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It is necessary to understand the various forms of ITR as filing income tax returns (ITRs) can be a daunting task if you are not aware of the right form for your income type.
ITR Filing 2025.
Income Tax Return AY 2025-26: Even as the finance ministry has notified ITR-1, ITR-3, ITR-4 and ITR-5, the income tax return filing for AY 2025-26 (financial year 2024-25) is expected to start soon. Meanwhile, it is necessary to understand the various ITR forms as filing income tax returns (ITRs) can be a daunting task if you are not aware of the right form for your income type.
From salaried individuals to businesses, trusts, and NGOs, there’s a specific ITR form for each taxpayer. Here’s all about the different ITR forms — ITR-1 to ITR-7.
Also Read: When Will ITR Filing 2025 Start? Know Latest Changes In ITR-1, ITR-4 Forms
An income tax return (ITR) form is a format in which income is reported to the tax department for tax payments. The choice of the correct ITR form is crucial, as filing the wrong one may lead to rejection or penalties.
ITR-1 (Sahaj): For Salaried Individuals
The Central Board of Direct Taxes (CBDT), India’s apex body on direct taxes like income tax, has allowed salaried individuals with long-term capital gains up to Rs 1.25 lakh to file ITR-1, instead of ITR-2 earlier. It has made ITR filing easier for such individuals.
Who can file:
- Resident individuals (not HUFs) with total income up to Rs 50 lakh
- Income from salary, one house property, and other sources (interest, etc.)
- Long-term capital gains up to Rs 1.25 lakh under Section 112A (listed securities).
Who cannot file:
- Individuals with long-term capital gains above Rs 1.25 lakh, foreign assets/income, or business income.
- Individuals with short-term capital gains, F&O income, and long-term capital gains from immovable properties.
- Directors in a company or those who invested in unlisted equity shares
Best for: Salaried employees with simple income sources and LTCG up to Rs 1.25 lakh.
ITR-2: For Individuals and HUFs Not Having Business Income
Who can file:
Individuals and Hindu Undivided Families (HUFs) with income from:
- Salary/pension
- More than one house property
- Capital gains, as well as long-term capital gains exceeding Rs 1.25 lakh
- Foreign income/assets
- Dividend income exceeding Rs 10 lakh
Who cannot file:
Those with income from business or profession
Best for: High-income individuals, stock traders, or property owners.
ITR-3: For Individuals and HUFs Having Income from Business or Profession
Who can file:
- Individuals/HUFs carrying on business or profession (proprietors)
- Includes income from intraday or derivative trading
- Partners in firms
Key feature: Allows balance sheet and P\&L account reporting.
Best for: Freelancers, professionals, traders, and business owners.
ITR-3 Updates for AY 2025-26?
Here are the key updates in ITR-3 form for AY 2025-26:
Capital Gains Segregation Based on July 23, 2024: A new split in Schedule Capital Gains is introduced to separately report gains before and after July 23, 2024, following changes in the Finance Act 2024.
Capital Loss on Share Buyback Allowed Post October 1, 2024: From October 1, 2024, capital loss on buyback of listed shares is allowed only if corresponding dividend income is reported under “Income from Other Sources”.
Asset & Liability Reporting Threshold Doubled: Individuals now need to report assets and liabilities only if their total income exceeds Rs 1 crore, up from the earlier Rs 50 lakh threshold.
Detailed Reporting of Deductions Under Sections 80C, 10(13A), etc. The form requires granular details for deductions such as investments under 80C, house rent allowance (10(13A)), and others—aimed at tightening verification and compliance.
TDS Section Code in Schedule-TDS: The new format mandates disclosure of the TDS section code (e.g., 194A, 194H, etc.) in the Schedule-TDS, enhancing traceability of tax credits.
ITR-4 (Sugam): For Presumptive Income Scheme
Who can file:
- Resident individuals, HUFs, and firms (other than LLPs)
- Opting for presumptive taxation under sections 44AD, 44ADA, or 44AE
- Income up to Rs 50 lakh (for professionals) or Rs 2 crore (for businesses)
Who cannot file:
Non-residents, directors, or those with foreign assets
Best for: Small business owners, transporters, and professionals like doctors or designers.
ITR-5: For Firms, LLPs, AOPs, BOIs
Who can file:
Partnership firms, LLPs, Associations of Persons (AOPs), Bodies of Individuals (BOIs), and artificial juridical persons.
- Excludes individuals and HUFs
Key feature: Covers audit and tax compliance for firms.
Best for: LLPs and firms that are not filing under ITR-4.
Key Changes in ITR-5 for AY 2025-26
Capital Gains Split Based on Date of Transfer: A significant update is the segregation of capital gains in Schedule-CG based on whether the transfer occurred before or after July 23, 2024 — the date on which key provisions of the Finance Act, 2024, took effect. This ensures clearer tax treatment in line with the revised capital gains framework.
Capital Loss on Share Buyback Allowed Post October 1, 2024: Taxpayers can now claim capital loss on buyback of shares if the corresponding dividend income was earlier reported as ‘Income from Other Sources’, effective from October 1, 2024. This addresses the mismatch in taxation treatment and brings relief to investors hit by share buyback tax anomalies.
New Reference to Section 44BBC (Cruise Business): ITR-5 now makes specific reference to Section 44BBC, which relates to presumptive taxation for businesses engaged in operating cruise ships. This is in line with the government’s push to formalise taxation for the growing cruise tourism sector.
TDS Section Code To Be Reported In Schedule-TDS: The new format mandates disclosure of the TDS section code (e.g., 194A, 194H, etc.) in the Schedule-TDS, enhancing traceability of tax credits.
ITR-6: For Companies Other Than Those Claiming Exemption Under Section 11
Who can file:
- Companies that do not claim exemption under Section 11 (income from property held for charitable or religious purposes)
Best for: Private limited, public limited companies (excluding NGOs).
ITR-7: For Persons Including Trusts Claiming Exemption Under Sections 139(4A) to 139(4F)
Who can file:
- Charitable/religious trusts
- Political parties, research associations, colleges, and universities
- Entities claiming exemption under Sections 11, 12, 10(23C), or 10(46)
Best for: NGOs, educational and research institutions.
Important Dates to Remember for ITR Filing AY 2025-26
Though ITR-1, ITR-3, ITR-4 and ITR-5 have been notified by the CBDT, the ITR filing has not started yet. It is expected to start this week. However, following are the ITR deadlines once the filing starts:
- Individual (non-audit): 31st July 2025
- Audit cases: 31st October 2025
- Revised/belated returns: 31st December 2025
FAQs
1. Can I file ITR-1 if I have capital gains?
Yes, you can file ITR-1 if you have salary income and long-term capital gains up to the exemption limit of Rs 1.25 lakh in FY25. However, above this threshold, taxpayers will need to file ITR-2 or ITR-3, depending upon income.
2. Is it mandatory to file ITR online?
Yes, for most taxpayers except some super senior citizens filing ITR-1 or ITR-4.
3. What happens if I file the wrong ITR form?
Your return may be considered defective or invalid. You’ll get a notice under Section 139(9) to rectify it.
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