Income tax return filing: ITR forms for AY 2025–26 notified — check key changes

Non-ordinary residents remain excluded from using the ITR-1 Sahaj form.

Income tax return: The Central Board of Direct Taxes (CBDT) has notified the complete set of Income Tax Return forms ( ITR-1 Sahaj, ITR-2, ITR-3, ITR-4 Sugam, ITR-V, ITR 6, ITR-7 ) for Assessment Year 2025-26, and introduced multiple taxpayer-friendly changes while maintaining the core structure of these income tax filing forms.

These forms for financial year 2024-25 incorporate important changes in the Finance Act. Notable updates include simplified reporting for small capital gains, relaxed asset disclosure requirements, and detailed capital gains tracking mechanisms.

The Income Tax department brings about periodic changes in the Income Tax forms to streamline tax reporting mechanisms and make the income tax filing procedure more user-friendly.

ITR-1 (Sahaj):

ITR-1 (Sahaj) continues to be the applicable ITR form for resident India with annual income of upto Rs 50 lakh — including from salary, one house property and other sources. Non-ordinary residents remain excluded from using the Sahaj form.

In a significant development for retail investors, the ITR-1 (Sahaj) will now accommodate long-term capital gains (LTCG) up to Rs 1.25 lakh under Section 112A from equity shares and equity-oriented mutual funds.

ITR-2:

Taxpayers filing ITR-2 – those with capital gains, multiple properties, or overseas assets – will notice substantial changes in reporting requirements:

The revised form necessitates separate disclosure of long-term capital gains before and after July 23, 2024, to include the new indexation rules and tax rates.

Investments in unlisted bonds and debentures now require distinct reporting based on their holding periods.

Share buyback proceeds received after October 1, 2024, must be reported both under "Income from Other Sources" and as transactions with "Nil" consideration in the capital gains section.

The threshold for mandatory asset and liability disclosure has been doubled from Rs 50 lakh to Rs 1 crore, easing compliance burdens for many taxpayers.
ITR-3:

The ITR-3 form, designated for individuals and Hindu Undivided Families (HUF) with business or professional income, now includes several new compliance requirements:

Income tax payers must explicitly indicate their chosen tax regime – old or new – along with the appropriate declaration form (10-IE or 10-IEA).

Business disclosure sections have been expanded to gather comprehensive details about profits, losses, and foreign income or assets.

High-value financial transactions now require reporting for —
- Cash deposits exceeding Rs 1 crore in current accounts,
- Foreign travel expenditures above Rs 2 lakh
- Electricity bills surpassing Rs 1 lakh
- Credit card payments over Rs 10 lakh

ITR-4 (Sugam):

The ITR-4 (Sugam), which is applicable to individuals, HUFs, and firms (excluding Limited Liability Partnerships or LLPs) operating under presumptive taxation schemes, now permits reporting of long-term capital gains under Section 112A up to Rs 1.25 lakh.

ITR-V:

ITR-V continues as the verification document for taxpayers who do not electronically verify their income tax returns. After submitting their tax return on the income tax portal, this form must be physically signed and dispatched to the Centralized Processing Center in Bengaluru within 30 days of filing via speed post.

Else, taxpayers can also choose to complete e-verification using Aadhaar OTP, net banking credentials, or a validated bank or demat account.
ITR-6:

Companies filing ITR-6, officially notified through the Gazette on May 6, 2025, must now compulsorily —

- Split capital gains reporting for transactions executed before and after July 23, 2024
- Report buyback-related capital losses if corresponding dividend income is declared after October 1, 2024
- Comply with updates for specific business categories, including cruise operators under Section 44BBC and diamond sellers (who must report minimum profits of 4 percent of gross receipts)
- Provide expanded details in Schedule BP along with TDS code disclosuresITR-7:

Notified on May 9 this year, the ITR-7 form pertains to political parties, charitable and religious trusts, research institutes, and other entities that have been exempted under Income tax Act's Sections 139(4A), 139(4B), 139(4C), or 139(4D).

Key changes introduced in ITR-7 form include:
- Division of capital gains before and after July 23, 2024, cutoff date
- Reporting buyback-related losses related to dividend income disclosures
- Fields for Section 24(b) deductions that pertain to housing loan interest
- Detailed tax deducted at source (TDS) section for enhanced tax verification