The Income Tax Department has introduced several important updates in the ITR filing process for Assessment Year (AY) 2025–26 (Financial Year 2024–25). These changes aim to simplify compliance, enhance accuracy, and make tax filing more transparent. Below are the most significant changes that every taxpayer in India should be aware of.

Enhanced Disclosures and Validation Features in Excel Utilities

The ITR-1 and ITR-4 Excel utilities now come with smarter error detection, pop-up warnings for missing fields, dropdown menus, and an Aadhaar–PAN linkage check. If PAN isn’t linked to Aadhaar, returns will be blocked.

Why it matters: These upgrades reduce errors, ensure smoother filing, and improve refund processing.

Common Mistakes to Avoid in AY 2025–26 ITR Filing

1. Not linking PAN with Aadhaar – Returns will not be processed without this.
2. Choosing the wrong ITR form – Can lead to rejection or penalties.
3. Missing details in deductions – Ensure you provide receipt numbers, policy details, and correct amounts.
4. Ignoring capital gain segregation rules – Gains before and after 23rd July 2024 must be reported separately.
5. Not e-verifying the return – Filing is incomplete until e-verification is done.

Detailed Reporting for Deductions and Assets

Filing now requires more details:

• HRA: Specify place of work, rent paid, salary components, and metro/non-metro classification.
• Deductions: Sections 80C to 80U require details like receipt numbers, loan or policy information.
• Assets & Liabilities: The reporting threshold has been raised from ₹50 lakh to ₹1 crore.

Why it matters: These measures push for transparency but increase documentation requirements.

Capital Gains and Share Buy-back Reporting Overhaul

Capital gains reporting has been updated:

• Segregation of gains based on transfer date (before or after 23 July 2024) due to new tax rates (LTCG @12.5%, STCG @20%).
• Share buy-backs from 1 October 2024 are treated as deemed dividends. Proceeds must be reported in Schedule OS, with corresponding capital losses in Schedule CG.

Why it matters: Ensures correct tax treatment for investors and shareholders.

Profession-Specific Codes and Extended Deadlines

New profession codes have been added in ITR‑3 and ITR‑4 for:

• Social media influencers (16021)
• F&O traders (21010)
• Betting-related earnings (21009)

Additionally, the deadline for filing updated ITR (ITR‑U) has been extended to 4 years. Sections 206AB and 206CCA, which imposed higher TDS/TCS on non-filers, have been removed from April 1, 2025.

Why it matters: Supports digital professionals, gives taxpayers longer correction windows, and reduces compliance burdens.

Quick Highlight Table

Final Thoughts
These changes in ITR filing for AY 2025–26 reflect the government’s push for digital compliance, transparency, and simplification. While the new rules may require more detailed disclosures, they also provide greater clarity, flexibility, and fairness for different categories of taxpayers.

Taxpayers are advised to stay updated and file early to avoid last-minute errors. When in doubt, consulting a tax professional can ensure compliance and optimize tax benefits.