–26?
For AY 2025–26, the Income Tax Department has implemented several updates to enhance accuracy and ease of compliance. Key changes include expanded eligibility for ITR-1 and ITR-4 for taxpayers earning up to ₹1,25,000 in long-term capital gains from listed securities, removal of Aadhaar Enrollment ID, and improved disclosure formats for income heads. The new forms also come with simplified layouts, revised instructions, and better integration with pre-filled data, enabling faster and more transparent filing. Additionally, Form 10-IEA has been introduced for opting out of the default new tax regime.
Q5. Can I file my ITR with LTCG under ₹1,25,000 using ITR-1 or ITR-4?
Yes. Taxpayers earning long-term capital gains from listed equity shares or equity mutual funds under Section 112A can now file using ITR-1 or ITR-4, provided their LTCG does not exceed ₹1,25,000 and they do not have any carry-forward capital losses. This is a significant change aimed at simplifying filing for small investors and salaried individuals with limited capital market exposure. However, if the LTCG exceeds this limit or if the taxpayer has multiple complex investments, ITR-2 would still be the appropriate form.
Q6. Is Aadhaar Enrollment ID still valid for ITR filing?
No. As per the updated rules for AY 2025–26, the Aadhaar Enrollment ID is no longer accepted for PAN application or ITR filing. Taxpayers must provide their actual Aadhaar number to validate their identity and link it with their PAN. This move ensures stronger identity verification and prevents duplication or mismatch during authentication. Those who previously used the Enrollment ID must update their details on the e-filing portal before submitting their return.
Q7. How can I switch between new and old tax regimes while filing ITR?
The new tax regime under Section 115BAC remains the default for AY 2025–26. However, taxpayers can choose to switch to the old regime by submitting Form 10-IEA before filing their return. Salaried individuals can make this choice every year, while those with business or professional income can opt out of the new regime only once. Once opted out, they cannot revert back to the new regime unless their business or profession ceases. TaxBuddy helps users compare both regimes, calculate tax liabilities, and choose the most beneficial option before submission.
Q8. Are there any new deadlines or penalty relaxations for AY 2025–26 ITR filing?
Yes. To accommodate the new disclosure requirements and updated layouts, the Income Tax Department extended the filing deadline for AY 2025–26 by 45 days from the standard due date. Additionally, the government has provided relief for taxpayers through the ITR-U facility, which allows correction of previously filed returns without incurring heavy penalties. This proactive approach encourages voluntary compliance and helps taxpayers rectify mistakes post-filing.
Q9. How has capital gains reporting changed in the new ITR forms?
The updated ITR forms have introduced more detailed sections for reporting capital gains, particularly from listed shares and mutual funds. Taxpayers must now specify the acquisition cost, date of purchase, sale consideration, and resultant gains under Section 112A. These fields ensure more accurate reporting and alignment with the data available in the AIS (Annual Information Statement). The goal is to reduce mismatches and facilitate faster verification and processing of returns.
Q10. Does the new tax regime remain default in AY 2025–26?
Yes. The new tax regime under Section 115BAC continues to be the default system for all taxpayers in AY 2025–26. It offers simplified slab rates and reduced exemptions compared to the old regime. However, those who wish to claim traditional deductions like 80C, 80D, or HRA can opt for the old regime by filing Form 10-IEA. This structure encourages transparency and makes decision-making easier for taxpayers when planning their annual filings.
Q11. Are there new aids in ITR forms for error-free filing?
The revised ITR forms include several new aids such as context-based instructions, improved tooltips, and examples for complex sections like capital gains and deductions. Auto-fill features for pre-validated data from Form 26AS and AIS minimize manual effort. The updated utility also automatically detects inconsistencies between declared income and TDS records, prompting users to correct them before submission. These enhancements help ensure error-free filing and smoother processing of returns.
Q12. How does TaxBuddy help manage new ITR form requirements?
TaxBuddy’s AI-driven tax platform is equipped to handle all the new updates introduced for AY 2025–26. It automatically categorizes income, verifies TDS data, and fills the correct ITR form based on the user’s financial profile. The system also assists in switching between tax regimes and ensures accurate reporting of capital gains and deductions. For individuals who prefer professional guidance, TaxBuddy’s expert-assisted service reviews the return before submission to ensure compliance and accuracy. This combination of automation and human expertise makes TaxBuddy an ideal solution for efficient and error-free ITR filing.
