All changes to Income Tax Returns you need to know for FY 2024-25

The revised Income Tax Returns (ITRs) for the AY26 are in place as a prerequisite. As anticipated, there are major changes in the notified ITRs Let us have a look at the changes made from

ITR-1 to ITR-4. 

The Union Budget 2024-25, tabled in July 2024, has increased the long-term capital gains exemption limit from ₹1 lakh to ₹1.25 lakh. Till now, taxpayers were compelled to use the more

complicated ITR-2 and ITR-3 to disclose their long-term capital gains. However, the revised ITR-1 will now allow a taxpayer to declare their long-term gains on listed equity shares and

equity-oriented mutual funds up to ₹1.25 lakh without bringing forward capital losses.

Having income from salaries, one house property, above said long-term capital gains, and other incomes such as bank interest, etc.

If a taxpayer is a director in a company, invested in unlisted equity shares, capital gains received from the sale of house property, short-term capital gains from listed equity shares, 

mutual funds, having a financial interest or assets, and liabilities abroad, cannot use this form.  

ITR-2

The Budget had changed the capital gains regime with a cut-off date of July 23, 2024. A taxpayer is now required to report long-term capital gains that occurred before and after the said

date separately, with or without indexation benefits. Unlisted bonds and debentures shall be reported based on holding periods. Further, buyback proceeds received on or after October 1,

2024, shall be declared under income from other sources, simultaneously, ‘nil’ under the income from capital gains. The threshold annual total income for mandatory disclosure under Schedule

–Assets and Liabilities has now increased from ₹50 lakh to ₹1 crore.      

An individual, including a non-resident, HUF, total income exceeding ₹50 lakh,

Having income from salary, pension, more than one house property, including brought forward loss,

Short and long-term capital gains or losses on sale of property / investments, dividends, etc.,

Not having income from a business/profession, can use this form. 

Suitable changes for capital gains split reporting on or after July 23, 2024, capital loss on share buyback, if corresponding dividend income is shown as income from other sources, an

increase of the threshold limit to disclose forging assets, and liabilities carried in this form as well. In addition to, revised form expanded the business disclosures include profits,

losses, reporting of high-value transactions - cash deposits over ₹1 crore in current accounts, foreign travel expenses over ₹2 lakh, electricity bills exceeding ₹1 lakh, and credit card

bills exceeding ₹10 lakh.        

An individual and HUF having income from a business or profession,

Income from capital gains, say, the sale of shares, mutual funds, property, etc.

Income from other sources, say, interest income, lottery winnings, horse racing, etc.

Carry forward and set-off of losses from previous years under income from business or profession, capital gains, foreign income, and assets located outside India can use this form.   

Taxpayers having business income are now required to provide the previous year’s details if they wish to opt out of the new tax regime, provided in Form 10-IEA. Suitable changes for capital

gains split reporting on or after July 23, 2024, are made in this form as well.  

A resident individual, HUF, partnership firms (other than LLPs) having total income up to ₹50 lakh,

Having income from business/profession and computing its income on the presumptive taxation scheme,   

Capital gains less than or up to ₹1.25 lakh with no brought forward losses can use this from.

If an individual is a director in a company/ partner in a firm, holding unlisted equity shares, having income from more than one house property, foreign assets, and liabilities, cannot use

this form.

In addition, compulsory quoting of Aadhaar, enhanced reporting for TDS and other deductions have been carried out in all revised ITRs For most of the taxpayers, July 31, 2025 will be the

last/due date to file their Return of Income, whether there will be extension or not, it is high time to sit, take a note of the changes made to the ITRs, collating requisite information,

and relevant papers keep in handy.