Notification No. 42/2025 dated 01.05.2025
The Central Board of Direct Taxes (CBDT) has officially notified the Income Tax Return (ITR) Form 5 for the Assessment Year (AY) 2025–26. The revised form has been issued through Notification No. 42/2025 dated 1st May 2025, and it incorporates key amendments aligned with the Finance Act, 2024. This update is crucial for firms, LLPs, AOPs, BOIs, and other persons (except individuals and HUFs) required to file ITR-5.
🔍 Key Changes in the Notified ITR-5 for AY 2025-26:
🖋️ 1. Schedule-Capital Gains — Split Based on Date of Transfer
The Schedule-CG now requires taxpayers to bifurcate capital gains into two periods:
- Before 23rd July 2024
- On or After 23rd July 2024
This change has been introduced to reflect the amendments brought in the Finance Act, 2024, which introduced differential tax treatment or grandfathering clauses applicable from this cutoff date.
✅ Action Point: Taxpayers must carefully identify the date of transfer for each capital asset to correctly report in the appropriate sub-schedule.
🖋️ 2. Capital Loss on Share Buyback Allowed (With Conditions)
In a major relief to investors, capital loss arising on share buyback post 01.10.2024 is now allowed only if:
- The corresponding dividend income received during buyback is shown as ‘Income from Other Sources’.
This addresses the earlier ambiguity where buybacks were resulting in a deemed dividend and disallowed loss. The revised form now accommodates such reporting.
✅ Action Point: Ensure the dividend component is accurately declared in Schedule-OS to claim the capital loss.
🖋️ 3. Reference to Section 44BBC — Cruise Business
The ITR-5 now includes reporting provisions aligned with newly inserted Section 44BBC, which provides for presumptive taxation of income from cruise business. This is part of the government’s push to promote cruise tourism and simplify tax compliance for operators in this segment.
✅ Action Point: Businesses engaged in cruise operations must assess eligibility under section 44BBC and report accordingly.
🖋️ 4. TDS Section Code in Schedule-TDS
To enhance TDS transparency and traceability, the revised Schedule-TDS now mandates reporting the TDS section code (e.g., 194C, 194J, etc.) for each entry.
This will help cross-verification with Form 26AS and improve reconciliation accuracy during assessment.
✅ Action Point: Cross-check TDS entries with Form 26AS/TRACES to ensure correct section codes are captured.
📑 Where to View Full Notification & ITR Format
The complete text of Notification No. 42/2025 and the new ITR-5 form can be accessed on the official e-Gazette portal:
👉 Click to View PDF Notification
📌 Who Should File ITR-5?
This return form is applicable to:
- Firms (excluding LLPs opting for ITR-3)
- Association of Persons (AOP)
- Body of Individuals (BOI)
- Artificial Juridical Person (AJP)
- Estate of deceased/ insolvent
- Business trusts and investment funds
You can contact team of Tax Experts to file Your ITR at 9150010300 or visit www.legalsahayak.com
The changes in ITR-5 reflect the government’s ongoing efforts to align tax filing procedures with evolving business practices and legal updates. Taxpayers and tax professionals should familiarize themselves with these changes well before the due date to ensure accurate and compliant filing.
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