FY25 tax returns: ITR forms call for broader disclosures

Taxpayers must navigate significant changes on capital gains, tax-saving investments, HRA

- Shipra Singh

This year, taxpayers will have to make more disclosures even as compliance has been eased in the new Income Tax Return (ITR) forms.

From Sahaj-1 to the more complex ITR-2 and ITR-3, all forms released by the CBDT for AY2025-26 have undergone major changes. They now seek more disclosures on tax-saving investments, HRA, and TDS on non-salary income, while easing compliance on assets and liabilities.

Taxpayers with LTCG up to ₹1.25 lakh from stocks and equity funds can now opt for the simpler ITR-1.

"Major changes in the ITR forms have been made to incorporate various aspects of reporting and disclosures arising from the amendments made in the Finance (No. 2) Act, 2024, enhancing the scope of Form ITR-1/ITR-4," said Poorva Prakash, partner, Deloitte India.

The due date to file the ITR is 31 July. However, taxpayers should try to file their returns in advance so that they get enough time to assess the ITR form applicable and file an error-free return, given the changes introduced this year.

Mint breaks down the key changes affecting most taxpayers:

LTCG for listed equities of up to ₹1.25 lakh

ITR-1 and ITR-4

An individual who has LTCG up to ₹1.25 lakh from equity funds and stocks under Section 112A and does not have any brought-forward losses from the previous year or loss to be carried forward to subsequent years is now eligible to file ITR-1 or ITR-4.

Earlier, LTCG under Section 112A, along with other capital gains, had to be reported in the complex ITR-2/ITR-3, which requires detailed disclosures.

In ITR-1 and ITR-4, only the total sales consideration, the total cost of acquisition, and LTCG need to be filled in the ITR.

The limit of ₹1.25 lakh will apply after setting off losses made in the same year, said Sonu Iyer, partner and national leader, people advisory services, EY India.