As the financial year 2024-25 has now ended, the work for income tax filings for the Financial year 2024-25 will soon begin. The CBDT has recently notified the Income tax return forms, thereby signaling the start of the tax filing season. Some of the important changes in the ITR forms are listed as below, so that taxpayers can work on reporting such data accurately
Aadhar enrollment number no longer accepted, Aadhar number mandatory
The Finance (No. 2) Act, 2024 has amended Section 139AA of the Income-tax Act ("ITA"), effective from 01-10-2024, to restrict the use of the Aadhaar Enrolment ID in place of the Aadhaar number for PAN applications and filing of Income-tax Returns. Consequently, ITR Forms 2, 3 and 5 have been revised to remove references to the Aadhaar Enrolment ID. Taxpayers are now required to quote their Aadhaar number—or the Aadhaar number of the partner, member, settlor, trustee, beneficiary, or executor, as applicable—at the time of filing returns, in line with the revised Section 139AA.
Scope of audit disclosure requirement in Schedule 5A expanded
Schedule 5A of ITR-3 deals with the apportionment of income between spouses governed by the Portuguese Civil Code. Until the previous assessment years, ITR-3 only required disclosure of whether the spouse’s accounts were audited under Section 44AB or if the spouse was a partner in a firm subject to such audit. The updated Schedule 5A has widened this requirement. It now seeks details on whether the spouse’s accounts are audited under any provision of the ITA (except Section 92E) or under any other applicable law.
Schedule AL is applicable if the total income exceeds Rs. 1 crore
Schedule AL in ITR-2 and ITR-3 captures information on the taxpayer’s assets and liabilities. Up to AY 2024-25, individuals with total income exceeding ₹50 lakh were required to disclose these details at year-end. As per the revised forms, this threshold has now been raised to ₹1 crore.
Change in disclosure on opting out of the new tax regime of Section 115BAC
For AY 2024–25, ITR-3 and ITR-5 simply required assessees to state whether they had opted out of the new tax regime under Section 115BAC(6), along with the date and acknowledgment number of Form 10-IEA, if applicable. The updated forms for AY 2025–26 go a step further, requiring confirmation of past filing of Form 10-IEA and a declaration on whether the assessee intends to continue opting out of the new tax regime in the current year.
Change in the applicability of ITR forms
The CBDT has amended Rule 12 of the Income-tax Rules, 1962, to simplify return filing for small taxpayers, especially salaried individuals and small businesses with capital gains under Section 112A up to ₹1.25 lakh.
The Finance (No. 2) Act, 2024 raised the Section 112A exemption limit—from ₹1 lakh to ₹1.25 lakh—for LTCG on listed shares, equity mutual funds, and business trust units.
Earlier, even if LTCG was within the exemption limit and no tax was payable, assessees couldn’t use the simpler ITR-1 or ITR-4 and had to file ITR-2 or ITR-3, causing hardship.
Now, salaried individuals eligible for ITR-1 and small business owners eligible for ITR-4 can continue using these forms if their LTCG under Section 112A is within ₹1.25 lakh and there’s no capital loss to carry forward or set off. This change reduces the compliance burden for small taxpayers.
The changes introduced in the ITR forms for AY 2025–26 reflect the government’s effort to streamline compliance, enhance data accuracy, and provide relief to small taxpayers. From mandating Aadhaar numbers to expanding audit-related disclosures, and from revising asset reporting thresholds to easing return form eligibility for those with limited capital gains, these amendments are significant.
Taxpayers are advised to carefully review the new requirements and assess their applicability before filing. Further, it is important to ensure that supporting documentation is maintained wherever disclosures have been expanded, especially in cases involving capital gains and audit status. As always, early preparation and consultation with a tax professional, if required, can help avoid last-minute errors and ensure a smooth filing process.
(The writer, a Fellow Chartered Accountant (FCA), specialising in Goods, Services tax, Transfer Pricing and Income tax, is the co-author of the book 'Comedium of Industrial Policy for MSMEs in Goa' released by ICAI)
