ITR Filing 2025: What’s new? All major changes in ITR forms and tax rules that you should know

Moreover, several changes have been introduced in the updated Income Tax Return forms ITR-1 to ITR-7 that were notified by the Income Tax Department recently. These forms have incorporated the changes announced in Budget 2024.

In this article, we take a look at key new changes that will apply while filing ITR in 2025, including updates in the Income Tax Return forms.

What's new for ITR filing in 2025?

This year, the tax department has eased compliance for small taxpayers, including salaried or non-salaried individuals and businesses with up to ₹1.25 lakh long-term capital gains under Section 112A of the Income Tax Act, 1961. These taxpayers can now file ITR-1 or ITR-4 even if they have long-term capital gains of up to ₹1.25 lakh from equity mutual funds and equity shares.

In FY 2024-25, there is no tax on LTCG up to ₹1.25 lakh from equity mutual funds and equity stocks. So, a small taxpayer can now report this income in ITR-1 and ITR-4 even though they have no capital gains tax liability.

The Aadhaar enrolment ID will not be accepted for ITR filing in ITRs 1, 2, 3, and 5. You will need a valid Aadhaar number to file return through these forms.

New capital gains tax rates announced in Budget 2024 will apply when filing returns in 2025. Accordingly, the capital gains tax rates on transactions done on or after July 23, 2024, are as follows:

• Tax on STCG under section 111A at 20% (Earlier rate was 15%)

• Tax on LTCG under Section 112 and 112A at 12.5% without indexation.

For ITR filing in 2025, proceeds from share buyback will be deemed as dividends in the hands of shareholders. This rule is effective since October 1, 2024. Previously, tax on share buybacks was paid by companies under Section 115QA.

The ITR forms have the following new elements in 2025:

• The threshold for reporting assets and liabilities in Schedule AL has been increased from ₹50 lakh to ₹1 crore.

• Unlisted bonds have been included under Section 50AA for treatment as STCG.

• Buyback gains will be shown as dividends in Schedule OS. Capital loss on share buyback will be allowed if the corresponding dividend income is shown as income from other sources (post 01.10.2024)

• For cruise ship operators, new fields for reporting of income under Section 44BBC have been incorporated.

• Disability certificates under Sections 80DD and 80U need to be reported.

• A new Schedule TDS will capture the Section under which TDS is deducted.

• Schedule-Capital gain will be split for gains before and after July 23, 2024.

While filing ITR-3,4 and 5, taxpayers will need to confirm whether they are opting out of the new tax regime. They also have to confirm whether they had filed Form 10-IEA in previous years.

According to the Income Tax Department's website, Form 10-IEA is required to be filed if a taxpayers with income from business and profession want to switch from the new tax regime to the old tax regime. This form can be used by individuals, HUF, AOP (other than co-operative societies), BOI & Artificial Judicial Persons (AJP) having income from business and profession.