Income Tax Department Notifies ITR-5 Form For AY 2025-26

Income Tax Department Notifies ITR-5 Form For AY 2025-26

Income Tax Department Notifies ITR-5 Form For AY 2025-26 The Income Tax Department has officially notified the ITR-5 Form for Assessment Year (AY) 2025-26 on May 1, 2025. This update comes shortly after the notification of ITR-1 and ITR-4 (on April 29) and ITR-3 (on April 30), as part of the early rollout of tax forms for faster and smoother return filing.

The changes in ITR-5 reflect several amendments introduced under the Finance Act, 2024, particularly aimed at enhancing clarity in capital gains reporting, expanding presumptive taxation to new sectors, and improving transparency in TDS disclosures.

🔍 What is ITR-5?

Income Tax Department Notifies ITR-5 Form For AY 2025-26 ITR-5 is the prescribed Income Tax Return form for entities such as firms, LLPs, AOPs, BOIs, and other non-individual taxpayers who are not required to file ITR-7. Income Tax Department Notifies ITR-5 Form For AY 2025-26 This form is designed to capture the financial and tax details of these entities, including their income, deductions, capital gains, and taxes paid or payable.

✅ Who Can File ITR-5?

The following taxpayers are eligible to file ITR-5:

• Firms
• Limited Liability Partnerships (LLPs)
• Association of Persons (AOPs)
• Body of Individuals (BOIs)
• Artificial Juridical Persons (AJPs)
• Estates of deceased individuals
• Estates of insolvent individuals
• Business trusts
• Investment funds

❌ Who Cannot File ITR-5?

The following taxpayers are not allowed to file ITR-5:

• Individuals
• Hindu Undivided Families (HUFs)
• Companies 
• Entities required to file ITR-7 (e.g., charitable or religious trusts)

🔄 Key Changes in ITR-5 for AY 2025-26

Income Tax Department Notifies ITR-5 Form For AY 2025-26 The ITR-5 form for AY 2025-26 introduces several important updates, reflecting the evolving tax framework under the Finance Act, 2024:

1. Segregation of Capital Gains Based on Date of Transfer

A major update in Schedule-CG is the separation of capital gains transactions based on whether the transfer occurred:

• Before July 23, 2024, or
• On or after July 23, 2024

👉 This segregation is critical because July 23, 2024 marks the effective date of key capital gains tax amendments under the Finance Act, 2024. This clarity will help ensure appropriate tax treatment under the old vs. new rules.

2. Capital Loss on Share Buybacks Allowed (Post October 1, 2024)

Taxpayers can now claim capital losses on buybacks of shares if:

• The corresponding dividend income was already declared as ‘Income from Other Sources’

✅ Effective from October 1, 2024, this amendment addresses past inconsistencies where investors were taxed on buyback proceeds without being able to claim a loss, thus offering relief for many retail and institutional investors.

3. New Disclosure for Cruise Ship Businesses (Section 44BBC)

A new presumptive income section—Section 44BBC—has been introduced specifically for:

• Businesses engaged in operating cruise ships

Income Tax Department Notifies ITR-5 Form For AY 2025-26 Taxpayers under this category must now report presumptive income under Section 44BBC in ITR-5. This change is part of the government’s push to bring cruise tourism operators under the formal tax umbrella and boost compliance in this niche sector.

4. Mandatory Reporting of TDS Section Code in Schedule-TDS

To enhance accuracy and transparency in tax deduction reporting, taxpayers are now required to:

• Mention the TDS section code in Schedule-TDS

✅ This ensures that the TDS claimed by the taxpayer can be matched easily with the deductor’s filings, reducing discrepancies and delays in processing refunds.

📅 When Will ITR Filing for AY 2025-26 Begin?

While ITR-1, ITR-3, ITR-4, and ITR-5 have already been notified, the e-filing utility on the income tax portal is expected to go live next week.

⏰ Important Due Dates for AY 2025-26:

💡 Final Thoughts

Income Tax Department Notifies ITR-5 Form For AY 2025-26

The notification of ITR-5 for AY 2025-26 reflects a continued effort by the CBDT to bring early clarity, compliance simplification, and transparency for taxpayers. Entities eligible to file ITR-5 should start gathering relevant financial and tax records in line with these updates.

Income Tax Department Notifies ITR-5 Form For AY 2025-26 With capital gains rules now segmented based on dates, the inclusion of cruise ship operators under presumptive taxation, and enhanced TDS reporting requirements, it’s more important than ever to file returns accurately and on time to avoid interest, penalties, or mismatch notices.

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