Income Tax Return (ITR) Forms, Understand which form you should file this year

The Central Board of Direct Taxes (CBDT) has announced the release of updated Income Tax Return (ITR) forms for the Assessment Year (AY) 2025-26. These updated forms come with important changes as per the Finance Act. Let’s dive into the key updates and understand which form should be filed.

Key Changes in ITR Forms for AY 2025-26

1. ITR-1 (Sahaj):
   • This form is for resident individuals who earn up to ₹50 lakh from salary, one house property, and other sources.
   • The updated ITR-1 form allows taxpayers to report Long-Term Capital Gains (LTCG) up to ₹1.25 lakh under Section 112A, specifically for gains from listed equity shares or equity mutual funds.
2. ITR-2:
   • This form is for individuals who have income from more than one source and are not eligible for ITR-1.
   • A significant change in ITR-2 is the separate reporting of LTCG before and after July 23, 2024. This is due to new rules around indexation and tax rates introduced by the government.
3. ITR-3:
   • This form is for individuals with business or professional income.
   • One of the major updates in ITR-3 is the requirement to select the tax regime (old or new) using Form 10-IE or Form 10-IEA.
   • Additionally, the form now includes expanded business disclosures, such as profits and losses, foreign income and assets, and reporting of high-value transactions.
4. ITR-4:
   • ITR-4 is designed for those who opt for the presumptive taxation scheme.
   • The updated form allows the reporting of LTCG under Section 112A up to ₹1.25 lakh for those under this scheme.
5. ITR-5:
   • ITR-5 continues to be used for verification of non-e-verified returns.
6. ITR-6:
   • Corporate taxpayers filing under ITR-6 now have to separate capital gains and report any losses from buybacks.
7. ITR-7:
   • This form is used by trusts and institutions.
   • The key changes for ITR-7 include the bifurcation of capital gains before and after July 23, 2024, as well as the reporting of buyback-related losses, dividend income, and the Section 24(b) deduction for housing loan interest.
   • Additionally, taxpayers using ITR-7 must mention TDS section codes to make tax verification easier.