ITR Form 5 AY 2025-26: Key Changes You Must Know
The Central Board of Direct Taxes (CBDT) has notified ITR Form 5 for AY 2025-26 via Notification No. 42/2025 dated 01.05.2025. This form is relevant for firms, LLPs, AOPs, BOIs, estates, trusts, and investment funds who are not eligible to file ITR-7.
Let’s break down the major updates and what they mean for taxpayers.
🔍 What’s New in ITR Form 5 for AY 2025-26?
Here are the key changes introduced:
- Capital Gains Split
- Why it matters: Helps apply different tax treatments to pre- and post-amendment gains.
- Capital Loss on Share Buyback
- CBDT clarification based on changes to section 115QA.
- Section 44BBC Reference Added
New presumptive taxation regime introduced for businesses in cruise tourism. - TDS Code Mapping.
- Ensures clearer reconciliation of TDS credits with Form 26AS and AIS.
🧾 Who Should File ITR-5?
- A partnership firm or LLP (not claiming exemption under section 11)
- AOP/BOI
- Artificial Juridical Person (AJP)
- Business trust or investment fund under section 115UB
Not applicable for individuals, HUFs, companies, or those filing under ITR-7.
🛠️ How to Prepare ITR Form 5?
Here’s a step-by-step guide:
| Step | Action |
|---|---|
| 1 | Download latest ITR-5 utility from incometax.gov.in |
| 2 | Ensure PAN and Aadhaar linking is complete |
| 3 | Report capital gains with date-based segregation (pre/post 23.07.2024) |
| 4 | Update dividend income (if buyback losses claimed) |
| 5 | Fill Part A-Gen for sec 44BBC if applicable |
| 6 | Verify TDS details with correct section codes |
| 7 | Validate using pre-fill & AIS/26AS reconciliation tools |
| 8 | E-verify before deadline (31 July 2025, unless extended) |
🧠 Expert Insight: Avoid Common Mistake
Many LLPs forget to report capital losses on buyback correctly post-01.10.2024. Unless linked to dividend income from other sources, such loss is disallowed.
📚 Legal References
- 📜 Notification No. 42/2025, CBDT
- 📘 Finance Act, 2024 (Capital Gains & Buyback Changes)
- 🧾 Section 44BBC: Introduced for cruise business presumptive income
❓FAQs on ITR Form 5 AY 2025-26
Q1. Is ITR-5 applicable for companies?
No. Companies should file using ITR-6 (except those claiming exemption under section 11).
Q2. What if dividend income isn’t disclosed but buyback loss is claimed?
It will be disallowed. New rules mandate both must be reported for loss allowance.
- How to choose between old and new tax regime under 115BAC
- TDS section codes explained for AY 2025-26 – Full List
Summary Snippet (for Google)
CBDT notifies ITR Form 5 AY 2025-26. Major changes: capital gains split, new 44BBC reporting, buyback loss rule, and TDS section code entry.