ITR-5 Form: A Comprehensive Guide for AY 2025-26

ITR-5 Form: A Comprehensive Guide for AY 2025-26

ITR-5

The Income Tax Return (ITR)-5 Form for Assessment Year (AY) 2025-26 has undergone significant updates to align with the Finance Act, 2024 and CBDT Notification No. 42/2025 dated May 1, 2025.

If your business or entity is eligible to file ITR-5, it’s important to understand these changes, as they directly affect tax computation, reporting requirements, and filing procedures.

Who Should File ITR-5?

ITR-5 is applicable for specific entities such as:

  • Partnership firms (excluding sole proprietorships)

  • Limited Liability Partnerships (LLPs)

  • Associations of Persons (AOPs)

  • Bodies of Individuals (BOIs)

  • Artificial Juridical Persons (AJPs)

  • Business trusts or investment funds under Section 115UB

  • Co-operative societies and certain trusts exempt from ITR-7 filing

Not applicable for:

  • Individuals or Hindu Undivided Families (HUFs)

  • Companies (must file ITR-6)

  • Charitable/religious trusts claiming exemption under Section 11 (file ITR-7)

ITR-5

Key Changes in ITR-5 for AY 2025-26

As per CBDT Notification No. 42/2025 – Income Tax, dated April 1, 2025, the following updates have been introduced:

1️⃣ Capital Gains Reporting by Date

  • What’s New: Schedule-CG now requires separate reporting for transactions before and on/after July 23, 2024.

  • Why: Capital gains tax rates and indexation rules differ after this date.

  • Example: LTCG under Section 112A is now taxed at 12.5% (earlier 10%) post-July 23, 2024.

2️⃣ Capital Loss on Share Buybacks

  • Effective from: October 1, 2024

  • Change: Capital loss from share buybacks can be offset only if the related dividend income is reported under “Income from Other Sources” [Section 2(22)(f)].

  • Impact: Prevents incorrect capital loss claims, aligning with the new buyback taxation rules.

3️⃣ Section 44BBC – Presumptive Tax for Non-Resident Cruise Operators

  • Change: New checkbox in Part A-Gen and Schedule BP for presumptive taxation — 20% of gross passenger revenue deemed taxable.

  • Benefit: Simplified compliance; no detailed books required.

4️⃣ Mandatory TDS Section Code Reporting

  • Change: In Schedule-TDS, taxpayers must specify the exact TDS section code (e.g., 194A for interest, 194C for contracts).

  • Reason: Helps match data with Form 26AS/AIS, reducing mismatches.

5️⃣ Enhanced Entity Identification

  • Change: Entities must now provide:

    • LLP Identification Number

    • Date of incorporation

    • Two mobile numbers & two email IDs

    • Complete address

  • Impact: Improves accuracy in audits and departmental communications.

6️⃣ Filing Status & Due Date Dropdown

  • Change: New dropdown to select filing due date (July 31, October 31, November 30) and return type (e.g., Section 139(1) – on-time, 139(4) – belated).

  • Benefit: Ensures clarity on filing intent and compliance.

7️⃣ Business Trust Declaration

  • Change: New checkbox to declare if filer is a REIT or InvIT.

  • Purpose: Enables correct tax treatment for such trusts.

8️⃣ “e-Pay Tax” Portal Integration

  • Change: Direct payment option for advance tax, self-assessment tax, and demand payments.

  • Benefit: Faster and more convenient compliance.

Rules & Filing Guidelines for ITR-5

  • Entity Eligibility: Confirm your business/entity type matches ITR-5 applicability.

  • Aadhaar-PAN Linking: Mandatory for all partners/members/trustees. Aadhaar enrolment IDs no longer accepted.

  • Due Dates:

    • July 31, 2025 – No audit required

    • October 31, 2025 – Audit required under Section 44AB

    • November 30, 2025 – Entities with international/transfer pricing reports

    • Extension: For AY 2025-26, filing extended to September 15, 2025 (CBDT Circular, May 27, 2025).

  • Verification: Complete within 30 days via Aadhaar OTP, Net Banking, or Digital Signature.

  • Reconciliation: Always match income and TDS with Form 26AS and AIS.

  • Penalties: Incorrect claims may attract 200% penalty + 24% interest under Section 276C.

Step-by-Step Guide to Filing ITR-5 (Excel Utility)

Step 1 – Download Utility

  • Go to incometax.gov.in → Downloads → ITR Forms AY 2025-26 → Download ITR-5 Excel Utility.

Step 2 – Fill in Details

  • Part A-Gen: Entity info, PAN, LLP ID, Section 44BBC declaration (if applicable).

  • Schedule-CG: Segregate capital gains pre/post July 23, 2024.

  • Schedule-TDS: Enter section codes and reconcile with AIS/26AS.

  • Schedule BP: Report presumptive income under 44BBC if eligible.

  • Fill other applicable income schedules.

Step 3 – Validate & Generate File

  • Click Validate → Fix errors → Generate XML/JSON.

Step 4 – Upload Return

  • Login → e-File → Income Tax Return → Upload → Select AY 2025-26, ITR-5, upload file.

Step 5 – E-Verify

  • Complete verification within 30 days.

Income Tax Rates for AY 2025-26

  • Firms/LLPs: 30% + surcharge (12% if income > ₹1 crore) + 4% cess.

  • AOPs/BOIs: Slab rates if member shares are determinate; else 30% or maximum marginal rate (42.744% if income > ₹1 crore).

  • Capital Gains:

    • STCG (Sec 111A): 20% (post-July 23, 2024; earlier 15%).

    • LTCG (Sec 112A): 12.5% (post-July 23, 2024) with ₹1.25 lakh exemption.

    • LTCG (Sec 112): 12.5% without indexation (post-July 23, 2024).

  • Presumptive Income (44BBC): 20% of gross receipts.

Examples

Example 1 – Partnership Firm

  • Business income: ₹50 lakh → Tax @ 30% = ₹15 lakh

  • STCG: ₹5 lakh → Tax @ 20% = ₹1 lakh

  • Total tax = ₹16 lakh + 4% cess = ₹16,64,000

Example 2 – AOP with Buyback Loss

  • Dividend income: ₹10 lakh taxed @ 30% = ₹3 lakh + cess = ₹3,12,000

  • Capital loss: ₹8 lakh (carry forward for 8 years)

Example 3 – Cruise Business (44BBC)

  • Revenue: ₹1 crore → Presumptive income: ₹20 lakh → Tax = ₹6 lakh + cess = ₹6,24,000

Recent Notifications & Circulars

  • Notification No. 42/2025 (May 1, 2025): Revised ITR-5 with updated schedules.

  • Circular 10/2025 (July 28, 2025): Extended processing timelines for complex returns.

  • Finance Act, 2024: New capital gains rates, buyback taxation, Section 44BBC introduction.

Read More: Filed Your ITR? Don’t Forget This Crucial Step Within 30 Days – Or Your Return May Become Invalid!

Key Takeaway

The new ITR-5 form demands more precise reporting, especially for capital gains, TDS section codes, and entity details. Correct categorisation and timely filing are crucial to avoid penalties.

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Income tax return forms for FY 2023-24 (AY 2024-25), are now accessible on the e-filing income tax portal.

income tax return forms

Filing Forms for FY 2023-24 Enabled: Online ITR Forms Now Accessible as of April 1, 2024

The Income Tax Department has activated online filing forms, including ITR-1, ITR-2, and ITR-4, for the fiscal year 2023-24 (Assessment Year 2024-25) on the e-filing portal since April 1, 2024. Eligible taxpayers can now promptly file their FY 2023-24 tax returns using these forms.

income tax return forms

The Income Tax Department has activated online filing forms, namely ITR-1, ITR-2, and ITR-4, for the financial year 2023-24 (Assessment Year 2024-25) on the e-filing portal starting from April 1, 2024. Taxpayers eligible to utilize these ITR forms can now proceed to file their FY 2023-24 tax returns with ease.

Previously, the tax department had issued offline Excel utilities for ITR-1, ITR-2, and ITR-4. Additionally, offline JSON utilities for FY 2023-24 (AY 2024-25) have been made available for ITR-1, ITR-2, ITR-4, and ITR-6.

The last date to file income tax returns for FY 2023-24 (AY 2024-25) is July 31, 2024.

Methods of Filing Income Tax Return

1. Complete Online Filing

Taxpayers can choose to file their ITR entirely online via the tax department’s e-filing income tax portal. By logging into their account on the portal, taxpayers can access the “File income tax return” option. Here, most of the taxpayer’s information is pre-filled from their Annual Information Statement (AIS) and Form 26AS. However, it is advisable for taxpayers to cross-check the pre-filled data with their documents such as Form 16, Form 16A, other TDS certificates, interest certificates, and salary slips.

2. Partial Online, Partial Offline Filing

Alternatively, taxpayers can opt for a combination of online and offline methods. This involves using JSON and Excel utilities provided by the tax department. Taxpayers can partially fill out their return offline using these utilities and then proceed to submit it online through the portal.

Filing ITR Completely Online

Taxpayers can file their income tax return entirely online by following these steps:

  • Log in to the e-filing income tax portal.
  • Access the “File income tax return” option.
  • Verify and cross-check pre-filled data with relevant documents.
  • Submit the return electronically through the portal.

Filing ITR with Offline Utilities

Taxpayers have the option to file their ITR using offline utilities such as JSON and Excel, which can be downloaded from the e-filing income tax portal. After downloading these utilities onto their system, taxpayers can input their information. To access pre-filled data within the offline utilities, taxpayers must download the pre-filled XML from their e-filing income tax account. Once the necessary details are entered into the offline utilities, they are then required to upload the completed file onto the e-filing website.

User Eligibility criteria to file ITR-1, ITR-2 and ITR-4

Depending on their income sources in the financial year, taxpayers have the option to file their tax return using either ITR-1, ITR-2, or ITR-4.

ITR-1 can be filed by taxpayers who are resident individuals (other than not ordinarily resident), having income from salaries, one house property, other sources of income such as interest, dividend, family pension and agricultural income up to Rs 50,000 and gross total income from all sources not exceeding Rs 50 lakh in a financial year.

ITR-2 can be filed by taxpayers having more than one house property, and those who have earned capital gains.

ITR-4 is used by taxpayers having income from business and professions which is taxable under sections 44AD, 44ADA and 44AE.

Read More: What are the differences between income tax and tax deduction at source?

CBDT Notifies ITR Forms Ahead of Schedule

In contrast to previous years, where income tax return forms were typically notified in April, this year they were released well in advance. With the commencement of the new financial year, the tax department has made both online and offline utilities for ITR forms available. However, numerous salaried taxpayers may need to wait until the end of June to gather the necessary TDS certificates before initiating the ITR filing process.

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Have you forgotten to double-check your tax return? Carry it out.

Have you forgotten to double-check your tax return? Carry it out

While ITRs can be validated electronically in five different methods, a physical copy can also be sent to Bengaluru’s Centralized Processing Centre (CPC).

One of the most significant financial tasks of the year is the filing of income tax returns. It’s critical that you file your income tax return on or before the deadline, with complete and correct information about your earnings and any other information requested on the ITR form. The deadline for reporting ITRs for FY2020-21 is December 31, 2021.

ITR verification is the final step in the income tax return filing process. The ITR must be confirmed within 120 days of the filing date, according to income tax legislation. A taxpayer has six options for verifying their return. While ITRs can be validated electronically in five different methods, a physical copy can also be sent to the Centralized Processing Centre for verification (CPC), Bengaluru.

Note that if an ITR is not confirmed within 120 days of filing, the income tax authorities will not consider it a genuine return. Furthermore, if the ITR is not confirmed, it will not be accepted for processing by the tax department. Furthermore, taxpayers will not receive any tax refund unless they have filed a validated ITR that has been confirmed by the income tax department after processing.

What to do if the ITR isn’t confirmed within the allotted time:

An individual can file a condonation delay request on the e-filing income tax site if an ITR was not verified within the statutory time limit owing to a legitimate reason. They will be asked to explain why the ITR was not confirmed earlier when filing such a request. If specific circumstances are met, the income tax department will grant a request for a deferral in payment. The following are some of the criteria:

  • A claim is true and accurate;
  • In the hands of another individual, income for which a tax return has been submitted is not assessable;
  • The taxpayer is experiencing genuine hardship as a result of the ITR not being confirmed in a timely manner.

If you have failed to verify your tax return, here’s how you can file condonation delay request:

Step 1: Login to your account on the income tax portal.
Step 2: Under the ‘Services’ tab on your Dashboard, select ‘Condonation Request’.
Step 3: On the ‘Condonation Request page’, select the type of condonation request you want to proceed with. (Currently income tax department shows only one option: Delay in submission of ITR-V). Select it and click on ‘Continue’.
Step 4: On the ‘Delay in submission of ITR-V’ page, click on ‘Create Condonation Request’.
Step 5: On the ‘Select ITR page’, select the record for which you want to raise a condonation request for delay in ITR-V submission and click on ‘Continue’.
Step 6: On the ‘Provide reason for delay page’, select the reason of your delay and click on Submit.

Step 5: On the ‘Select ITR page,’ select the record for which you want to submit an ITR-V delay condonation request and click ‘Continue.’
Step 6: Select the cause for your delay on the ‘Provide explanation for delay page’ and click Submit.

A success notification will appear, along with a Transaction ID. Make a mental note of the Transaction ID for future use. A confirmation message will be sent to the email address and mobile number you provided when you registered with the e-Filing portal.

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Keep in mind that there is no explicit provision in the Income Tax Act that specifies a time restriction for filing a condonation delay request. However, the CBDT has stated in Circular No. 9/2015 dated June 9, 2015 that no condonation application for a refund/loss claim will be considered after six years from the end of the assessment year for which the application/claim is lodged.

How to keep track of a delay condonation application’s progress:

Through the new income tax site, you can quickly check the status of your condonation request. The ‘Condonation Request’ option under the ‘Services’ tab can be used to track the status. You will not be able to file an ITR until your delay condonation request is approved. While there is no set timeframe for acceptance or denial of a condonation request, the tax department typically processes such requests in 3 to 4 months.

What if your request for a condonation delay is denied?

If the application is denied, the return will remain unverified, and a non-verified return is viewed as an invalid return under income tax regulations, meaning the individual will be responsible for all of the repercussions of failing to file a tax return. If the assessee’s request for a condonation is denied, they will be liable to criminal sanctions under the IT law.

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Consequences of failing to file an ITR:

  • Section 234F imposes late filing fines of Rs 5,000. However, if the taxpayer’s total income is less than Rs 5 lakh, late costs are limited to Rs 1,000.
  • In addition, any amount of tax that remains unpaid would be subject to interest at 1% per month or part of a month under section 234A.
  • Due to non-filing of the tax return within the statutory due dates, the opportunity to claim certain deductions and/or set off and carry forward of losses other than losses from house property loss is lost.
  • The Internal Revenue Service (IRS) can charge a penalty under 270A for under-reporting income, which is equal to 50% of the tax saved by the taxpayer due to non-filing of a return.
  • The taxman can also bring a case against the defaulting taxpayer under section 276CC, which can result in a sentence of rigorous imprisonment for a period ranging from three months to two years, as well as a fine, based on the amount of tax avoided.