New ITR Forms for AY 2026–27: Key Changes, Updates & What Taxpayers Must Know
The Income Tax Department has introduced significant changes in the ITR forms for Assessment Year 2026–27 (FY 2025–26). These updates aim to improve compliance, enhance transparency, and align reporting with recent amendments under the Finance Act.
Key Highlights of ITR Changes for AY 2026–27
• Expansion of eligibility for ITR-1 and ITR-4
• Revised capital gains reporting structure (Replaced Old rates with new rates).
• Enhanced disclosure for house property and tenant details
• New reporting for F&O transactions.
• Simplified representative assessee details
• Extended timeline for filing revised returns
Changes in ITR-1 (Sahaj)
• The ITR-1 form now allows taxpayers to provide both primary and secondary mobile numbers, email IDs, and addresses, improving communication flexibility compared to earlier forms.
• Eligibility has been expanded to include individuals having income from up to two house properties, which was earlier restricted to one. Additionally, house property reporting has been enhanced with disclosure of tenant details and introduction of a new field for unrealized rent i.e. the amount of rent which cannot be realized.
• The process of filing through a representative assessee has been simplified. Only basic details such as name, mobile number, and email ID are now required.
• Taxpayers seeking to claim relief under Section 89A in respect of double taxation on foreign income will no longer be eligible to do so while filing their return in ITR-1. Such taxpayers are now required to furnish their return of income using ITR-2 or ITR-3, as applicable, in order to avail the benefit of this relief.
Changes in ITR-2
• The capital gains reporting framework has been revised to align with updated tax provisions, requiring more granular disclosures and incorporating the revised tax rates, including 20% (with indexation) for long-term gains on property, 12.5% (without indexation) for specified cases, and 15% for certain short-term gains under section 111A, while other short-term gains continue to be taxed at applicable slab rates.
• Interest income reporting has been expanded, with separate disclosure required for income earned from companies, NBFCs, and housing finance companies.
• For deductions under section 80GGC (Political Party Donation), taxpayers must now provide additional details specifically IFSC code and transaction reference number for UPI transfer or Cheque number/ IMPS/ NEFT/ RTGS.
• Representative assessee reporting has also been simplified, similar to ITR-1.
Changes in ITR-3 (Business & Profession)
• Taxpayers are now required to separately disclose F&O turnover, intraday turnover, F&O income and intraday income bringing more clarity to derivative transactions.
• In the case of an assessee who is a partner in a partnership firm, Schedule IF now mandates separate disclosure of interest and remuneration received or receivable from the firm, ensuring greater transparency and accurate reporting.
Changes in ITR-4 (Sugam)
ITR-4 has been aligned with ITR-1 in terms of eligibility and reporting simplification.
• Taxpayers with income from up to two house properties are now eligible to file this form. House property reporting has been enhanced with requirements to disclose tenant details and unrealized rent.
• The process for representative assessee filing has been simplified.
• Taxpayers intending to claim relief under Section 89A in respect of double taxation on foreign income will no longer be eligible to do so through ITR-1. Such relief can now be claimed only by furnishing the return of income in ITR-2 or ITR-3, as applicable.
• Financial disclosures have also been expanded. Taxpayers must now disclose investments made during the year and closing bank balances, enhancing financial transparency.
Common Changes across All ITR Forms
• Across all ITR forms, enhanced disclosures have been introduced for opting in or out of the new tax regime, particularly for taxpayers having business income.
• Revised returns can now be filed up to 31st March of the subsequent year, subject to payment of a late fee. Accordingly, all forms include fields to capture such details.
Conclusion
The changes in ITR forms for AY 2026–27 reflect a clear shift towards greater transparency, structured reporting, and system-driven compliance. While the forms have become more detailed, they also simplify certain aspects such as eligibility and representative filing.
FAQs
1. Will taxpayers be required to file two returns (for AY 2026 -27 as well as TY 2026 -27) during the transition year (FY 2026 -27)?
No, the obligation to file the return for the Tax Year 2026 -27 will arise after the end of the Tax Year and it is similar to the framework existing in Income Tax Act, 1961.
2. Under which Act will the ITR for income earned during FY 2025 -26 be filed?
The ITR for income earned during FY 2025 -26 will be filed for Assessment Year 2026 -27 under the provisions of the Income Tax Act, 1961. Even though the filing will typically occur after 1st April, 2026 (i.e., after the new Act has come into force), the return relates to a tax year beginning before 1st April, 2026 and is therefore governed entirely by the old Act.
Disclaimer: This material and the information contained herein is intended for clients and other Chartered Accountants to provide updates and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business.
