What Are the Key Updates in CBDT's New ITR Form 5 for AY 2025-26?
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Synopsis
Discover the latest updates on the new ITR Form 5 issued by the CBDT for AY 2025-26. Learn about significant modifications, including how to report capital gains and losses, as well as the implications for taxpayers opting out of the new income tax regime. Stay ahead of changes to ensure compliance and optimize your tax filings.
Key Takeaways
- New ITR Form 5 introduced by CBDT for AY 2025-26.
- Separate reporting of capital gains before and after July 23, 2024.
- Capital losses on share buybacks are now reportable.
- Mandatory inclusion of TDS section code in Schedule-TDS.
- Changes aim to enhance transparency in tax filings.
New Delhi, May 3 (NationPress) The Central Board of Direct Taxes (CBDT) has released the updated Income Tax Return (ITR) Form 5 for the assessment year (AY) 2025-26, incorporating several significant changes.
The Income Tax Department announced multiple revisions in the new return form via an X post this past Saturday.
A key modification is the separation in Schedule-Capital Gain, which mandates that taxpayers report capital gains distinctly for periods before and after July 23, 2024.
This form now allows the reporting of capital losses on share buybacks, under certain conditions.
Among other notable updates in ITR Form 5, it states that “capital loss on share buyback is permissible if the corresponding dividend income is declared as income from other sources (post 01.10.2024); Section 44BBC reference (related to cruise businesses) has been added; and the TDS section code must be included in the Schedule-TDS.”
The new ITR Form 5 specifically references Section 44BBC of the Income Tax Act, which pertains to presumptive taxation for specific businesses.
Additionally, taxpayers are now required to indicate the Tax Deducted at Source (TDS) section code in the Schedule-TDS of the return form.
This update aims to enhance transparency and ensure accurate classification of TDS deductions.
Previously, the CBDT had introduced the income tax return forms ITR-1 and ITR-4 for the financial year 2024-25 and the assessment year 2025-26. Taxpayers must use the new forms to file returns for income earned from April 1, 2024, to March 31, 2025.
A significant update this year is that ITR-1 (SAHAJ) can now be submitted for reporting long-term capital gains (LTCG) under section 112A.
This is contingent on the LTCG being no more than Rs 1.25 lakh, and the income tax assessee having no losses to carry forward or offset against capital gains.
The notification further clarifies that those who opted out of the new income tax regime in AY 2024–25 must declare their choice to either continue or revert.
Individuals opting out of the new income tax regime for the first time in AY 2025–26 are required to provide details from Form 10-IEA acknowledgment.
Moreover, there must be an explanation for the late submission of Form 10-IEA.
Point of View
It's vital to keep our audience informed about changes in tax regulations. The updates to ITR Form 5 are significant, and understanding these changes is essential for taxpayers. Our commitment is to provide accurate and timely information that empowers citizens to navigate their tax responsibilities effectively.
NationPress
23/05/2025
Frequently Asked Questions
What are the major updates in ITR Form 5?
The major updates include the bifurcation of capital gains reporting, allowance for capital loss on share buybacks under specific conditions, and the requirement to specify the TDS section code.
How does the new ITR Form affect capital gains reporting?
Taxpayers must now report capital gains separately for periods before and after July 23, 2024, improving clarity and accuracy in tax filings.
What is the maximum LTCG that can be reported using ITR-1?
The maximum long-term capital gains that can be reported using ITR-1 (SAHAJ) is Rs 1.25 lakh, provided there are no losses to carry forward.
What is the significance of Section 44BBC?
Section 44BBC relates to presumptive taxation for certain businesses, which is now referenced in the new ITR Form 5.
What should I do if I opted out of the new tax regime last year?
You must declare your choice to either continue or revert from the new tax regime while filing your taxes for the current assessment year.
