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May 21, 2025

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Major Changes in ITR Forms for FY 2024-25: What Taxpayers Need to Know

The Income Tax Department has announced the release of Income Tax Return (ITR) forms for the Financial Year 2024-25 (Assessment Year 2025-26). As usual, the Department has made notable changes comprising better facilitation, increased ease of compliance, and simplification of processes for taxpayers. Here are the salient features of the changes and their impact summary.

1. Simplified Filing through ITR-1 and ITR-4

As of now, taxpayers who have Long Term Capital Gains (LTCG) under Section 112A can even file their returns using ITR-1 (Sahaj) and ITR-4 (Sugam) as long as the total LTCG stays within ₹1.25 lakh.

Key Points:

Easier filing for small investors with modest capital gains.

No carry forward of capital losses is allowed when using ITR-1 or ITR-4.

2. Aadhaar Enrolment ID No Longer Accepted

The option to quote Aadhaar Enrolment ID for filing ITRs has been removed.

What’s New:

Only the actual Aadhaar number is now accepted.

The column for Aadhaar Enrolment ID has been eliminated from all ITR forms.

3. Opting Out of the New Tax Regime – Business Income

Taxpayers with business income who wish to opt out of the New Tax Regime must now provide additional details in ITR-4.

Requirements:

Furnish details of the previously filed Form 10-IEA (opt-out form).

Confirm if opting out of the New Regime again for the current assessment year.

4. Mandatory TDS Section Disclosure

Taxpayers earning non-salary income must now explicitly mention the relevant TDS section in their ITR.

Applies To:

ITR-1, ITR-2, ITR-3, and ITR-5

Income sources such as professional fees, interest, or contractor payments.

5. Capital Gains – New vs. Old Regime Based on Date

The treatment of capital gains will differ based on the date of transfer or sale of the asset.

Critical Date: 23 July 2024

Before 23 July 2024: Capital gains are taxed under existing rules.

On or after 23 July 2024: Gains are taxed as per the new regime provisions.

6. Taxation of Unlisted Bonds

New rules have been introduced for the taxation of gains from unlisted bonds.

Effective From: 23 July 2024

Gains from unlisted bonds redeemed on or after this date will be treated as Short-Term Capital Gains (STCG).

Taxable at the taxpayer's applicable slab rate, even if held long-term.

7. Buy-back Proceeds Treated as Deemed Dividend

From 1 October 2024, any income from the buy-back of shares by unlisted companies will be considered a deemed dividend.

Tax Reporting:

Reported under “Income from Other Sources”.

The cost of acquisition of shares can be shown as a capital loss, but not offset against this deemed income.

8. Section 80DD and 80U – Additional Compliance

For claiming deductions under Section 80DD (maintenance of a dependent with disability) or Section 80U (self-disability), additional disclosures are now mandatory.

Required Documents:

Acknowledgement number of the disability certificate.

Copy of Form 10-IA (disability certification form).

Applies to ITR-2 and ITR-3.

9. Higher Threshold for Asset and Liability Reporting

To ease compliance for middle-income taxpayers, the threshold for mandatory Asset and Liability reporting has been increased.

Updated Rule:

Now mandatory only if Gross Total Income > ₹1 crore.

The earlier limit was ₹50 lakh.

10. Deadline to File ITR for FY 2024-25

Taxpayers must file their income tax returns for FY 2024-25 by 31st July 2025, unless extended by the government.

Conclusion

The ITR forms were modified to show more simplification of tax compliance for genuine taxpayers, as well as increasing monitoring and reporting for higher value and more complex transactions. Taxpayers should carefully analyse these changes in the forms before submitting their returns for the financial year 2024-25. Full compliance will still be guaranteed, however.

FAQs

1. Can I use ITR-1 or ITR-4 if I have capital gains?

Absolutely. You can now file ITR-1 or ITR-4 returns even if you have Long Term Capital Gains (LTCG) under Section 112A, as long as:

The LTCG does not exceed ₹1.25 lakh, and

You do not want to carry forward capital losses

2. Is Aadhaar Enrolment ID still accepted while filing ITR?

No. The Income Tax Department has removed the option to quote Aadhaar Enrolment ID. You must provide your actual Aadhaar number.

3. I have business income and want to opt out of the new tax regime. What should I do?

You must:

Mention your previously filed Form 10-IEA details in ITR-4.

Confirm whether you are opting out of the new regime again for the current year.

4. What is the new requirements related to TDS in the ITR?

Taxpayers earning non-salary income must now mention the specific TDS section under which tax was deducted.

This is applicable for ITR-1, 2, 3, and 5.

5. How does the date of asset transfer affect capital gains taxation?

Old tax rules will apply if the asset was sold before 23 July 2024.

If sold on or after 23 July 2024, new tax regime rules for capital gains will be applicable.

6. What’s the new rule for taxation of unlisted bonds?

From 23 July 2024, any gain from unlisted bonds will be treated as short-term capital gains, regardless of the holding period.

These gains will be taxed at your applicable slab rate.

7. How are buy-back proceeds treated from October 2024?

Proceeds from the buy-back of shares by unlisted companies from 1 October 2024 will be treated as deemed dividends:

Report under “Income from Other Sources”.

The cost of shares can be declared as a capital loss, but cannot be adjusted against this income.

8. What are the new requirements for deductions under Section 80DD or 80U?

For claiming deductions:

Provide the acknowledgement number of the disability certificate

Attach a copy of Form 10-IA.

Applies to taxpayers filing ITR-2 or ITR-3.

9. Do I need to disclose assets and liabilities in my ITR?

Only if your Gross Total Income exceeds ₹1 crore.

This threshold has been increased from the earlier limit of ₹50 lakh.

10. When do these changes come into effect?

This pertains to ITR filings for FY 2022025 (i.e., income earned during the period 1st April 2024 to 31st March 2025).

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