Tag: ITR FORMS

Guidelines for an improved and accurate ITR filing in 2025

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Form 16/16A – The Starting Point of Your ITR Journey

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who should file ITR-1 (SAHAJ)

Not sure if ITR-1 is for you?
This chapter simplifies eligibility and exclusions –

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who should file ITR-4 (SUGAM)

Not sure if ITR-4 is for you? 
This chapter simplifies eligibility and exclusions – 

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Kind Attention Taxpayers!

If your refund failed, You may try:
☝️ Validate/ Re-validate your bank account
☝️ Submit the “Refund Reissue Request” after validation

Act now to receive your refund smoothly!

Kind Attention Taxpayers!

A validated bank account is necessary for receipt of refunds. Kindly add a bank a/c or update your existing bank a/c with the latest details on efiling portal and validate the same.  

For Adding a new bank a/c:
Pl visit incometax.gov.in/iec/foportal/ ➡️ Login ➡️ Profile ➡️ Add Bank Account ➡️Validate 

For Updating existing bank a/c:
Pl visit➡️Login➡️Profile➡️Choose Bank Account ➡️Update Bank Account Details such as a/c No., IFSC, a/c type ➡️Validate.

Kind Attention Taxpayers!

If your refund has failed due to non-validation / re-validation of your bank account, please ensure your bank account is validated or re-validated, as applicable.

If you have not submitted “Refund Reissue Request” after validation/ re-validation of your bank account, Do remember to submit “Refund Reissue” request.

Demystifying Income Tax Calculations for ITR Filing in 2025 (AY 2025-26)

As the financial year 2024-25 concludes on March 31, 2025, it’s time for Indian taxpayers to start preparing for their Income Tax Return (ITR) filing for the Assessment Year (AY) 2025-26. Understanding the nuances of income tax calculation, including the changes introduced for this financial year, is crucial for accurate and timely compliance.

The Indian tax system continues to offer taxpayers the choice between the Old Tax Regime and the New Tax Regime. While the new regime is the default option, a clear understanding of both is vital to determine which one benefits you more.

Key Changes and Highlights for FY 2024-25 (AY 2025-26)

The Union Budget 2025 has brought in some notable changes, particularly impacting the New Tax Regime, making it potentially more attractive for a wider range of taxpayers.

1. Increased Rebate under Section 87A (New Tax Regime):

One of the most significant changes is the increase in the tax rebate under Section 87A from ₹25,000 to ₹60,000 for the new tax regime.3 This means that individuals with a taxable income of up to ₹12 lakh will have zero tax liability under the new regime.

2. Revised Income Tax Slabs (New Tax Regime):

The new tax regime has seen a further rationalization of its slab rates for FY 2024-25 (AY 2025-26). The updated slabs are as follows:

Income Tax Slabs (₹)Tax Rate (%)
Up to ₹4,00,000NIL
₹4,00,001 to ₹8,00,0005%
₹8,00,001 to ₹12,00,00010%
₹12,00,001 to ₹16,00,00015%
₹16,00,001 to ₹20,00,00020%
₹20,00,001 to ₹24,00,00025%
Above ₹24,00,00130%

3. Standard Deduction for Salaried Individuals (New Tax Regime):

Salaried individuals opting for the new tax regime are now eligible for a standard deduction of ₹75,000, making income up to ₹12.75 lakh effectively tax-free when combined with the enhanced rebate.

4. Old Tax Regime Slabs (Unchanged):

The slabs for the Old Tax Regime remain largely unchanged from previous years:6

Income Tax Slabs (₹)Tax Rate (%) (Individuals below 60)Tax Rate (%) (Senior Citizens 60-80)Tax Rate (%) (Super Senior Citizens >80)
Up to ₹2,50,000NILNILNIL
₹2,50,001 to ₹5,00,0005%5%NIL
₹5,00,001 to ₹10,00,00020%20%20%
Above ₹10,00,00030%30%30%

5. Enhanced TDS and TCS Thresholds:

Several TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) thresholds have been increased to ease compliance.7 For instance:

  • Interest on deposits for senior citizens: Increased from ₹50,000 to ₹1,00,000.
  • Rent payments: The monthly TDS limit has been increased to ₹50,000 from the earlier annual limit of ₹2.4 lakh.
  • TCS on foreign remittances under LRS (Liberalized Remittance Scheme) has a higher threshold of ₹10 lakh (from ₹7 lakh), and TCS has been removed for education loans acquired from specified financial institutions.

6. Extended Time Limit for Updated Tax Returns:

The time limit for filing updated income tax returns has been extended from two years to four years from the end of the relevant assessment9 year, providing taxpayers with a longer window to rectify errors.

How to Calculate Your Income Tax

Regardless of the regime you choose, the general steps for income tax calculation remain similar:

  1. Determine Gross Total Income: This involves summing up income from all five heads:
  2. Claim Exemptions (Old Tax Regime Only):If you opt for the Old Tax Regime, you can reduce your gross salary by claiming various exemptions like:
  3. Claim Deductions (Old Tax Regime vs. New Tax Regime):This is where the two regimes differ significantly.
  4. Calculate Taxable Income:
  5. Apply Slab Rates:Once you have your taxable income, apply the applicable slab rates for your chosen regime to calculate your basic tax liability.
  6. Add Surcharge (if applicable):If your net taxable income exceeds certain thresholds (e.g., ₹50 lakh, ₹1 crore), a surcharge will be levied on your income tax.16 Note that the highest surcharge rate under the new tax regime is capped at 25%, unlike 37% in the old regime.
  7. Add Health and Education Cess:A 4% Health and Education Cess is applied to your income tax (including surcharge, if any), for both regimes.
  8. Subtract Tax Rebate (Section 87A):

Choosing Between Old and New Tax Regimes

The choice depends entirely on your individual financial situation and the amount of deductions and exemptions you can claim.

  • Old Tax Regime is generally beneficial if: You have significant investments and expenses that qualify for deductions under various sections (e.g., substantial 80C investments, home loan interest, health insurance premiums).
  • New Tax Regime is generally beneficial if: You have limited investments/deductions, prefer a simplified tax structure with lower tax rates at lower income levels, or your income falls within the ₹7 lakh to ₹12 lakh bracket where the increased rebate makes it tax-free.

Many online income tax calculators are available (from financial institutions and the Income Tax Department’s website) that can help you compare your tax liability under both regimes, making the decision easier.

Important Dates for ITR Filing (AY 2025-26)

For individuals and HUFs (Hindu Undivided Families) not subject to audit, the extended due date for ITR filing for FY 2024-25 (AY 2025-26) is September 15, 2025.

It’s always advisable to file your ITR well before the deadline to avoid last-minute glitches and potential penalties. Gather all necessary documents like Form 16, Form 26AS, AIS (Annual Information Statement), bank statements, investment proofs, etc., in advance to ensure a smooth filing process.

By understanding these aspects of income tax calculation and planning your finances effectively, you can ensure a hassle-free ITR filing experience for AY 2025-26.

Insights into New Income Tax Return (ITR) Forms for AY 2024-25

Income Tax Department has announced the Income Tax Return (ITR) Forms 1-6 for the Financial Year 2023–24 (Assessment Year 2024–25). Since the new forms have been released well in advance of the deadline, tax experts view this announcement as a proactive move by the Central Board of Direct Taxes (CBDT) to help taxpayers and streamline the filing procedure. Filing all ITR Forms 1 to 6 will be effective from April 1, 2024.

The new changes introduced in AY 2024-25 ITR forms follow primarily from the amendments made to the Income-tax Act, 1961, as outlined in the Finance Act, 2023. For example, a new provision under Section 43B inserted into the Income-tax Act prohibits deductions for any amounts payable to micro or small businesses that are not paid within the MSME Act’s set time limit in order to guarantee timely payments to MSMEs.

Notably, the deadlines for filing ITR-2 and ITR-3 are set for July 31, 2024. However, individuals subject to income tax audits and those with business income are required to submit ITR-3 by October 31, 2024.

The Income Tax Department has seven distinct forms for return filing, namely ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and additionally, ITR-7.

Within two income tax return forms, namely ITR-1 (SAHAJ) and ITR-4 (SUGAM), for the AY 2024–25, a filing deadline is set for July 31, 2024, unless an extension is granted. The notification for ITR-1 and ITR-4 for FY 2024–25 was issued on December 22, 2023.

Significant changes include the requirement for taxpayers to disclose all their bank accounts from the previous year, specifying the type of account. The default tax regime has shifted to the new regime, and individuals must provide details if they choose to opt out and switch to the old income tax regime. In ITR-1, taxpayers are required to select the tax regime, while in ITR-4, the submission of Form 10-IEA is necessary to opt out of the new tax regime. Additionally, a new column for claiming deductions under Section 80CCH has been introduced in both forms. ITR-4 introduces a ‘Receipts in Cash’ column, accommodating an increased turnover limit.

Experts underscore that the new ITR forms for AY 2024–25 gather additional information to enhance transparency and align with amendments in the Finance Act, 2023. Changes include the introduction of Legal Entity Identifier (LEI) details, acknowledgment numbers for the Audit Report, Unique Document Identification Number (UDIN) details, and disclosures related to cash receipts, the MSME Act, 2006, and winnings from online games.

Introducing India’s income tax forms ITR-1 to ITR-7

ITR-1 (SAHAJ) is designed for individuals with simple income structures and excludes those with income from business or profession, capital gains, or those claiming double taxation relief. Eligibility criteria include being a resident individual, having a total income up to INR 5 million, agriculture income up to INR 5000, and owning only one house property.

Key Differences Between ITR-1 and ITR-2  
CriteriaITR- 1ITR-2
Applicant typeIndividuals (resident or non-resident)Individuals (resident or non-resident) and Hindu Undivided Families (HUFs)
Individual income from salary/pension within a FYUp to INR 5 millionMore than INR 5 million 
Income from other sourcesExcluding activities like horse racing, gambling, lotteries, etc.Including activities like lotteries, gambling, horse racing, card games, etc.
Exempt income Up to INR 5000More than INR 5000
Income from property Up to 1 houseMore than 1 house

ITR-2 forms must be filed by those individuals or Hindu Undivided Families (HUFs) who are not eligible for ITR-1. The criteria include those who do not have income from a business or profession, do not receive income from a partnership firm in the form of interest, salary, bonus, commission, or remuneration, or who have the income of another person to be clubbed. Additional details in ITR-2 include LEI details, contributions to political parties, and deductions for the maintenance of a dependent with a disability.

IT-3 is meant for individuals with business or professional income. ITR-3 is mandatory for individuals whose income is taxable under the “profits and gains of business or profession,” including interest, salary, bonus, commission, or remuneration.

In financial year 2022–23, certain revisions were made to the ITR-3 form, which will be applicable for FY2024/AY2025:

  • Schedule VDAs (voluntary disclosure agreements) have been newly introduced to separately detail income from crypto/other VDAs.
  • If VDA income is treated as capital gains, a quarterly breakdown is required in the Capital Gains Schedule. The revised ITR-3 mandates reporting every VDA transaction, including sale and purchase dates.
  • Foreign institutional investors (FII/FPI) are now obligated to disclose their SEBI registration number for enhanced transparency.
  • The balance sheet reporting has undergone a minor modification, specifying that advances received per section 40A(2)(b) of the Income Tax Act from specified individuals and others should be reported under the ‘Advances’ category in Source of Funds.
  • The newly introduced ‘Trading Account’ section necessitates the reporting of turnover and income from intraday trading.

ITR-4 (SUGAM) is designed for resident individuals, HUFs, and firms (excluding LLP) with a total income up to INR 5 million and business or profession income computed under sections 44AD, 44ADA, or 44AE of the Income-tax Act. Notably, a new field for reporting ‘receipts in cash’ has been included in Schedule ‘BP—details of income from business or profession’ for those to whom the form applies.

This plan is also available to freelancers who receive income under sections 44AD, 44AE, or ADA, but only if their gross earnings do not exceed INR 5 million. In order to choose the presumptive taxation scheme under section 44AD, the turnover threshold limit was raised from INR 20 million to INR 3 million by the Finance Act, 2023, provided that the cash receipts do not exceed five percent of the entire turnover or gross receipts for the previous year. 

The ITR-5 form is meant for a particular class of taxpayers, namely, Association of Persons (AOPs), LLPs, firms, Body of Individuals (BOIs), Estate of deceased, Artificial Juridical Person (AJP), Business Trust, Estate of Insolvent, and Investment Funds. Individuals, corporations, HUFs, and those who file an income tax return using the new ITR Form 7 do not file the ITR-5 Form. The ITR-5 form is also not available to anyone filing an income tax return under sections 139(4A), 139(4B), 139(4C), or 139(4D) (i.e. trusts, political parties, institutions, colleges, etc.).

ITR-6 is for companies that are registered under the Indian Companies Act of 1956 or any other law, even if they are not claiming exemption u/s 11 (income from property held for charitable or religious purposes). 

ITR-7 is for charitable/religious trusts, political parties, scientific research institutions, and university/colleges/institutions/Khadi and village industries requiring exemptions under various sections. Electronic filing is mandated for specific sections.

Some tax experts in India believe that the new tax regime becoming the default option simplifies tax return filing, with the option to opt out for those preferring the old regime. The updated forms aim to streamline the process and enable faster refunds.