Complete ITR Filing Guide for FY 2025-26: Which Form, Which Deductions, What's Changed

The income tax return filing season for FY 2025-26 (Assessment Year 2026-27) is open. Whether you're a salaried employee, a freelancer, or a small business owner — getting your ITR right the first time saves you from notices, penalties, and the stress of rectifications. This guide covers everything you need to know.

Which ITR Form Should You Use?

Choosing the wrong ITR form is one of the most common mistakes. The Income Tax Department can treat a return filed in the wrong form as defective, requiring you to refile. Here's a clear breakdown:

New Tax Regime vs Old: Which Saves More in FY 2025-26?

The new tax regime is now the default from FY 2023-24 onwards. You must actively opt for the old regime if you want to claim deductions. Here's the current slab comparison:

When the old regime wins: If your deductions (80C + 80D + HRA + home loan interest etc.) exceed approximately ₹3.75 lakh, the old regime is usually better. For most salaried employees with home loans, NPS, and insurance — the old regime still makes more sense. Calculate before choosing.

Key Deductions Under the Old Regime (Don't Miss These)

Section 80C — Up to ₹1.5 Lakh

This is the most widely used deduction. Eligible investments and expenses include:

• PPF contributions — long-term, tax-free at maturity
• EPF contributions — employee's share qualifies
• ELSS mutual funds — 3-year lock-in, market-linked returns
• Life insurance premiums — for self, spouse, children
• NSC, 5-year bank FD — guaranteed, low-risk options
• Children's tuition fees — actual fees for up to 2 children
• Home loan principal repayment — on self-occupied property
• NPS Tier-I contributions — additional ₹50,000 under 80CCD(1B)

Section 80D — Health Insurance Premiums

• ₹25,000 for self, spouse, and children (₹50,000 if senior citizen)
• Additional ₹25,000 for parents (₹50,000 if parents are senior citizens)
• ₹5,000 for preventive health check-ups (within the above limits)
• Maximum: ₹1 lakh if you and your parents are both senior citizens

Section 24(b) — Home Loan Interest

Up to ₹2 lakh per year on interest paid for a self-occupied house. For let-out property, there is no upper limit on interest deduction (subject to loss set-off rules).

Section 80TTA / 80TTB — Savings Account Interest

• 80TTA: Up to ₹10,000 deduction on savings account interest (for non-senior citizens)
• 80TTB: Up to ₹50,000 for senior citizens (covers FD interest too)

HRA — House Rent Allowance

The HRA exemption is the minimum of: (a) Actual HRA received; (b) 50% of basic salary for metro cities, 40% for others; (c) Actual rent paid minus 10% of basic salary. Keep rent receipts and landlord's PAN (if annual rent exceeds ₹1 lakh).

What's New in FY 2025-26?

• Standard deduction ₹75,000 under new regime (increased from ₹50,000 in Budget 2024)
• Tax-free income up to ₹7 lakh under new regime via rebate u/s 87A
• Updated ITR-1 and ITR-4 pre-filled with more data including crypto transactions flagged by IT Dept
• TDS on property purchases above ₹50L — buyer must deduct 1% TDS; ensure Form 26QB is filed
• Virtual Digital Assets (Crypto) — 30% flat tax + 1% TDS on gains; must report even small trades
• AIS / Form 26AS reconciliation mandatory — the IT Dept's Annual Information Statement now shows all high-value transactions including mutual fund redemptions, property sales, FD interest

5 Mistakes That Trigger IT Notices — Avoid These

1. Not reporting interest income — Bank FD interest, savings account interest, and P2P lending income must be declared. The IT Dept gets this data from banks automatically via SFT (Statement of Financial Transaction).
2. Ignoring Form 26AS / AIS — Always reconcile your return with the AIS and 26AS. Any mismatch (like mutual fund gains you didn't declare) triggers automated scrutiny.
3. Wrong ITR form — Using ITR-1 when you had capital gains, or ITR-4 when your business income exceeds the presumptive limit, results in a defective return notice.
4. Missing freelance income — Even side income from Upwork, YouTube monetisation, or consulting must be declared. TDS deducted by clients appears in your 26AS.
5. Not verifying the return — An ITR filed but not e-verified within 30 days is treated as if it was never filed. Verify via Aadhaar OTP, net banking, or send signed ITR-V to CPC Bengaluru.

Documents Checklist for ITR Filing

• Form 16 from employer (Part A and Part B)
• Form 26AS and Annual Information Statement (AIS) from IT portal
• Bank statements and FD interest certificates
• Home loan interest certificate from the bank
• Rent receipts (if claiming HRA)
• Investment proof: ELSS statements, PPF passbook, LIC premium receipts
• Health insurance premium receipts (80D)
• Capital gains statements from mutual fund platforms (CAMS/KFintech)
• Sale deed / purchase deed (if property transacted)
• Crypto transaction history (exchange-wise)

When to Take Professional Help

While ITR-1 for simple salaried income is straightforward to file yourself on the income tax portal, you should engage a CA or tax professional when:

• You have capital gains from stocks, mutual funds, or property
• You run a business or practice as a professional
• You received foreign income or hold foreign assets
• You received an IT notice or scrutiny assessment
• Your income crossed ₹50 lakh
• You want to optimise between old and new regime with precision