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The updated ITR-5 form segregates capital gains based on whether the transfer occurred before or after July 23, 2024, when key provisions of the Finance Act, 2024, took effect.
Even as the income tax department has notified ITR-1, ITR-3, ITR-4 and ITR-5 forms, the income tax return filing for AY 2025-26 is expected to start next week.
The Central Board of Direct Taxes (CBDT) has officially notified the income tax return form for ITR-5 for the assessment year 2025-26, introducing several key changes aligned with recent legislative amendments. The notification, issued on May 1, 2025, incorporates updates arising from the Finance Act, 2024.
It comes after the income tax department on April 29 notified ITR-1 and ITR-4 forms for AY 2025-26, and ITR-3 on April 30. The department has made it easier for individuals with long-term capital gains (LTCG) of up to Rs 1.25 lakh from listed equities to file returns.
Kind attention Taxpayers!CBDT notifies ITR-Form 5 for AY 2025-26 vide Notification No. 42/2025 dated 01.05.2025.
Key updates:🖋️ Schedule-Capital Gain split for gains before/ after 23.07.2024 (post changes in Finance Act, 2024)🖋️Capital loss on share buyback allowed if… pic.twitter.com/fDhRKHKPO9
— Income Tax India (@IncomeTaxIndia) May 3, 2025
Key Changes in ITR-5 for AY 2025-26
Capital Gains Split Based on Date of Transfer
A significant update is the segregation of capital gains in Schedule-CG based on whether the transfer occurred before or after July 23, 2024 — the date on which key provisions of the Finance Act, 2024, took effect. This ensures clearer tax treatment in line with the revised capital gains framework.
Capital Loss on Share Buyback Allowed Post October 1, 2024
Taxpayers can now claim capital loss on buyback of shares if the corresponding dividend income was earlier reported as ‘Income from Other Sources’, effective from October 1, 2024. This addresses the mismatch in taxation treatment and brings relief to investors hit by share buyback tax anomalies.
New Reference to Section 44BBC (Cruise Business)
ITR-5 now makes specific reference to Section 44BBC, which relates to presumptive taxation for businesses engaged in operating cruise ships. This is in line with the government’s push to formalise taxation for the growing cruise tourism sector.
TDS Section Code To Be Reported In Schedule-TDS
Increased focus on transparency has led to a requirement for taxpayers to report the relevant TDS section code in Schedule-TDS, thereby allowing the income tax department to better track and reconcile TDS claims with deductor filings.
Who Can File ITR-5?
ITR-5 is applicable to entities such as:
- Firms
- Limited Liability Partnerships (LLPs)
- Association of Persons (AOPs)
- Body of Individuals (BOIs)
- Artificial Juridical Persons (AJPs)
- Estates of deceased and insolvent persons, and
- Business trusts and investment funds.
However, individuals, HUFs (Hindu Undivided Families), companies, and those required to file ITR-7 (such as charitable or religious trusts) are not eligible to use this form.
When Will ITR Filing For AY 2025-26 Start?
Even as the income tax department has notified ITR-1, ITR-3, ITR-4 and ITR-5 forms for the assessment year 2025-26 (financial year 2024-25), the income tax return filing is expected to start next week.
July 31 is the deadline for ITRs that do not require an audit. For those who require audit will have October 31 as the deadline.
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