CBDT Unveils New ITR Form 5 with Major Updates for 2025-26

The Central Board of Direct Taxes (CBDT) announced significant revisions to the Income Tax Return (ITR) Form 5 for Assessment Year 2025-26, including changes to capital gains reporting and new guidelines for share buybacks. The July 2024 Budget also initiated plans to revise the Income-tax Act of 1961.

In a significant move, the Central Board of Direct Taxes (CBDT) has released Notification No. 42/2025, introducing the updated Income Tax Return (ITR) Form 5 for the Assessment Year 2025-26. According to the Income Tax Department's official X page, these changes involve a crucial alteration in the Schedule-Capital Gain, necessitating taxpayers to differentiate between capital gains made before and after July 23, 2024.

The revised form now permits the declaration of capital losses from share buybacks, contingent upon the corresponding dividend income being classified as "income from other sources," for transactions post-October 1, 2024. In addition, ITR Form 5 incorporates a direct reference to section 44BBC of the Income Tax Act.

A notable change includes the obligation to identify the Tax Deducted at Source (TDS) section code in Schedule-TDS. The Income Tax Department also recently launched the 'e-Pay Tax' feature on its online portal to streamline taxpayer services, as stated by the CBDT. Meanwhile, the July 2024 Budget has paved the way for a comprehensive overhaul of the Income-tax Act of 1961 aimed at minimizing disputes. The new Income Tax Bill is slated for discussion in the monsoon session of Parliament, following a call for stakeholder suggestions and ongoing scrutiny by the Select Committee.

(With inputs from agencies.)