Daijiworld Media Network – New Delhi
New Delhi, May 3: The Central Board of Direct Taxes (CBDT) has released the updated Income Tax Return (ITR) Form 5 for the assessment year 2025-26, introducing several significant changes aimed at enhancing compliance and clarity in reporting.
In a post on X (formerly Twitter) on Saturday, the Income Tax Department outlined the new features of ITR Form 5, which is primarily used by LLPs, firms, and certain associations. One of the most notable changes is the bifurcation in Schedule-Capital Gain, where taxpayers are now required to separately declare capital gains earned before and after July 23, 2024. This move is intended to bring more granularity in reporting timelines.
Another important revision pertains to capital losses on share buybacks. Taxpayers can now report such losses only if the corresponding dividend income is declared under 'income from other sources' a provision that applies to transactions made post-October 1, 2024.
Further, the form incorporates a reference to Section 44BBC, relating to presumptive taxation for cruise business operators, signifying the government’s focus on formalising taxation in niche sectors.
The Schedule-TDS section has also been updated. Taxpayers must now specify the exact TDS section code, a measure aimed at improving traceability and classification of tax deductions at source.
These changes come after the earlier notifications of ITR-1 (SAHAJ) and ITR-4, where a notable update allows ITR-1 filers to report long-term capital gains (LTCG) under Section 112A, provided the gains do not exceed Rs 1.25 lac and there’s no capital loss to carry forward or set off.
The CBDT also addressed procedural requirements for those shifting between tax regimes. Taxpayers who had opted out of the new tax regime in AY 2024-25 must now explicitly state whether they wish to continue or reverse that decision. Additionally, Form 10-IEA acknowledgement details must be furnished for first-time opt-outs in AY 2025–26.
Authorities also stressed the need for clarity on late filing of Form 10-IEA, indicating that stricter compliance timelines may follow.
The new forms are to be used for income earned during FY 2024-25 (April 1, 2024 – March 31, 2025).