Delayed ITR Forms, Rushed Filings: AY 2025–26 Begins on the Back Foot
The Income Tax Department had promised earlier to release ITR forms before the end of each financial year so that taxpayers and professionals get enough time to prepare and file returns correctly. While they kept this promise in the earlier years, this time for AY 2025–26, the forms were released in May after the new financial year had already started. This delay creates trouble for early filers and goes against the very idea of timely compliance. What’s more, taxpayers are still expected to meet the deadlines without any delay. If citizens are held accountable, shouldn’t the system also be timely and transparent?
There are some major changes announced which are listed below:
ITR-1 (Sahaj):
It was available only to resident individuals with total income up to 50 lakh from the following sources:
1. Salary or pension
2. One house property
3. Other sources (excluding income from lottery or racehorses)
4. Agricultural income up to 5,000
What changed now?
Now, you can file ITR-1 even if you have long-term capital gains (LTCG) under Section 112A up to 1.25 lakh, provided:
1. These gains are from listed equity shares or equity mutual funds.
2. You do not have capital losses to carry forward.
3. You are not a company director, don’t hold unlisted shares, and don’t have foreign assets.
ITR-4 (Sugam)
Individuals, Hindu Undivided Families (HUFs), and firms (excluding LLPs) with total income up to 50 lakh from business or profession, using presumptive taxation under:
Section 44AD
Section 44ADA
Section 44AE
What’s new after the amendment?
Capital Gains Reporting Allowed:
Just like ITR-1, LTCG up to 1.25 lakh under Section 112A can now be reported in ITR-4 as well, if:
1. Gains are from listed equity shares or equity-oriented mutual funds.
2. No capital loss is carried forward or set off.
Increased Presumptive Limits
1. Under Section 44AD: Limit raised to 3 crore (for businesses where cash receipts do not exceed 5%).
2. Under Section 44ADA: Limit raised to 75 lakh (for professionals where cash receipts do not exceed 5%).
New Reporting Requirements
1. If claiming deduction under Section 80GG (for rent paid), Form 10BA must be submitted.
2. Deductions under Sections 80C to 80U are now to be selected from dropdowns in the online form, with specific clause details required.
3. Taxpayers must indicate if they filed Form 10-IEA (opt-in/opt-out of the new tax regime) in the previous year and their choice for the current year.
ITR-3:
Individuals and HUFs earning income from business or profession who do not opt for presumptive taxation.
What’s changed?
Asset Reporting Threshold Doubled
The requirement to report assets and liabilities under Schedule AL now applies only if your total income exceeds 1 crore, instead of the earlier 50 lakh.
Other Changes:
While Notification No. 40/2025 focuses on ITR-1 and ITR-4, ITR-3 changes were covered in a follow-up notification (No. 41/2025) dated April 30, 2025, including:
1.Segregated capital gains based on transaction dates (especially post-July 2024 changes).
2. Loss treatment on share buybacks tied to dividend disclosures.
3. Reporting under new presumptive tax section 44BBC (for cruise operators).
Access all the forms from the below mentioned links:
Disclaimer: This material and the information contained herein is intended for clients and other Chartered Accountants to provide updates and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business.
