For the assessment year 2025–26 (financial year 2024–25), the Income Tax Department (ITD) has introduced redesigned ITR forms (ITR 1 through ITR 7), along with excel utilities. This was meant to clarify the new provisions on digital assets, capital gains, audit-related disclosures, et cetera so as not to create confusion in compliance.
But this overhaul also means more sections, extra disclosure fields, and stricter validation rules. Tax experts and taxpayers alike are asking: has filing really become simpler, or just more detailed as practical Complexity of New ITR forms? This article explores the intended simplicity against practical complexity introduced by the new forms.
The new ITR forms for Ay 2025-26, incorporates some additional details to simplified ITR for those who are not familiar with filling ITR’s, now some more information’s are required to fill in ITR of 2024-25.
Overhauled ITR‑1 and ITR‑4: Small Files, Big Details
ITR-1 (SAHAJ) and ITR-4 (SUGAM) are meant to simplify filing for less complex casesof new ITR forms —mainly salaried individuals, pensioners, and presumptive business income.
But for AY 2025–26:
- Expanded eligibility now allows LTCG (long-term capital gains) up to ₹1.25 lakh from equities/mutual funds in these forms—as long as no carryforward losses are involved.
- New validation rules added in Excel utility mean old-regime deductions are scrutinised with proper schedule selections and drop-downs – including Form 10‑IEA details for tax regime choices.
- The Aadhaar enrolment ID field is removed, requiring taxpayers to enter only the permanent Aadhaar number or PAN—no interim IDs permitted.
Though aimed at simplification, these new changes in ITR forms introduce more mandatory fields and error-checks. Taxpayers must ensure each element—like LTCG, regime form, Aadhaar—is properly entered.
Greater Granularity for ITR‑2 and ITR‑3: Reflecting Real-World Complexity
ITR-2 is used by taxpayers with capital gains, crypto income, foreign assets—not linked to business income.
ITR‑2: Expanded Schedules, Refined Clarity
- Buyback loss from shares could be claimed, with dividends said to fall under “Income from Other Sources”.
- Assets-liabilities disclosure has a threshold of ₹1 crore—only those with really high incomes have this schedule.
- Deduction schedules (80C, etc.) have enhanced drop-down lists for more detailed disclosure.
- TDS section codes must be entered for every entry with the exact section code (example: 194A, 194C).ITR‑3: Utility Changes for Business and Audit Cases
- Same as ITR 2, Therefore as pre/post-23 July gains, buyback losses, and widened deduction dropdowns.
- New sections for VDAs (crypto, Digital Assets).
- Audit forms 3CA-3CD & 3CB-3CD supported by Official Excel Utility.
- Schedule 24(b) has been extended: pertaining to housing loan interest, detailed information has to be given (lender, purpose, etc.).
Tax filers using ITR‑3—stock traders, professionals with F&O trades—must now collate more detailed records, often involving investment and business software.
Do the Excel Utilities Close Gaps or Broaden Them?
Utilities help with offline filling, validation, JSON/XML upload. But newly, their structures require:
- Complex schedule-level data.
- Detailed drop-down selections across many entries—especially under old-regime claims.
- Precise tax regime selections and Form 10‑IEA references
For example, the ITR-4 utility now asks whether the taxpayer had opted out of the new tax regime in earlier years—and wants the Form 10‑IEA acknowledgment
So while utilities reduce portal dependency, they increase diligence and record-keeping.
Have These Forms Become Too Complex?
According to ET Wealth, the updated forms require “rigorous data collection”—especially for capital gains, pre‑/post‑July 2024 classification, and new TDS and VDA entries.
Even for simpler taxpayers, extra disclosures complicate filing. For old-regime individuals, detailed info—like insurer/policy number, landlord name, specific home rоom details—must now be supplied.
Experts warn that taxpayers must prepare through the year, collecting policy numbers, landlord details, loan info, LTCG reports—rather than scrambling at the year-end
Is the Complexity Justified?
Arguments for it:
- Improved data accuracy enables the ITD to cross-verify submitted claims.
- Automatic pre-filling reduces human error—now available for ITR‑2 from July 18, 2025.
- New asset thresholds focus on high-value taxpayers, reducing disclosure needs for others.
But critics note that everyday taxpayers may feel overwhelmed and rely more heavily on tax professionals—defeating the simplicity narrative.
Tax Professional Feedback: Burden or Balance?
Tax professionals interviewed by ET Wealth say the forms push more responsibility onto taxpayers. Quarterly tracking and regular document updates are necessary. On the positive side, stricter scheduling may reduce notices and notices.
However, the defining question remains: is this level of detail really simplifying compliance, or simply shifting effort upstream in new forms?
Navigating the Complexity of New ITR forms 2025: What Taxpayers Should Do
- Track capital gains by sale date (before or after 23 July 2024).
- Organise documents: keep insurer/policy numbers, loan proofs, landlord receipts, VDA records, donor info.
- Collect TDS section information from each deductor.
- Plan around regime elections: if opting out of the new tax regime (for business owners), keep Form 10‑IEA handy.
- Pre-fill carefully: verify AIS and Form 26AS matched data.
- Use validation in Excel utility—correct errors early.
Only through systematic tracking can one file accurately in the updated forms.
The Timeline: Extended Deadlines & Progressive Rollout
Changes are moving fast in online ITR filing:
- ITR 1 and ITR4 in the window from April 29 to May 30, 2025
- Utilities in May to July 2025
- Enabling of the tax audit forms for businesses starting July 18
- Increased deadline to September 15, 2025, for complexity reasons
The extended market window reflects both the ambition and the turnaround times involved with such an overhaul.
Balancing Act: Simpler Forms, More Details
ARM Chair Mayank Mohanka argues that while the language is leaner, compliance clarity is still needed. A dozen additional fields don’t necessarily reduce burden—they require discipline.
Looking Ahead: Does This Trend Continue?
Many of these changes stem from the new Income Tax Bill’s objective: better control and documentation. ITR forms required new disclosure—digital assets, split gains, regime choices—are likely here to stay.
Over time, monthly or quarterly disclosures might ease the year-end burden. Integration of employer TDS, bank interest, and crypto exchange data could be improved innew ITR forms. But currently, the transition places pressure on taxpayers’ readiness and record-keeping.
Conclusion:
The new ITR forms for AY 2025–26 signal a shift: India’s tax system is moving toward data richness and upfront compliance. The growing complexity puts the onus on taxpayers to maintain detailed records throughout the year.
For smaller taxpayers with salary income and minimal investments, ITR‑1 and ITR‑4 offer a relatively smoother filing path. But even they now face LTCG caps, asset schedules, and regime election details.
For those filing new ITR‑2 form or ITR‑3 form, the level of documentation needed is deeper and more demanding. Still, this transparency may reduce scrutiny later—and automated utilities help with validation.
Ultimately, while these new ITR forms are more complex, they’re a response to an evolving economic environment: digital assets, equity gains, and a tax system built on high data fidelity. Online ITR filing successfully under AY 2025–26 will require more care—but may offer fewer surprises downstream.
FAQs
1. What is the difference between the old and new tax regime?
The old tax regime allows taxpayers to claim various exemptions and deductions like Section 80C, HRA, LTA, etc., but has higher tax rates. The new tax regime, on the other hand, offers lower tax rates but does not allow most deductions or exemptions, making it simpler but less flexible.
2. Can I switch between the two tax regimes every year?
New and old tax regime analysisIf you’re a salaried employee, you’re allowed to switch between the new and old tax regimes every financial year based on what suits you best. But if you’re a business owner or self-employed professional, you can switch only once and must stick to that regime in subsequent years.
3. Is HRA exemption allowed in the new tax regime?
No, House Rent Allowance (HRA) exemption is not available under the new tax regime. It’s allowed only in the old regime, provided you live in a rented house and meet the conditions. So, if you rely heavily on HRA to reduce tax, the old regime may benefit you more.
4. Is standard deduction available under the new regime?
Yes, from FY 2023–24 onwards, a standard deduction of ₹50,000 is available under the new tax regime for salaried individuals and pensioners. This was a welcome relief as earlier, standard deduction was only available under the old tax regime, making the new regime more appealing to middle-income earners.
5. Which tax regime is better for salaried employees?
The better regime depends on your salary structure and investments. If you claim many deductions like 80C, HRA, NPS, etc., the old regime may give you higher tax savings. If you don’t have many deductions or prefer simplicity, the new regime with lower tax rates could be better.
6. What is the rebate under Section 87A in the new regime?
If your total taxable income is up to ₹7 lakh, the new regime gives you a rebate under Section 87A, meaning your tax payable becomes zero. This makes it highly attractive for low-income individuals who don’t claim deductions but still want to save on tax legally.
7. Can I claim deductions under 80C in the new regime?
No, Section 80C deductions—like investment in PPF, ELSS, LIC premiums, tax-saving FDs, etc.—are not available in the new regime. These deductions are allowed only in the old regime, making it a better choice for those who actively invest in tax-saving financial instruments every year.
8. What is the default regime now for taxpayers?
From Assessment Year 2025-26, the new tax regime has become the default option for taxpayers. If you want to file taxes under the old regime, you need to explicitly opt out while filing your Income Tax Return (ITR). Otherwise, your tax will be calculated using the new regime.
9. Can I claim home loan interest under the new regime?
No, under the new regime, you cannot claim a deduction on home loan interest under Section 24(b). This deduction—up to ₹2 lakh—is available only in the old tax regime. If you have a housing loan, the old regime may provide significant tax savings on interest payments.
10. Who should ideally choose the new tax regime?
The new regime is ideal for individuals with limited deductions or exemptions, such as freelancers, consultants, first-time earners, or those who prefer simplicity. It has lower slab rates and involves minimal paperwork, making tax filing easy and quick. It also benefits those not investing in 80C instruments.
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