ITR Filing 2025: Key Updates Every Taxpayer Should Know — Insights by Infosential LLP

Gaurav Rodiyal
May 6
3 min read

As the financial year draws to a close, individuals and businesses alike begin preparations for the annual ritual of income tax return (ITR) filing. With every assessment year, the Central Board of Direct Taxes (CBDT) introduces certain modifications to ITR forms to enhance transparency, compliance, and alignment with policy changes. For Assessment Year (AY) 2025-26, several noteworthy changes have been introduced, and it is crucial for taxpayers to understand how these updates may impact their filing.

At Infosential LLP, we break down the most critical amendments that taxpayers should keep in mind this filing season.

1. Increased Threshold for Reporting Assets & Liabilities in ITR-3

One of the most significant changes in ITR-3 pertains to the reporting of assets and liabilities. Previously, individuals with a total income exceeding ₹50 lakhs were mandated to disclose details of their assets and liabilities. For AY 2025-26, this threshold has now been revised to ₹1 crore.

What this means: Only those taxpayers whose total income exceeds ₹1 crore in the financial year 2024-25 will be required to report their assets and liabilities in the return. This provides relief to mid-level taxpayers while continuing to ensure accountability for high-net-worth individuals.

2. Detailed Capital Gains Reporting in ITR-3 & ITR-5

The updated ITR forms demand a more granular disclosure of capital gains. Taxpayers must now bifurcate their capital gains earned before and after 23rd July 2024. This change is driven by revisions in taxation laws effective from that date.

Additionally, for those participating in share buybacks, any capital loss can be claimed only if the corresponding dividend income is reported under "Income from Other Sources." Such claims now require a separate disclosure field within the return.

3. Enhanced TDS Reporting Requirements

In Schedule-TDS, taxpayers will now be required to specify the TDS section codes under which tax has been deducted. This is a shift from earlier norms where section-wise reporting was not mandatory.

Implication: This change is aimed at improving traceability and ensuring accurate reconciliation between Form 26AS and the ITR.

4. New Section for Cruise Business Reporting: Section 44BBC

Businesses engaged in the cruise sector will now need to provide specific financial details under the newly introduced Section 44BBC. This specialized reporting ensures industry-specific compliance and introduces transparency in a growing sector.

5. Key Changes in ITR-1 and ITR-4 Forms

Even the simplified forms have seen meaningful upgrades:

a) Inclusion of Long-Term Capital Gains (LTCG)

For the first time, taxpayers filing ITR-1 can now report LTCG under Section 112A (capital gains on listed equity shares or mutual funds) — provided the total LTCG does not exceed ₹1.25 lakh and there is no capital loss to carry forward or set off.

Similarly, ITR-4 — meant for taxpayers under the presumptive taxation scheme — now permits reporting of LTCG under similar conditions.

This widens the scope for using simpler return forms, reducing the filing burden for small investors.

b) Revised Deductions Reporting

Claiming deductions under Section 80C, 80D, 80U, etc., will now require taxpayers to select specific clauses/sub-sections from a drop-down in the e-filing utility. The days of vaguely entering deduction totals are over — precision and traceability are now essential.

Final Thoughts from Infosential LLP

These changes underscore the government's intention to streamline tax compliance while ensuring accuracy and better data classification. For taxpayers, this means a greater need for awareness and meticulousness during ITR filing.

At Infosential LLP, we advise individuals and businesses to:

Stay informed about yearly tax updates.
Use appropriate forms based on the nature and volume of income.
Seek professional advice when dealing with capital gains, high incomes, or specialized business operations.

Filing your return with the right knowledge ensures not only compliance but also peace of mind.

Need help with your ITR for AY 2025–26?

Reach out to Infosential LLP for expert tax advisory and return filing services tailored to your income profile and business needs.