ITR Form Changes in AY 2025-26: What’s New and What to Watch
- Farheen Mukadam
- Jul 23
- 10 min read
For the Financial Year 2024-25 (Assessment Year 2025-26), there are several important changes and updates in the Income Tax Return (ITR) filing process. These changes, especially related to capital gains reporting, the new tax regime, and updated filing deadlines, are designed to simplify compliance for taxpayers and ensure more accurate reporting. The government has also introduced new tax slabs under the new tax regime, which could result in tax savings for many. Additionally, non-audit taxpayers now have an extended filing deadline, allowing them more time to ensure their returns are accurate.
Table of Contents:
Revised Capital Gains Reporting in ITR-1 and ITR-4
One of the key updates in the ITR forms for FY 2024-25 (Assessment Year 2025-26) is the revised reporting of capital gains in ITR-1 and ITR-4. Previously, reporting of capital gains was limited to a few sections, but this year, the forms have been updated to ensure more comprehensive reporting of both long-term and short-term capital gains.
ITR-1: This form, typically used by salaried individuals, now includes more detailed sections for reporting capital gains, especially from the sale of mutual funds, stocks, and other securities. Taxpayers must now provide a breakdown of the sale price, acquisition costs, and other related expenses to calculate the capital gains more accurately.
ITR-4: For taxpayers filing under the presumptive taxation scheme (Section 44AD), the revised ITR-4 requires more detailed capital gains reporting, including the nature of the asset and the specific calculations for both short-term and long-term gains. This update ensures that taxpayers cannot skip over these crucial components, which helps in proper assessment and tax computation.
The changes are designed to simplify the reporting process and make it more transparent, reducing errors that could result in penalties or delays in refund processing.
Default Tax Regime for AY 2025-26: What You Need to Know
For Assessment Year 2025-26, the default tax regime has been set under the new tax laws introduced in the previous budget. Under the new tax regime, taxpayers are required to pay taxes according to the revised tax slabs without claiming exemptions or deductions, such as HRA, 80C deductions, etc.
Key Highlights of the New Regime: The new tax regime was introduced to simplify tax filing by eliminating the need to claim various exemptions and deductions. The regime offers lower tax rates, making it more attractive for those who do not have significant deductions to claim.
No Deductions: Unlike the old tax regime, the new tax regime does not allow deductions such as the standard deduction, 80C, 80D, or HRA exemptions. Taxpayers must decide between the old regime (with deductions) and the new regime (with lower tax rates but no deductions).
Applicability: The new regime applies to all individual taxpayers and Hindu Undivided Families (HUFs) who are filing under the new tax scheme. Taxpayers who opt for the new tax regime will have to forego most deductions but benefit from lower tax rates.
New Tax Slab Rates Under the New Regime
The revised tax slabs under the new regime for Assessment Year 2025-26 are designed to make tax filing simpler and more efficient, while providing relief to taxpayers with lower incomes. The key changes in the tax slabs are as follows:
Income Up to ₹2.5 Lakhs: No tax will be levied on income up to ₹2.5 lakhs under the new tax regime.
Income Between ₹2.5 Lakhs and ₹5 Lakhs: Tax is levied at a rate of 5%.
Income Between ₹5 Lakhs and ₹10 Lakhs: Tax rate is 20%.
Income Above ₹10 Lakhs: Tax rate is 30%.
The new tax regime eliminates many of the exemptions and deductions available in the old regime, but the lower tax rates make it attractive for taxpayers who do not have significant deductions. Additionally, the new regime aims to make tax filing simpler by eliminating complex calculations for exemptions and deductions.
Extended ITR Filing Deadline for Non-Audit Taxpayers
For the Financial Year 2024-25, the Central Board of Direct Taxes (CBDT) has extended the deadline for filing Income Tax Returns (ITR) for non-audit taxpayers. Previously set for July 31, 2025, the deadline has been extended to September 15, 2025. This extension provides more time for individual taxpayers and businesses that do not require an audit to ensure their tax returns are filed accurately and in compliance with the latest updates.
This extended deadline is particularly useful for those who may have missed the original date or need extra time to gather the necessary documentation for capital gains or other income sources. It also helps ensure that taxpayers can account for any last-minute updates or discrepancies, such as delayed TDS credits.
Updated Return Filing Window (ITR-U) for AY 2025-26
The government has introduced a new feature for the Financial Year 2024-25: the Updated Return Filing Window (ITR-U). This allows taxpayers to file an updated return after the original return has been filed. The updated return mechanism is especially useful for those who realize they made mistakes in their original filing, such as missing income or incorrect deductions.
Benefits: The ITR-U option allows taxpayers to correct errors without facing penalties, as long as the corrections are made before the end of the assessment year.
How It Works: If taxpayers notice discrepancies in their original return, they can file an updated return to correct the errors. This is particularly beneficial for minimizing the risk of audits or penalties.
Other Notable Changes in ITR Forms for AY 2025-26
For the Assessment Year 2025-26, the Income Tax Department has introduced several notable changes to the Income Tax Return (ITR) forms. These changes are designed to simplify the tax filing process, improve transparency, and ensure greater compliance with the latest tax regulations. Below, we’ll delve deeper into these changes and how they aim to make the process more user-friendly:
1. New Fields for Capital Gains
One of the significant updates in the ITR forms for AY 2025-26 is the inclusion of new fields to report capital gains. These changes are particularly beneficial for taxpayers who have investments in mutual funds, stocks, and other securities.
Previously, taxpayers were required to manually calculate and report capital gains, which often led to mistakes or omitted details. Now, additional fields have been introduced to capture a wider range of investment-related transactions, such as:
Mutual Funds: New sections are included to report short-term and long-term capital gains from mutual fund investments, making it easier for taxpayers to include such income in their returns.
Shares and Securities: There are now more detailed fields for reporting capital gains from the sale of shares, bonds, and other securities. Taxpayers can specify the holding period, the type of gain (short-term or long-term), and the respective exemptions or deductions available.
Specific Investment Products: For taxpayers dealing in complex investment instruments, such as derivatives, the ITR form has been updated to allow more granular reporting.
This detailed approach ensures that capital gains are accurately reported, reducing the chances of errors and improving the efficiency of tax processing.
2. Improved TDS Reporting
Another major change introduced for AY 2025-26 is the improved TDS reporting. Tax Deducted at Source (TDS) is a critical component of income tax compliance, and the new ITR forms provide a more comprehensive way for taxpayers to report TDS on various income sources.
More Detailed Fields for TDS: The ITR forms now contain specific sections for reporting TDS against income from different sources, such as salary, interest, dividends, and rent. Taxpayers can easily report the amount of TDS deducted by employers, banks, or other entities.
Multiple Sources of TDS: Previously, taxpayers with multiple sources of income often found it difficult to consolidate TDS deductions from various sources. The new forms now allow individuals to report TDS from multiple sources in a more streamlined and systematic manner.
Verification and Adjustment of TDS: The updated forms allow for easier reconciliation of TDS claims with the Form 26AS, which is a statement that consolidates TDS information. Taxpayers can verify whether the TDS reflected in their Form 26AS matches the deductions reported in the ITR. Any discrepancies can be addressed more efficiently.
Improved TDS Credit Mapping: To ensure accuracy, the ITR forms now also include a better mapping system for claiming TDS credits against the respective income heads. This allows for smoother processing of tax returns and minimizes the chance of mismatches during the verification process.
With these changes, taxpayers can accurately report their TDS details, reducing the risk of errors that could delay refunds or trigger unnecessary scrutiny from tax authorities.
3. Simplified Disclosures
The new ITR forms for AY 2025-26 have also incorporated simplified disclosure sections, making it easier for taxpayers to provide the necessary details about their income, deductions, and expenses. This is especially beneficial for taxpayers who may not be familiar with complex tax filings.
Income Disclosure: The forms now have clear sections for taxpayers to disclose their income from different sources such as salary, business profits, capital gains, rental income, and other income sources. The instructions have been simplified, making it easier for taxpayers to report their income without confusion.
Expense and Deduction Reporting: Deductions under various sections of the Income Tax Act, such as Section 80C, Section 80D, and others, are now easier to report. The forms provide clear instructions and better layout, allowing taxpayers to easily claim deductions without missing out on eligible benefits.
Simplified Tax Calculation: For taxpayers with basic tax situations, the forms now automatically calculate tax liabilities based on the data provided, reducing the chances of manual calculation errors. This feature ensures a faster and more accurate filing experience.
The new disclosures in the ITR forms are designed to reduce complexity and improve the accuracy of returns. By simplifying these sections, the government aims to make tax filing more accessible, particularly for individuals with straightforward financial situations.
4. Improved Instructions and Guidance
To further assist taxpayers, the ITR forms for AY 2025-26 include improved instructions. The forms now offer step-by-step guidance, providing detailed explanations for each section of the return. Taxpayers can follow these instructions to ensure they are reporting their income and claiming deductions correctly.
Guidance for Taxpayers: The forms now provide a clear description of what information is required for each field, along with examples. This is particularly helpful for taxpayers who may not be familiar with tax terminology or who have limited experience with tax filing.
Error Minimization: The instructions also help minimize errors by clearly outlining common pitfalls and offering tips on how to avoid them. This improves the quality of filings and reduces the chances of incorrect returns.
Conclusion
The revised ITR forms, new tax slabs, and extended deadlines for non-audit taxpayers provide significant relief and clarity for the Financial Year 2024-25. Taxpayers now have more time to file their returns accurately and benefit from lower tax rates under the new regime. While the new tax regime simplifies the filing process by eliminating the need for deductions and exemptions, the ITR forms have been updated to ensure more detailed and accurate reporting of income, including capital gains. The updated return filing window (ITR-U) offers taxpayers an opportunity to correct errors without facing penalties, providing added flexibility. These changes reflect the government's ongoing efforts to simplify tax filing and ensure compliance. For anyone looking for assistance in tax filing, it is highly recommended to download theTaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1: What is the ITR utility, and why is it required for filing ITR?
The ITR utility is a software tool provided by the Income Tax Department that allows taxpayers to file their tax returns. It helps taxpayers generate the required ITR forms, fill them out with relevant income and tax details, and submit them to the government. This utility ensures that the return is filed in the correct format and in compliance with tax laws.
Q2: How do JSON files relate to the ITR filing process?
JSON files are used to submit ITR data electronically. These files contain all the relevant tax information in a structured format, allowing for smooth and automated processing by the Income Tax Department’s system. Once a taxpayer completes their return using the ITR utility, they can export the data in JSON format for submission. This digital format ensures that all the necessary information is included without manual errors.
Q3: What are the latest changes in ITR forms for FY 2024–25?
The latest changes include more detailed reporting requirements, especially for capital gains and income from other sources. The forms have been designed to accommodate these changes and improve accuracy in tax filings. Additionally, the new forms ensure that taxpayers can take advantage of lower tax rates under the new tax regime while reporting their income more comprehensively.
Q4: How do I file my ITR using the updated utility and JSON files?
To file your ITR using the updated utility and JSON files, first, download the relevant ITR utility from the Income Tax Department's website or use platforms like TaxBuddy for assistance. Fill out the required fields, validate the data, and then generate a JSON file. Upload the JSON file to the Income Tax Department’s e-filing portal to complete the submission.
Q5: Why is it important to use JSON files for filing ITR?
JSON files are essential because they streamline the process of filing tax returns electronically. They reduce the chances of errors during data entry and ensure that all required information is captured in the correct format. Using JSON files speeds up the processing time for tax returns and allows for automatic validation of the details submitted.
Q6: What is the benefit of using the TaxBuddy mobile app for filing ITR?
The TaxBuddy mobile app simplifies the entire ITR filing process. It offers an easy-to-use interface, guidance on filling out tax returns, and automatic generation of JSON files for e-filing. The app helps taxpayers navigate the filing process with ease, reducing the risk of errors and ensuring compliance with the latest tax laws.
Q7: Can I file an ITR without using JSON files?
No, to file an ITR electronically, you must submit your return in the correct format, which includes using JSON files. These files are an essential part of the e-filing process, ensuring that all data is captured and transmitted accurately.
Q8: What happens if I file an incorrect JSON file?
If you file an incorrect JSON file, the Income Tax Department may reject your submission or request further clarification. This can delay your filing process and refund. It’s important to ensure the JSON file contains accurate data before submitting it. Tools like TaxBuddy can help validate your information before submission.
Q9: Can the TaxBuddy mobile app help with generating JSON files for ITR filing?
Yes, the TaxBuddy mobile app automatically generates the correct JSON files when you fill out your tax return on the app. This ensures that all the required details are included in the appropriate format, making e-filing easier and faster.
Q10: What if I make a mistake while filing my ITR with the utility and JSON files?
If you make a mistake, you can file a revised return to correct the error. The TaxBuddy app also offers guidance to help you avoid common mistakes, and it supports the filing of revised returns if necessary.
Q11: Are there any penalties for errors in my ITR filing using the utility and JSON files?
Errors in your ITR filing can result in penalties, especially if they lead to tax underpayment or incorrect claims. It’s essential to use the correct ITR utility and ensure the accuracy of the information in your JSON file to avoid such penalties. The TaxBuddy app helps by cross-checking your return for common errors before submission.
Q12: How can I track my ITR status after filing with the utility and JSON files?
Once your ITR is filed using the utility and JSON files, you can track its status through the Income Tax Department’s e-filing portal. You’ll receive updates on your filing status, any requests for additional information, or your refund status directly through the portal.
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