Big news for those sticking with the old tax regime this tax season! The Income Tax Department is rolling out some significant changes for Assessment Year 2025-26 (that’s for income earned in Financial Year 2024-25). Get ready for increased scrutiny and enhanced disclosure requirements if you’re claiming deductions.
Why the Change?
The main goal here is to crack down on false deduction claims. The verification process is getting a major upgrade, moving from a manual check after you file to an automated, upfront requirement at the time of filing. This means your Income Tax Return (ITR) will only go through if your deduction claims are backed by detailed, accurate information.
What’s New for Your Deductions?
Forget about lump-sum claims! The Income Tax Department now requires itemized reporting for many common deductions.
- Section 80C: If you’re claiming deductions for investments like PPF, tax-saving FDs, or life insurance, you’ll need to provide the policy number or document identification number.
- Section 24b (Home Loan Interest): This is a big one. You’ll need to furnish detailed information about your lender, including the lender’s name, loan account number, sanction date, total loan amount, and outstanding balance. This also applies to interest on education loans (Section 80E) and electric vehicle financing (Section 80EEB).
- Section 80D (Health Insurance): For health insurance claims, you’ll need the insurer’s name and policy number. If you’re claiming deductions for critical illnesses under Section 80DDB, you’ll have to specify the disease.
- House Rent Allowance (HRA): HRA exemptions now require a breakdown of your salary components, rent paid, and work location. Be especially mindful if you’ve been claiming both HRA and home loan interest deductions in the same city—these claims will face much closer scrutiny, and you’ll need to justify maintaining both a rented residence and an owned property relative to your work location.
Automated Verification and Cross-Referencing
To ensure accuracy, all the data you submit will be cross-referenced with third-party databases using your PAN and Aadhaar. This means the system will verify your information with banks, insurance companies, and other government records, making it harder for fraudulent claims to slip through.
Good News: More Time to Prepare!
Recognizing these significant changes, the Central Board of Direct Taxes (CBDT) has extended the ITR filing deadline for non-audit cases for Assessment Year 2025-26. You now have until September 15, 2025, instead of July 31, 2025, to gather all the necessary detailed information and file your return accurately.
These new rules are a clear move towards a more transparent and accountable tax system, benefiting both taxpayers and the department in the long run. Make sure you’re prepared with all your documents to ensure a smooth filing process!