The Central Board of Direct Taxes (CBDT) has notified the Income-tax (Twelfth Amendment) Rules, 2025 through Notification No. 40/2025, dated April 29, 2025, amending the Income-tax Rules, 1962. These amendments, effective from April 1, 2025, primarily pertain to the filing of income tax returns for Assessment Year (AY) 2025-26.
IMPORTANT POINTERS
- ITR-1 and ITR-4 Updated for AY 2025-26 with revised formats and eligibility.
- New ITR Rules Effective from 1st April 2025 under Twelfth Amendment Rules, 2025.
- Year References Revised from 2023/2024 to 2024/2025 across rules for consistency.
- New Clause Exempts LTCG up to ?1.25 lakh under section 112A from carry-forward loss.
- ITR-1 Eligibility Expanded to include individuals with LTCG up to ?1.25 lakh and ?5,000 agri income.
- ITR-4 Clarified for resident individuals, HUFs, and firms earning under presumptive taxation with LTCG up to ?1.25 lakh.
- Form 10-IEA Mandatory for opting out of the new tax regime under section 115BAC(6).
- High-Value Transactions Disclosure required for deposits, foreign travel, and electricity expenses.
- Bank Accounts Reporting made mandatory for non-dormant accounts for refunds and verification.
- Revised Declaration Section includes structured dropdowns and enhanced filing confirmations.
Key Highlights
1. Updated ITR-1 (Sahaj) and ITR-4 (Sugam) Forms Released
The revised ITR-1 and ITR-4 forms are now applicable for AY 2025-26.
ITR-1 is meant for resident individuals (excluding ordinarily resident) having total income up to Rs 50 lakh from salary, one house property, other sources (like interest) and long-term capital gains up to Rs 1.25 lakh under section 112A.
Similarly, ITR-4 is for resident individuals, HUFs, and firms (other than LLPs) with total income up to Rs 50 lakh from presumptive business or profession under sections 44ADA, 44AD or 44AE.
2. Clarity on Capital Gains Reporting
The new forms now include a specific provision for reporting long-term capital gains up to Rs 1.25 lakh under Section 112A, clarifying eligibility for simplified return filing even when such gains are present.
3. Changes in Rule 12 and Reporting Formats
Amendments in Rule 12 update the tax filing conditions for non-residents and clarify return forms applicable in case of business income, capital gains, and other specific situations. References to outdated years have been updated to reflect the current assessment year.
4. Enhanced Disclosure Requirements
Taxpayers opting for the old regime under Section 115BAC(6) are now required to submit Form 10-IEA by the due date under Section 139(1). Additionally, Schedule details for advance tax, TDS, TCS, and specified financial transactions have been standardized for accuracy.
5. Reporting Under Clause 139(1)(7)
Individuals not otherwise liable to file returns but meeting specific criteria (e.g., high-value transactions like foreign travel expenses exceeding Rs 2 lakh or electricity consumption over Rs 1 lakh) must furnish the return and disclose the transaction details.
6. Facilitating E-filing and Pre-validation
The forms include improved sections for e-verification and bank account details to ensure seamless refund processing. Emphasis has been placed on accurate IFSC code, account number, and bank selection for refund credit.
Implications for Taxpayers
The notification ensures alignment with current fiscal provisions and enhances compliance transparency. Taxpayers must ensure accurate classification of income and deductions while selecting the appropriate ITR form. The CBDT’s move is also aimed at simplifying e-filing and reducing errors in refund claims.
Also Read: CBDT Notifies New ITR-3 Form for AY 2025-26
Where to File
The updated ITR forms can be accessed on the Income Tax e-Filing portal. Taxpayers are advised to review instructions carefully and consult with a professional for complex incomes or if switching between old and new tax regimes.
Official copy of the notification has been attached