🔍 Key Changes in ITR Forms for AY 2025–26: What You Need to Know

Have you checked out the recent updates to the Income Tax Return (ITR) forms for AY 2025-26?

Let’s break down the most important changes in a way that’s easy to digest.

1️⃣ Can I use ITR-1 or ITR-4 with LTCG?
💡 Yes, you can! If you have Long-Term Capital Gains (LTCG) under section 112A, you can now file through ITR-1 or ITR-4 – but with some conditions:
- The LTCG must not exceed Rs. 1.25 lakh.
- You cannot carry forward or set off any losses under the capital gains head.

👉 Why is this a change?
Until AY 2024-25, even a small amount of capital gain would require a different ITR form. Now, the simplified approach is more taxpayer-friendly.

2️⃣ What’s new in ITR-4 regarding the new tax regime (section 115BAC)?
🔄 Opting out of the new tax regime just got easier with these updates:
- If you opted out in AY 2024-25, you need to declare that decision and optionally reverse it.
- If opting out for the first time in AY 2025-26, you'll be required to provide Form 10-IEA acknowledgment details.
- Late filing of Form 10-IEA now has a specific section for clarification.

3️⃣ What are the new reporting requirements for deductions and income?
📋 More disclosure required in ITR-1 and ITR-4:
- Deductions (from section 80C to 80U) must now be selected from a dropdown menu with detailed clause selections.
- If you have income under section 89A (retirement accounts abroad), be ready for more detailed reporting and relief tracking.
- Bank accounts: All accounts in India (except dormant ones) must be reported.
- Refund credit: You must select at least one bank account for receiving the refund.

4️⃣ What are the changes to turnover limits for small businesses and professionals?
📊 Turnover limits have increased:
- Section 44AD (business): The turnover threshold has been raised to Rs. 3 crore if digital transactions account for up to 95%.
- Section 44ADA (professionals): The limit for professionals has been enhanced to Rs. 75 lakh, again with the condition of 95% digital receipts.

👉 Why does this matter?
This will ease compliance for businesses and professionals with a significant portion of digital transactions, helping them qualify for easier filing options.

💡 Pro Tip: Stay ahead of the curve by preparing for these updates early, ensuring smooth filing and avoiding any last-minute hassles!


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