Key Changes in ITR-3 & ITR-5 for AY 2025-26: What Taxpayers Must Know

In line with the transition towards the Income-tax Act, 2025 (effective 1 April 2026), the government has notified revised Income Tax Return (ITR) forms applicable for Assessment Year 2026–27 (Financial Year 2025–26) which inter-alia includes structural changes and aims at having more clarity and transparency in the Income Tax Returns. This article outlines the key changes in ITR-3 and ITR-5, along with their applicability.

Applicability of Form ITR5

Before deep diving through the understanding the key changes in form ITR5, let us first understand the list of persons to whom from ITR 5 is applicable. ITR 5 is generally applicable to partnership entities, collective bodies and certain trusts/ funds. Thus, the following taxpayers are required to file their income tax return using Form ITR‑5:

• Firms (other than sole proprietorships)
• Limited Liability Partnerships (LLPs)
• Association of Persons (AOPs)
• Body of Individuals (BOIs)
• Artificial Juridical Persons (AJPs)
• Estate of deceased persons
• Estate of insolvent persons
• Business trusts
• Investment funds (including those referred to in section 115UB)

This form is not applicable to Individuals, Hindu Undivided Families (HUFs), Companies and Persons required to file ITR‑7 (such as charitable/religious trusts, political parties, institutions, etc.).

Applicability of Form ITR3

ITR-3 is applicable to Individuals and Hindu Undivided Families (HUFs) who have income from business or profession. Thus, the following taxpayers are required to file their income tax return using Form ITR‑3:

• Proprietorship business
• Trading activity (including share trading)
• Manufacturing / retail / service business
• Partner in Firm (receiving remuneration / interest from partnership firm)

This form is not applicable to Individuals, Hindu Undivided Families (HUFs), opting for Presumptive income under Sec 44AD / 44ADA / 44AE.

Structured Disclosure for Tax Regime Selection

A more detailed, enhanced and structured disclosure requirements have been added in the notified forms in order to remove any ambiguity and facilitating accurate tracking of taxpayer choice of old /new regime.

More Granular and aligned Trading / Business schedules to enhance transparency especially for F&O Traders

Introduction of mandatory disclosure for Futures & Options turnover and Segregation of trading income components has been introduced which specifically applies to firms/LLPs/businesses engaged in derivatives trading.

Generic Changes Across All ITR Forms

• Contact & Address Details: Fields names for contact details like address, mobile number been updated from Mobile 1, Mobile 2 to both primary and secondary mobile numbers. Similar nomenclature changes are incorporated for email addresses, and residential addresses.
• Few Cosmetic changes like introduction of drop downs for addition of due dates in filing of income tax returns.
• Revised Return Fees (Section 234-I): A separate field for the late fee on revised returns filed after 31st December is now mandatory in all forms, including ITR-7.
• The 15% STCG and 10% LTCG fields added due to amendment in Finance Act 2024 have been removed, since the old capital gains rates for listed equity securities i.e., 15% for STCG and 10% for LTCG is no longer applicable for gains in financial year 2025-26.

Filing Deadlines

• Non-Audit Cases: For trusts whose accounts are not required to be audited, the ITR filing due date has been extended from 31st July to 31st August 2026.
• Audit Cases: The deadline remains 31st October 2026.
• Revised Returns: Can now be filed up to 12 months from the end of the tax year (i.e., until 31st March 2027).

Conclusion

The revised Forms signals a decisive move and form level changes rather than a law level changes by the Central Board of Direct Taxes towards greater transparency, accountability, and data-driven compliance for tax payers.