Five Key Changes in ITR Forms for FY 2024-25 (AY 2025-26) - Expanded Eligibility for ITR 1 and ITR 4
The Income Tax Department has introduced several changes to the ITR forms for FY 2024-25 (AY 2025-26). These changes include expanded eligibility for ITR 1 and ITR 4, mandatory TDS section specification, new capital gains tax rules, a raised asset reporting threshold, and the reporting of buy-back proceeds as deemed dividends.
Itr FormsCapital GainsTax FilingAsset ReportingTdsReal Estate NewsMay 17, 2025
1. **Wider Eligibility for ITR 1 and ITR 4**
More taxpayers can now use ITR 1 and ITR 4 forms. The Income Tax Department has relaxed the eligibility criteria, allowing individuals with long-term capital gains (LTCG) from equity shares or mutual funds to file ITR using these forms, provided such gains do not exceed Rs 1.25 lakh in the financial year. This change is expected to benefit a large number of taxpayers who previously had to use more complex forms.
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. This will help in accurate tax reconciliation and reduce the likelihood of errors.
3. **New Capital Gains Tax Rules Integrated**
With the introduction of revised capital gains rules in Budget 2024, effective from July 23, 2024, taxpayers need to pay close attention to the date of sale of their assets while filing ITR. Whether it’s shares, mutual funds, property, or land, the correct capital gains tax calculation hinges on the sale date. This change ensures that taxpayers are aware of the new rules and can file their returns accurately.
4. **Asset Reporting Threshold Raised**
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. This change reduces the compliance burden for a significant number of taxpayers.
5. **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 incorporated into ITR-2 and ITR-3 to ensure compliance with this regulation.
These changes reflect the government's efforts to simplify the tax filing process and align it with the latest economic and regulatory developments. Taxpayers are advised to stay informed and ensure they comply with the new rules to avoid any penalties or discrepancies in their tax returns.
Frequently Asked Questions
Who is eligible to use ITR 1 and ITR 4 for FY 2024-25?
Individuals with long-term capital gains (LTCG) from equity shares or mutual funds, provided such gains do not exceed Rs 1.25 lakh in the financial year, are now eligible to use ITR 1 and ITR 4.
What is the new requirement for mentioning TDS sections in ITR forms?
Taxpayers must specify the TDS section under which tax was deducted for every income on which tax was deducted, applicable to ITR forms 1, 2, 3, and 5.
How do the new capital gains tax rules affect ITR filing?
Taxpayers need to pay attention to the date of sale of their assets, as the revised capital gains rules effective from July 23, 2024, can impact the tax calculation.
What is the new asset reporting threshold for ITR forms?
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.
What are the new rules for reporting buy-back proceeds in ITR forms?
From October 1, 2024, the amount received on the buy-back of shares by domestic listed companies will be considered as deemed dividends and must be reported in ITR-2 and ITR-3.
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