Major Updates to ITR-3 Excel Utility for AY 2025-26: What Taxpayers Need to Know
The Income Tax Department has rolled out significant changes to the ITR-3 Excel utility for Assessment Year 2025-26, impacting individuals and Hindu Undivided Families (HUFs) with income from business or profession exceeding Rs 50 lakh. These updates aim to enhance transparency and streamline the tax filing process.
Here’s a summary of the key modifications:
1. Stricter Disclosure for Deductions:
- Detailed Information: Taxpayers must now provide more comprehensive details for various deductions. This includes specific data points like sanction dates and policy/certificate numbers for sections like 80C, 80E, 80EE, 80EEA, and 80EEB.
- Enhanced Transparency: Additional fields have been introduced for disclosures under Section 10(13A) (House Rent Allowance), requiring details such as employer PAN or landlord information. For Section 24(b) (home loan interest), detailed loan information like lender’s name, loan account number, sanction date, and outstanding balance is now mandatory.
2. Segregated Capital Gains Reporting:
- Pre- and Post-July 23, 2024 Transactions: A crucial change mandates the separate reporting of capital gains realized before and after July 23, 2024. This distinction is vital due to varying tax rates and indexation rules for transactions occurring on either side of this date.
- Cost of Acquisition and Improvement: Resident taxpayers must now provide distinct details for the cost of acquisition and cost of improvement for properties transferred before July 23, 2024, to ensure accurate indexation benefits.
- Share Buybacks (Post-October 1, 2024): For share buybacks executed on or after October 1, 2024, the sale consideration should be reported as ‘Nil’ under the capital gains schedule. The actual amount received will be treated as dividend income under ‘Income from Other Sources’. The updated form also allows for reporting of corresponding capital losses in Schedule CG.
3. Revised Asset and Liability Reporting Threshold:
- Increased Limit: The threshold for mandatory disclosure of assets and liabilities in Schedule AL has been significantly increased from Rs 50 lakh to Rs 1 crore. This means only taxpayers with total assets exceeding Rs 1 crore will now be required to furnish these details, reducing the compliance burden for many.
4. Section-Wise TDS Reporting:
- Greater Clarity: Tax Deducted at Source (TDS) is now required to be reported section-wise, which will bring more clarity and precision to tax credit reconciliation with Form 26AS and AIS.
5. Inclusion of Presumptive Taxation (Section 44BBC):
- Cruise Ship Operations: The utility now incorporates new provisions under Section 44BBC for presumptive taxation related to income from cruise ship operations, simplifying reporting for this specific income category.
6. Virtual Digital Assets (VDAs) and Regime Selection:
- Expanded VDA Reporting: The ITR-3 form features expanded reporting requirements for virtual digital assets, reflecting their growing significance in investment portfolios.
- New Tax Regime Declaration: Taxpayers are now required to confirm whether Form 10-IEA was filed for AY 2024-25 and declare their intent to continue with or opt out of the new tax regime for the current assessment year.
These comprehensive updates underscore the tax authorities’ commitment to enhancing the accuracy and depth of tax reporting. Eligible taxpayers can download the ITR-3 Excel Utility from the Income Tax e-filing portal, complete their details, and then generate a JSON file for submission.