"Filing on time is not enough — filing right is now the expectation."
As the Income Tax Department updates its compliance ecosystem, tax professionals and taxpayers must align with the new ITR structures, deduction validations, and automated checks. The changes made for Assessment Year 2025–26 are not just form updates — they reflect a paradigm shift in how data will be verified and used to trigger scrutiny.
Let’s walk through the latest developments, actionable insights, and clear guidance to help you navigate this new compliance terrain.
Extended Filing Deadline – AY 2025–26
The Central Board of Direct Taxes (CBDT) has extended the ITR filing due date to 15th September 2025, providing relief in response to:
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Major revisions in the ITR utility
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Increased data requirements
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Compliance with validation logic for correct form selection
This extra time allows both professionals and taxpayers to adapt and ensure filings are error-free and defensible.
Major Changes in ITR Forms – A Holistic Summary
The Income Tax Return (ITR) forms for AY 2025–26 have introduced substantial additions and validation rules, particularly in:
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Disclosure of deductions under Chapter VI-A
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Mapping TDS sections to appropriate ITR forms
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New compliance areas like MSME payments, CGAS reporting, and political donations
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Auto-validation of income sources to prevent defective filings
Let’s break down these changes into actionable blocks.
Part A: Deductions Under Chapter VI-A (Old Tax Regime) – Now with Detailed Disclosures
If you opt for the old tax regime, the following deductions now require comprehensive data in the ITR:
| Section | Deduction | New Disclosures Required |
|---|---|---|
| 10(13A) | House Rent Allowance | Place of Work, Basic Salary, Rent Paid, Actual HRA Received |
| 80C | Life Insurance, ELSS, etc. | Policy Number / Document ID |
| 80D | Health Insurance | Name of Insurer, Policy Number |
| 80E | Interest on Education Loan | Bank Name, Loan A/c No., Sanction Date, Loan Amount, Balance as on 31st March |
| 80EE / 80EEA | Interest on Housing Loan | Same as 80E, applicable to first-time homebuyers |
| 80EEB | Electric Vehicle Loan Interest | Above details + Vehicle Registration Number |
| 80DDB | Medical Treatment for Specified Disease | Name of Disease, supporting Form 10-I issued by specialist |
Part B: New Validation Rules – Choosing the Correct ITR Form Is Now Mandatory
Many taxpayers erroneously file ITR-1 (Sahaj) while having income from sources that disqualify them from doing so.
To reduce filing errors, the ITR utility now validates TDS sections in Form 26AS and prevents filing of ITR-1 if certain TDS codes are present.
Income Sources That Now Prohibit Use of ITR-1:
If any of these TDS Sections appear in Schedules TDS2/TDS3 or Form 26AS, ITR-1 is invalid, and the taxpayer must use ITR-2 or higher.
| TDS Section | Income Type |
|---|---|
| 194B, 194BB, 194BA | Winnings (lotteries, horse races, online games) |
| 194IA, 194IC, 194LA | Sale/acquisition of immovable property |
| 194S | Virtual Digital Assets (e.g., crypto) |
| 194E, 194LB–196D | Foreign remittances, non-resident interest/dividends |
| 194Q, 194C, 194R | Business receipts, contractor payments, perquisites |
Part C: Structural Changes in ITR-2, ITR-3, and ITR-5
These forms have seen expanded disclosures and are of critical relevance to:
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Professionals
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Business entities
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LLPs and companies
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Co-operative societies
Notable Additions:
| Category | New Disclosure |
|---|---|
| LEI Requirement | Legal Entity Identifier mandatory if refund > ₹50 crore |
| Section 44AB | Specify tax audit due date and audit applicability reason |
| Presumptive Taxation | Cash turnover field added in ITR-4 |
| MSME Compliance – Section 43B(h) | Report payments to MSMEs beyond 15/45 days or lose deduction |
| CGAS (Capital Gains) | Mandatory to provide Account No., IFSC, and deposit date |
| Political Donations | Date, Amount, Mode of Payment, and Name of Party under Section 80GGC |
| Disability-Related Deductions | Section 80U and 80DD: Now require Form 10-IA ID and Unique Disability ID (UDID) |
New Section 115BAE: A Game-Changer for Manufacturing Co-operative Societies
This newly inserted section offers concessional tax rates for manufacturing co-operative societies (introduced via Finance Act 2024).
Entities can opt for this section in the ITR form itself, but only if conditions are fully met. The window to opt is limited, and once exercised, is irrevocable.
✅ Tip: Thoroughly review turnover, nature of manufacturing activity, and applicable conditions before selecting this option.
Practical Steps for Income Tax Return Filing
Here's a ready-to-follow checklist for compliance success:
| Step | Purpose |
|---|---|
| 🔄 Review all applicable ITRs | Understand new fields, schedules, and eligibility |
| 🧾 Map all deduction proofs early | Don’t wait until the last minute |
| 📊 Match income sources to Form 26AS & AIS | Prevent invalid form selection |
| 📌 Review MSME outstanding payments | Disallowances under 43B(h) can be steep |
| 🛠️ Adjust assignment timelines | Filing season will be heavier due to form complexities |
| 📢 Educate clients proactively | Share a simple checklist based on updated rules |
| ✅ Use updated ITR utility | It now performs auto-validation and flags errors |
Key Insights: How Compliance Has Evolved
“The return form is now no longer a ‘formality’—it’s an instrument of audit-ready financial truth.”
What was once a routine form is now a fully-validated compliance document, integrating PAN-linked data, GST turnovers, MSME compliance, and deduction accuracy.
Even small errors — like claiming 80D without insurer name — will lead to disallowance or notice generation.
The Income Tax filing landscape for AY 2025–26 is built on data integrity, precise form selection, and structured disclosures. Tax professionals must not only be technically sound but also proactive in educating clients and collecting documentary proof for every deduction claimed.
With the deadline now extended to 15th September 2025, this is the ideal time to:
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Align your processes
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Set up internal controls
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Prevent defects and re-filings
