New ITR-5 form is here: Capital gains, buyback loss and TDS rule changes explained

If you're a partnership firm, LLP, or Association of Persons filing taxes this year, there’s a new Income Tax Return form you need to get familiar with. The Central Board of Direct Taxes (CBDT) has notified the new ITR-5 form for Assessment Year 2025–26 via Notification No. 42/2025, effective from April 1, 2025—and it comes packed with changes that could impact your reporting, deductions, and refund timelines.

1. Capital Gains Now Split by Key Date
One of the biggest updates lies in Schedule CG, where capital gains are now reported in two segments:

Before July 23, 2024: For transactions before key Finance Act changes took effect.

On or After July 23, 2024: For post-amendment gains or losses.
This bifurcation helps align gains with applicable tax treatments and gives tax officers clearer audit trails.

2. Buyback Losses Need Declared Dividends
From October 1, 2024, claiming losses on share buybacks is only allowed if the associated dividend income was reported as ‘Income from Other Sources.’ This cross-checking discourages misuse and ensures only valid losses are claimed.

3. Cruise Industry Gets a Presumptive Taxation Boost
Section 44BBC makes its debut—introducing a presumptive tax regime specifically for cruise businesses. Operators can declare income at a fixed rate on gross receipts, cutting down compliance headaches and aligning with India’s push to promote tourism.

4. TDS Section Codes Now Mandatory
You’ll now need to specify the exact section under which TDS was deducted (like 194A for interest, 194C for contracts). This move tightens CPC’s ability to match TDS claims, reducing mismatches and refund delays.

5. Built for Digital, Ready for AI
The new ITR-5 is optimized for seamless online filing. It’s built to feed directly into the tax department’s AI-assisted scrutiny engine—expect fewer errors, but also sharper oversight.