Income tax filing: Delay in ITR-5, 6, 7 utilities sparks concern ahead of ITR filing deadline

The Income Tax Department is yet to unveil the online utility tools for ITR-5, ITR-6, and ITR-7, leaving many taxpayers on edge. These forms are essential for businesses, companies, and trusts, especially with the looming deadline of 15th September 2025 for non-audit cases. The hold-up is attributed to significant adjustments for the assessment year 2025-26, bringing changes in tax rates and reporting duties. Such delays have raised concerns among firms and organisations that depend heavily on these forms for compliance.

As per experts, the department has opted for a phased rollout to ensure technical stability and proper integration with backend systems like AIS and Form 26AS. This gradual deployment is meant to avert technical issues that could disrupt the e-filing process, thus maintaining the system's efficiency and reliability while accommodating new requirements.

Kinjal Bhuta, Chartered Accountant and Treasurer at BCAS, stated, "These delays are mostly due to inherent technical issues with the utility and mismatches in pre-filled returns. That was also the reason why ITR-2 and ITR-3 were delayed recently." The problems arise from new sections and reporting formats embedded in these forms. Notably, ITR-5 now requires documentation of buyback losses only if the related dividend has been taxed, while ITR-6 and ITR-7 contain specific mandates for capital gains and several exemptions. These complex requirements add layers of intricacy to processing and filing tax returns under the new guidelines.

Taxpayers using ITR-5, ITR-6, and ITR-7 need to pay attention to the revised reporting formats. For example, ITR-6 obliges firms to declare capital gains for transactions carried out before and after 23rd July 2024, as well as earnings from cruise operations and diamond trades. ITR-7 incorporates fields for reporting capital gains and housing loan interest under Section 24(b). Furthermore, the long-term capital gains tax has increased to 12.5% from 10%, with short-term gains now attracting a 20% tax.

ITR-5: This form is meant for entities like firms, LLPs (Limited Liability Partnerships), AOPs (Associations of Persons), BOIs (Bodies of Individuals), Artificial Juridical Persons (AJPs), estates of deceased or insolvent individuals, business trusts, and investment funds. It is used by those who are not filing returns under ITR-7 and are not required to file ITR-6.

ITR-6: Companies, except those claiming exemption under Section 11 (i.e. income from property held for charitable or religious purposes), must file ITR-6. Filing is allowed only through electronic mode.

ITR-7: ITR-7 is applicable to persons, including companies, who are required to file returns under the following sections of the Income Tax Act:

139(4A): For trusts or entities earning income from property held for wholly or partly charitable or religious purposes.

139(4B): For political parties whose income exceeds the basic exemption limit (before applying for exemptions).

139(4C): For certain institutions such as scientific research associations, news agencies, institutions under Section 10(23A) or 10(23B), and specified educational or medical institutions.

139(4D): For universities or colleges not required to file under other ITR forms.

139(4E): For business trusts not covered under other provisions.

139(4F): For investment funds as per Section 115UB, which are not required to file under other provisions.

The utilities are expected to arrive shortly, likely by the end of July, as experts conclude that "while the delay is inconvenient, it is meant to reduce errors on the e-filing portal". Despite the challenges posed by this delay, it aims to enhance the accuracy of filings. The department is anticipated to release the utilities soon, providing taxpayers ample time to comply with the new regulations and meet upcoming filing deadlines.

Those opting for manual filing must verify their returns using ITR-V by sending the signed form to CPC Bengaluru within 30 days, unless e-verification is chosen. The delay highlights the complexities in updating tax systems to adhere to new legislative directives and ensure precise reporting. Taxpayers should remain alert for further updates from the Income Tax Department to avoid last-minute surprises.

Meanwhile, taxpayers should prepare their documents and fully understand the new requirements. This proactive approach will help mitigate potential issues once the utilities are released. Staying informed with official updates is crucial to ensuring compliance and avoiding penalties. Such diligent preparation will aid taxpayers in effectively navigating the changing landscape.