Income Tax (I-T) department has released online utilities for ITR-1 and ITR-4 but not yet for ITR-2 and ITR-3. As soon as they are released, taxpayers are recommended to start the process of filing their tax returns, suggests Preeti Sharma, Partner, Global Employer Services, Tax & Regulatory Services of BDO India.
In an email interview with MintGenie, she shares her views on income tax forms, new tax regime, importance to engage an expert for filing of income tax return and recommendations for the tax department.
Edited Excerpts
Should taxpayers wait till Sept 15 for filing tax returns or would you advise them to file it before the standard deadline of July 31?
The due date of filing Income-tax return for the Financial Year 2024-25 has been extended from 31 July 2025 to 15 September 2025. This is owing to the introduction of significant changes in the ITR forms. The online utility for Form ITR 1 and ITR 4 is already notified. However, Form ITR 2 and ITR 3 are not yet available for filing.
It is expected that new online forms will be pre-filled with maximum possible information based on the Significant Financial Transactions being reported by multiple departments and divisions across India.
Once the ITR form applicable to you is available for filing, it is recommended to start the process of filing your tax return rather than waiting for the due date. This will have the following benefits:
Online form will be pre-filled with your income, TDS and other tax payment details. If you start the process early, you will have time to validate the information, and raise dispute with the tax department if the information is not captured accurately. At the same time, if TDS and TCS are not reflecting, liaise with the deductor to take corrective action.
The new date is an extension for filing of your tax return. However, the advance tax payment obligation remains the same. If you have not paid advance taxes and prefer to pay tax at the time of filing of your tax return, you will incur additional interest obligation for the delay in payment of taxes if you defer the tax payment exercise to September.
Early filing of ITR can help in avoiding technical glitches and server downtime due to last-minute rush. As has been seen in past years, as initially fewer individuals opt to file the tax returns, their returns also get processed faster.
How will the tax-filing process change next year after the new Income-Tax Act comes into force?
No major changes are anticipated in the tax return form and return filing process owing to the introduction of the new Income-Tax Act. The new Act aims to reduce legal complexity; however, the major income heads and concept of taxation are kept as they are.
We can expect changes in the forms, including renumbering of section, revised tax slabs and rebates amount, however, largely no major changes are expected in the tax filing process.
For salaried taxpayers, what tax regime (old or new) is better over the other? Can you tell us with some reasoning?
There is no standard answer as identification of a beneficial tax regime mainly depends on an individual’s structure, available deductions.
The old tax regime offers various deductions & exemptions such as House Rent Allowance, Leave Travel Allowance, and popular deductions under Section 80C (investment Provident Fund, Life Insurance policies, etc.) and Section 80D (health insurance premium), etc.
On the other hand, the new tax regime was introduced to simplify the tax structure; hence, the above-mentioned deductions/ exemptions are not available in the new regime, but it offers lower income-tax rates as compared to the old regime. The new regime is beneficial for those who do not have major exemptions or deductions to claim and prefer hassle-free filing.
Although a case-specific calculation is recommended, but at the high level, if you expect all your exemptions / deductions are likely to be more than ₹4,00,000, old regime may have lower tax liability. But at the same time, be mindful that you have to maintain full documentary evidences to support the deduction/ exemption claimed. The probability of enquiry from tax department is higher if old regime is opted.
New regime is the default regime, and if the old regime is not specifically opted in tax return form, the online form will consider new regime while calculating your taxes.
The new income tax (IT) forms released by CBDT offered number of changes. For instance, new capital gain rules have been incorporated in the tax form. Did you discover any good news or surprise in these changes?
Yes, the new ITR-1 forms notified by the CBDT bring several positive and practical changes, particularly benefiting small investors and salaried taxpayers. One such welcome move is the inclusion of long-term capital gains (LTCG) reporting of up to ₹1.25 lakhs in the ITR-1 (Sahaj), reducing the need to switch to more complex forms like ITR-2. Other changes that have been introduced:
TDS Disclosure: A new column in the TDS schedule requires taxpayers to specify the section under which it is deducted, such as section 192 for salary, section 194A for interest, etc. This might help to reconcile TDS claimed in the ITR by the taxpayer with Form 26AS, potentially minimising mismatches.
A specific bank account for refunds by ticking a checkbox next to a pre-validated account may be selected, while all active accounts still need to be reported, regardless of their validation status.
Aadhaar: Only the 12-digit Aadhaar number is now accepted. The option to provide an enrolment ID has been removed, which may impact taxpayers awaiting Aadhaar issuance close to the filing deadline.
ITR1 and ITR4 are updated with the above, however, we will need to wait for the actual rollout of utilities of other forms to gauge the changes.
Tax filing is quite simpler, especially for those with one (or two) sources of income only. Would you recommend small taxpayers to file return on their own instead of engaging a tax expert?
With the introduction of pre-filled ITR Forms on the e-filing portal based on Form 16, Form 26AS, AIS, TIS, Bank reports, Broker reports, etc., the return filing process has now become easier especially for salaried individuals with only one-two income sources such as bank interest, and some minor capital gains.
The portal also provides a step-by-step guidance to help taxpayers file the ITR correctly. For many small taxpayers with limited source of income such as salary and interest, filing their ITR on their own can absolutely be a practical and cost-effective approach. Additionally, the IT department has introduced simplified forms like ITR-1 (Sahaj) & ITR-4 (Sugam), which is designed specifically for such cases.
However, if a taxpayer has more complex income — say, capital gains from multiple share transactions, rental income, foreign income, or wants to claim several deductions under the old tax regime, then, it is advisable to consult a tax expert to avoid mistakes that could lead to notices or penalties from the IT Department.
Do you have any recommendations for the tax department with regards to the tax-filing process?
Although the IT Department has made commendable progress in digitising and simplifying the tax filing process in recent years, I would like to propose the following changes to improve the return filing process.
I. Enhanced accuracy of pre-filled data by strengthening the integration between banks, mutual funds, and SEBI. There are many instances where wrong data is reported in AIS statement of the individual taxpayers.
II. More interactive guidance. For example, chatbot explaining sections in simple language and providing suggestions on eligible deductions based on taxpayer’s available information
III. Speeding up of refund processing and grievance redressal mechanism
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