ITR Filing: Major Income Tax Changes to Take Effect From July 1:

ITR Filing: Major Income Tax Changes to Take Effect From July 1 The income tax department is introducing some significant amendments effective from July 01, 2025. These amendments relate to PAN-Aadhaar linkage, ITR forms, e-filing utilities, and payment deadlines. Here is the detailed breakdown for each:

Aadhaar Mandatory for New PAN Applications

Individuals who will apply for a new PAN card after July 01, 2025, must link their Aadhar number with it. No other ID or documents as proof, such as a passport, voter ID, etc., will be applicable. This new rule has been implemented to ensure better identity verification and prevent misuse of fake or duplicate PAN cards.

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Real-Time PAN–Bank Account Linking System Activated

The Income Tax portal now supports real-time verification of PAN and bank account linkage using an API developed by NPCI (National Payments Corporation of India). This change will be made effective from June 17, 2025. This rule will assist in the following:

• Faster refund processing,
• Fewer mistakes during e-filing,
• Smooth linking of your PAN with your bank account.

Hence, ensure your PAN is accurately linked to your bank account.

ITR Filing Deadline Extended

The Government of India has extended the deadline for filing ITRs for the assessment year 2025-26. Usually, the deadline for filing income tax returns is July 31, 2025; however, the deadline has now been extended to September 15, 2025. This deadline is only applicable to non-audit taxpayers (most salaried individuals and small business owners). But any taxes that are due, such as final tax or self-assessment tax, must still be paid before July 31, 2025. Taxpayers making payments of these taxes after the due date may suffer consequences such as interest and penalty, even if the return is filed by September 15, 2025.

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Major Updates to ITR Forms and Utilities

The Income Tax Department has introduced amendments to all income tax return (ITR) forms for the assessment year 2025-26 (financial year 2024-25). Here is the detailed breakdown: ITR-1 and ITR-4 (for salaried individuals and small businesses):

• Both these forms now can also be used for Can now be used if you have limited long-term capital gains (LTCG) up to Rs. 1.25 lakh.
• If you are in the process of linking your Aadhar card, a new field is being added to enter Aadhaar enrollment details.

ITR-2 and ITR-3 (for those with capital gains, multiple incomes, etc.):

• Now, taxpayers are required to report their capital gains made before and after July 23, 2024, separately.
• Taxpayers must also report any related dividend income to the authority if they have earned it from share buybacks.

ITR-5 and ITR-6 (for trusts and companies):

• These forms also include the same capital gains reporting amendments as ITR-2 and ITR-3.

New ITR-U Form:

• The ITR-U form is a newly introduced form that enables correction of past returns (voluntary filing) as per Budget 2025; eligibility, deadlines, and penalties are defined.

Additionally, revised Excel utilities for ITR-1 and ITR-4 are now available on the e-filing portal at the official website of the Income Tax Department; hence, you can now begin preparing your return.

Revised Tax Slabs and Deductions

The new tax regime has been made the default regime from April 1, 2025 (beginning from the new financial year 2024-25), as per Budget 2025. It comes with major advantages and slab variations: Individuals earning income up to Rs. 12 lakh (after standard deduction and rebate) are not required to pay any sort of tax on it. Revised tax slabs are as follows:

1. Rs. 4-8 lakh: 5%
2. Rs. 8-12 lakh: 10%
3. Rs. 12-16 lakh: 15%
4. Rs. 16-20 lakh: 20%
5. Rs. 20-24 lakh: 25%
6. Above Rs. 24 lakh: 30%

• The standard deduction has been increased to Rs. 75,000.
• The Section 87A rebate is now Rs. 60,000; hence, anyone with taxable income up to Rs. 12 lakh pays zero tax under this regime.

The new tax regime is set as the default regime, meaning you still have the option to shift to the old tax regime if it benefits you more, as per your income. However, you will need to move out of the regime manually.