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Income Tax Department Finalizes ITR Forms for AY 2025-26 with Major Updates

All seven ITR forms are now live, introducing segmented capital gains reporting, expanded eligibility for simplified filing, and stricter compliance for exempt entities.

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Overview

  • The Income Tax Department has notified all seven ITR forms for Assessment Year 2025-26, with the final form, ITR-7, released on May 11, 2025.
  • ITR-7 now requires entities like trusts, political parties, and research institutions to disclose foreign contributions and segregate capital gains based on transactions before and after July 23, 2024.
  • Simplified filing has been extended to salaried individuals and presumptive taxpayers with long-term capital gains up to ₹1.25 lakh, allowing them to use ITR-1 and ITR-4.
  • ITR-3's asset reporting threshold under 'Schedule AL' has been raised from ₹50 lakh to ₹1 crore, reducing the compliance burden on middle-income taxpayers.
  • Mandatory digital signatures, TDS code reporting, and expanded housing loan interest disclosures aim to enhance transparency and accountability across filings.