Introduction: The Changing Landscape of Income Tax Filing in India
With each financial year, the Income Tax Department of India seeks to improve the income tax return (ITR) filing experience for taxpayers—balancing the twin objectives of simplification and increased compliance. For the Financial Year 2024–25 (Assessment Year 2025–26), the government has introduced nine significant changes across ITR-1, ITR-2, ITR-3, and ITR-4 forms.
These updates reflect an increasing reliance on technology, broader income reporting norms, alignment with international standards, and changes in the tax regime. In this in-depth article, we’ll break down each change, its implications, and practical tips to help you file your ITR smoothly and accurately.
1. Expanded Eligibility for ITR-1 and ITR-4: Easier Filing for Small Investors
What’s New?
Until AY 2024–25, taxpayers with long-term capital gains (LTCG) under Section 112A—even if only a small amount—had to file ITR-2 or higher. This added complexity for salaried individuals or pensioners who dabbled lightly in stock markets or equity mutual funds.
From AY 2025–26:
- Individuals earning LTCG up to ₹1.25 lakh under Section 112A can now file using ITR-1 or ITR-4, provided all other eligibility criteria are met.
Why It Matters
- Broadens access to simpler return forms (Sahaj and Sugam).
- Saves time and professional fees for small investors.
- Encourages compliance among first-time filers and those moving to direct equity.
Key Tip
If your LTCG is within ₹1.25 lakh (the exemption threshold) and you have no other complex income like foreign assets or business income (unless opting for presumptive tax under 44AD or 44ADA), you may now choose ITR-1 or ITR-4, simplifying your experience.
2. TDS Section-wise Disclosure: Enhanced Transparency and Error Reduction
What’s New?
Taxpayers must now report the exact section under which Tax Deducted at Source (TDS) was made in their return.
Examples include:
- Section 194A for interest from deposits.
- Section 192 for salary.
- Section 194J for professional fees.
Why It Matters
- Aligns the return filing with the Form 26AS and AIS data.
- Prevents mismatches in automated processing.
- Enables quicker refunds and reduces scrutiny or notices.
Key Tip
Use your Form 26AS and AIS from the income tax portal to cross-check TDS entries. If you see any section discrepancies, get them corrected before filing.
3. Capital Gains Reporting Gets Granular: Date-Wise and Asset-Class Specific
What’s New?
The new ITR forms demand:
- Detailed breakup of capital gains—short-term and long-term—across asset classes.
- Disclosure of date of acquisition and sale, cost, and sale consideration.
This is especially relevant for:
- Shares and equity mutual funds.
- Real estate.
- Bonds and debentures.
- Other assets (jewelry, art, etc.).
Why It Matters
- Aids in precise calculation of indexation, grandfathering (for LTCG pre-2018), and surcharge implications.
- Reduces errors in self-computation.
Key Tip
Maintain year-wise capital gains reports from brokers. Many platforms now offer pre-filled tax P&L statements which help avoid errors in data entry.
4. Foreign Assets and Income Reporting: Global Compliance Tightens
What’s New?
Residents (not ordinarily residents or full residents) must report:
- Foreign bank accounts.
- Foreign properties or businesses.
- Any foreign-source income.
This is mandatory even if the income is not taxable in India.
Why It Matters
India has signed information exchange treaties (like CRS and FATCA), increasing scrutiny on overseas earnings and investments.
Non-disclosure can lead to:
- Penalties under the Black Money Act.
- Prosecution in extreme cases.
Key Tip
If you’re an NRI who has returned or a resident with legacy foreign assets, consult a tax advisor to ensure full and correct disclosure.
5. Agricultural Income Details: Beyond Declaring the Number
What’s New?
Exempt agricultural income must now be reported with:
- Land details (location, area).
- Ownership pattern (self-owned or leased).
- Type of activity (farming, dairy, etc.).
Why It Matters
- Prevents misuse of agricultural exemption to launder unaccounted income.
- Ensures legitimate exemption for genuine farmers.
Key Tip
If your agricultural income exceeds ₹5,000, it must be reported even if exempt. Don’t assume “exempt” means “not required to disclose.”
6. Virtual Digital Assets (VDAs): Crypto, NFTs Under Tax Lens
What’s New?
A separate schedule is introduced for VDAs.
You need to report:
- Purchase and sale details.
- Gains or losses.
- TDS deducted (under Section 194S).
Why It Matters
- Crypto income is taxed at a flat 30% rate without deductions (except cost of acquisition).
- TDS at 1% applies on sale value above ₹10,000.
Non-reporting invites penalty and loss of refund eligibility.
Key Tip
Keep exchange transaction statements handy and classify each trade clearly (buy/sell date, asset, value).
7. Detailed ‘Other Sources’ Income: No More Bundling
What’s New?
Earlier, income from other sources could be clubbed into a single figure. Now, the ITR requires a category-wise breakup:
- Savings interest.
- Fixed deposit interest.
- Family pension.
- Gifts (as per Section 56).
- Income from winnings or casual sources.
Why It Matters
- Prevents underreporting and mismatches with AIS.
- Helps the IT department apply the correct tax treatment.
Key Tip
Check your bank account summary and AIS for missed or unreported incomes like cashback, dividends, or sweep-in interest.
8. E-Verification Becomes Essential: Finish the Filing
What’s New?
Filing isn’t complete without e-verification, which must be done within 30 days of submitting your ITR.
Methods include:
- Aadhaar OTP.
- Net banking.
- Demat-based e-verification.
- DSC (for professionals and companies).
Why It Matters
Without verification:
- Your return is not processed.
- Refunds are delayed or denied.
- You may get notices for non-filing.
Key Tip
Opt for instant Aadhaar OTP verification to avoid delays. You can check the status anytime on the portal.
9. AIS & TIS Integration: Pre-filled Returns and Improved Accuracy
What’s New?
- Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) data is now seamlessly integrated into your ITR form.
- Pre-filled details include:
- Salary
- TDS
- Interest income
- Mutual fund transactions
- Property sales
Why It Matters
- Enhances convenience and accuracy.
- Reduces manual data entry and errors.
- Helps in early processing and faster refunds.
Key Tip
Download and verify your AIS & TIS before filing. If there are discrepancies (e.g., interest not received but reported), raise a feedback request directly within the portal.
Bonus: Additional Tips and Best Practices
1. Choose the Right Form
- ITR-1: Salary, pension, one house property, income from other sources (up to ₹50L).
- ITR-2: Capital gains, multiple properties, foreign income.
- ITR-3: Business/professional income.
- ITR-4: Presumptive income (Sections 44AD, 44ADA).
2. Use Pre-Filled XML Carefully
Double-check your details even if pre-filled.
3. Be Prompt
Filing early avoids last-minute errors and system overload.
4. Keep Documents Ready
Maintain:
- PAN, Aadhaar
- Form 16/16A
- Interest certificates
- Capital gain statements
- Bank statements
- Investment proofs
Conclusion: Embrace the New, Stay Compliant
The ITR form changes for FY 2024–25 may appear detailed, but they are structured to ensure smoother processing, quicker refunds, and better data transparency. The key is to stay informed, cross-verify with AIS/TIS, and file early with complete disclosures.
Whether you’re a salaried employee, a gig worker, a digital asset investor, or a retired pensioner, these new changes affect how your return is structured and processed. Use them as an opportunity to strengthen your financial compliance and avoid future tax complications.
Frequently Asked Questions (FAQs)
Q1. What are the major ITR changes introduced for FY 2024–25 (AY 2025–26)?
A: The Income Tax Department has introduced 9 key changes across ITR-1 to ITR-4 forms. These include expanded eligibility for simplified forms, detailed reporting of capital gains and foreign assets, section-wise TDS reporting, and enhanced disclosure for virtual digital assets, among others.
Q2. Can I use ITR-1 or ITR-4 if I have long-term capital gains (LTCG) income?
A: Yes, if your LTCG income under Section 112A does not exceed ₹1.25 lakh in a financial year, you can now use ITR-1 or ITR-4. This change simplifies return filing for small investors.
Q3. Why is it important to report the TDS section in the new ITR forms?
A: Specifying the TDS section (like 194A, 194J) helps the Income Tax Department match your income data with Form 26AS and AIS. This reduces discrepancies and ensures smoother processing of refunds or notices.
Q4. What details are required for capital gains reporting in the new ITR forms?
A: Taxpayers must provide date-wise details including acquisition date, purchase value, sale date, and sale consideration. This improves the accuracy of capital gains computation and reporting.
Q5. Do I need to report foreign income or assets even if they are not taxable in India?
A: Yes. Resident taxpayers must disclose all foreign assets and income, regardless of whether they are taxable in India, to comply with international reporting standards.
Q6. What has changed in agricultural income reporting in ITR?
A: Now you must provide details like the location of the agricultural land, ownership status (owned or leased), and type of activity carried out. This curbs misuse of the agricultural income exemption.
Q7. How should income from digital assets like cryptocurrency be reported?
A: There is a dedicated schedule in the ITR forms for reporting Virtual Digital Assets (VDAs) like cryptocurrencies and NFTs. You need to disclose details such as acquisition cost, sale value, and net gain/loss.
Q8. What is the importance of e-verification in ITR filing?
A: E-verification is now mandatory and must be completed within 30 days of filing your return. Without e-verification, your return is considered invalid. Methods include Aadhaar OTP, net banking, and digital signature.
Q9. What are AIS and TIS, and how are they integrated with ITR?
A: AIS (Annual Information Statement) and TIS (Taxpayer Information Summary) are pre-filled data repositories maintained by the IT Department. They now auto-populate your ITR to reduce manual entry and errors.
Q10. What is the best way to ensure compliance with the new ITR changes?
A: To ensure compliance:
- Review all AIS and TIS entries
- Use the correct ITR form for your income type
- Provide complete and accurate disclosures
- Complete e-verification within 30 days
- Keep supporting documents for all entries