New Delhi: The income tax department has notified all seven income tax return forms for assessment year 2025-26.
While ITR forms 1 and 4, which are filed by small and medium taxpayers, were notified on April 29; ITR-7, filed by trusts and charitable institutions, was notified on May 11.
One important change has been introduced in ITR-1 and 4, which was notified on April 29, relating to the reporting of capital gain income from listed equities.
Now, salaried individuals and those under the presumptive taxation scheme, having long-term capital gains (LTCG) of up to Rs 1.25 lakh in a financial year, will be able to file ITR-1 and ITR-4, respectively. Earlier, such persons/entities were required to file ITR-2.
Under the I-T law, LTCG of up to Rs 1.25 lakh from sale of listed shares and mutual funds is exempt from tax. Gains exceeding Rs 1.25 lakh/ annum are subject to 12.5 per cent tax.
The last date for filing ITR for individuals and those who do not have to get their accounts audited is July 31. One change which has been introduced in ITR forms 2, 3, 5, 6 and 7 pertains to rationalisation of capital gains tax. In Schedule Capital Gains of the ITR, capital gains must now be split based on whether they arose before or after July 23, 2024.
In the Budget presented on July 24, 2024, the government had proposed to lower long-term capital gains tax on real estate to 12.5 per cent without indexation benefit, from 20 per cent with indexation.
Indexation benefit allows taxpayers to arrive at the cost price of the property after adjusting for inflation.
With this, individuals or HUFs who purchased houses before July 23, 2024, can opt to pay Long Term Capital Gain (LTCG) tax under the new scheme at the rate of 12.5 per cent without indexation or claim the indexation benefit and pay 20 per cent tax.
Also, in ITR-3, which is filed by individuals and HUFs having income from profits and gains of business or profession, the threshold for reporting assets and liabilities under ‘Schedule AL’ has been raised from Rs 50 lakh to Rs 1 crore, thus reducing the disclosure burden on middle-income taxpayers.
ITR Form 1 (Sahaj) and ITR Form 4 (Sugam) are simpler forms that cater to a large number of small and medium taxpayers. Sahaj can be filed by a resident individual having annual income of up to Rs 50 lakh and who receives income from salary, one house property, other sources (interest) and agricultural income up to Rs 5,000 a year. Sugam can be filed by individuals, HUFs and firms (other than LLPs) having a total annual income of up to Rs 50 lakh and income from business and profession.
ITR-2 is filed by individuals and HUFs not having income from profits and gains in business or profession, but having income from capital gains.
ITR-5 is filed by firms and Limited Liability Partnership and Cooperative Societies. ITR-6 is filed by companies registered under the Companies Act. ITR-7 is filed by trusts and charitable institutions.