The Central Board of Direct Taxes (CBDT) has released the updated ITR-5 form for the Assessment Year 2025–26, bringing in a set of crucial changes that reflect the Finance Act, 2024. This move, notified on May 1, 2025, follows the earlier release of ITR-1, ITR-3, and ITR-4 forms in the last week of April.

Notable Changes in ITR-5: Capital Gains, Buybacks, and Cruise Business

A major highlight in the new ITR-5 is the revised treatment of capital gains. Taxpayers must now report gains in Schedule-CG based on whether the transfer happened before or after July 23, 2024 — the date when several provisions of the Finance Act, 2024, came into force. This distinction is aimed at improving accuracy in capital gains tax assessments and aligning with the updated Income Tax rules.

Another key update involves the treatment of capital loss from share buybacks. Starting October 1, 2024, taxpayers can claim a capital loss if the associated dividend income was previously classified under ‘Income from Other Sources.’ This adjustment is expected to address past inconsistencies in tax treatment and offer relief to equity investors.

Meanwhile, the ITR-5 form now directly references Section 44BBC, targeting presumptive income for cruise ship operators. This inclusion supports the government’s broader efforts to formalize and tax the fast-expanding cruise tourism sector under a consistent framework.

Increased Transparency and Filing Details

In a move aimed at tightening compliance and boosting transparency, taxpayers will now need to mention the relevant TDS section codes under Schedule-TDS. This change will help the income tax department in reconciling TDS claims with data filed by deductors, reducing errors and delays in processing returns.

Entities eligible to file ITR-5 include firms, LLPs, associations of persons (AOPs), bodies of individuals (BOIs), and other entities not covered under individual or HUF categories. Notably, companies, individuals, and those required to file ITR-7 — such as charitable or religious trusts — are not allowed to use this form.

The ITR filing window for AY 2025–26 is expected to open next week. As per standard timelines, taxpayers not requiring audits must file their returns by July 31, 2025. For entities that require audits, the deadline extends to October 31, 2025.

With these updates, taxpayers are advised to review their financial records in line with the revised ITR-5 structure and consult with professionals to ensure compliance with new provisions. For more information, visit the official Income Tax India website.