ITR Filing Deadline Extends For Salaried Individuals: How Taxpayers Can Make The Most of ITR Extension?

The Income Tax Return (ITR) filing deadline for the Assessment Year 2025-2026 has been extended by the Central Board of Direct Taxes from July 31, 2025, to September 15, 2025, Avinash Polepally, Business Head, ClearTax has shared an expert explanation on the rationale behind the extension and the key complexities taxpayers are currently facing and solutions.

Complexity 1: Changes in ITR Forms and LTCG Reporting

To simplify tax filing for people with long-term capital gains up to 1.25 lakh, they can now report it in both ITR-1 and ITR-4. But, Taxpayers with LTCG arising from listed equity shares, equity-oriented mutual funds and listed units of business trusts (e.g., REITs) only, can file under ITR-1 and ITR-4. Alternatively, taxpayers who have sold assets such as property, gold, or other non-listed entities must report using ITR-2, regardless of the LTCG amount.

ClearTax Solution:

ClearTax simplifies this process by analysing the source of long-term capital gains and automatically selecting the correct ITR form, thus reducing confusion and minimising errors in the filing process. With ClearTax, you won't have to manually decide which form to use, saving time and minimising mistakes.

Complexity 2: Managing Brought-Forward and Carry-Forward Losses

The recent inclusion of filing LTCG in ITR-1 and IT-R 4 now allows users to choose between ITR forms, depending on their long term capital gains use case, with or without brought-forward and carry-forward losses. Many users assume that ITR-1 and ITR-4 can be used for all LTCG cases.

However, these forms apply only if your LTCG is under ₹1.25 lakh, keeping in mind that losses cannot be carried forward using these forms and neither can be the brought forward losses could be adjusted For taxpayers with both carried-forward losses and current-year capital gains, determining the correct ITR form can be especially complex, and ClearTax is here to help you.

ClearTax Solution:

ClearTax handles such use-cases with ease, with the help of our AI-powered platform. With auto prefill of data, we fetch all the relevant details of capital gains data including brought forward LTCG losses automatically. The system then selects the correct ITR form based on the user's financial history and current year's tax situation. This ensures that you won't miss out on tax-saving opportunities, now, or even in the future.

Complexity 3: The Bifurcation of LTCG Tax Rates

With the new changes in the tax rates for LTCG, there is a need to differentiate between gains accrued before and after 23rd July 2024. Taxpayers who have LTCG from assets sold before this date will be subject to a 20% tax rate with indexation benefit. On the other hand, taxpayers who sell their assets after July 23, 2024, will be taxed at a reduced rate of 12.5% without indexation benefits. Keeping this bifurcation in mind, taxpayers must ensure that the right tax rate is applied to their capital gains.

ClearTax Solution:

ClearTax's platform automatically handles the bifurcation of LTCG tax rates. Once you upload your capital gains statement, our system automatically calculates the applicable tax rate based on the sale date, ensuring that the correct tax is applied without manual intervention. This automatic tax rate adjustment reduces the chances of errors, allowing taxpayers to file confidently and accurately.

Conclusion

Even though the extended deadline for ITR filing to September 15, 2025, allows taxpayers more time, many could feel overwhelmed with the new changes in the tax forms. ClearTax's AI-powered platform simplifies these complexities by automatically selecting the correct ITR form, ensuring accurate tax rate application, and minimising errors in the filing process. With ClearTax, taxpayers can be rest assured that their filings are accurate, efficient, and compliant with the latest tax regulations. This allows them to focus on what matters most - planning for the future.

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