New Income tax Return Form-Changes Made for this Assessment Year 2025-26
For the Assessment Year (AY) 2025-26, corresponding to the Financial Year (FY) 2024-25, the Income Tax Department of India has introduced several significant changes in the Income Tax Return (ITR) filing process.
The enhanced Excel utilities bring in multiple validation checks, compliance improvements, and user-friendly features to simplify return filing and prevent false claims.
Taxpayers, especially those opting for the old tax regime, are now required to provide detailed information to substantiate their claims for deductions and exemptions.
These updates aim to enhance transparency, compliance, and accuracy in tax filings. Here’s a comprehensive overview of the key modifications:
Enhanced Documentation for Deductions and Exemptions
Taxpayers now have to disclose the policy number or document identification number to claim Section 80C tax deduction.
Name of the Insurance Company.
Policy or Document Number
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Section 80E—to claim interest deduction on education loans under section 80E, taxpayers must provide details of loan information. This includes the lender’s name, bank name, account number, date of sanction, total sanctioned amount, outstanding as on 31st march, and interest paid. These field are mandatory.
Name of the Specified Disease
Expansion of eligibility to file ITR 1 and ITR 4: This year, the Income Tax Department has expanded the eligibility by relaxing the eligibility criteria, making more taxpayers eligible to file their tax return using ITR 1 and ITR 4. The new rules allow even taxpayers with long-term capital gains from equity and equity mutual funds to file a tax return using ITR1 and ITR 4 (as applicable), provided the capital gains do not exceed Rs 1.25 lakh.
Individuals having long-term capital gains of up to Rs 1.25 lakh in a fiscal year can also file ITR-1. Earlier, such persons were required to file ITR-2.
TDS section must be specified— a key change this year is the requirement to mention the TDS section under which tax was deducted. This applies to ITR forms 1, 2, 3, and 5. Taxpayers must ensure that they have correctly mentioned the relevant TDS provision for every income on which tax was deducted.
Asset reporting threshold raised— from this year, a taxpayer is required to report their assets and liabilities only if the gross total income exceeds Rs 1 crore.
Previously, individuals with income over Rs 50 lakh had to report assets and liabilities. Now, that threshold has been increased. From FY 2024-25 onwards, only taxpayers with gross total income exceeding Rs 1 crore are required to furnish details of assets and liabilities in their ITR.
Reporting of buy-back proceeds as deemed dividends—From October 1, 2024, the amount received on the buy-back of shares by domestic listed companies will be considered as deemed dividends in the hands of shareholders. The new rule was announced in Budget 2024. The reporting requirements have been made in the ITR-2 and ITR-3 for this.
Separate reporting for capital gains from unlisted bonds and debentures: Budget 2024 changed the taxation rules for unlisted bonds and debentures. The new rules are effective July 23, 2024.
Mandatory Aadhaar for ITR Filing— Effective from October 1, 2024, individuals must have an Aadhaar number to file an income tax return or apply for a Permanent Account Number (PAN). The provision disallowing the use of Aadhaar enrolment numbers in ITR and PAN application forms has been implemented.
These changes reflect the government’s ongoing efforts to streamline the tax filing process, enhance compliance, and provide greater benefits to taxpayers. Taxpayers are advised to familiarize themselves with these updates to ensure accurate and timely filing of their returns. |