ITR Filing AY 2026-27: Major changes every taxpayer should know

🚨 ITR Filing AY 2026-27: Major Changes in ITR-1, ITR-2 & ITR-4 Every Taxpayer Should Know

The Income Tax Department has officially rolled out the online and Excel utilities for ITR-1, ITR-2, and ITR-4 for the Assessment Year (AY) 2026-27 (which covers the income you earned in the Financial Year 2025-26).

If you are a non-tax professional planning to file your tax return this year, grab a cup of coffee. This is not a typical routine filing season. While the newly enacted Income Tax Act 2025 officially commenced on April 1, 2026, the returns we are filing right now for the income earned last year (FY 2025-26) are still computed under the rules of the old Income Tax Act, 1961.

However, the Central Board of Direct Taxes (CBDT) has quietly introduced major functional upgrades to the ITR forms themselves. Let’s break down exactly what has changed in ITR-1, ITR-2, and ITR-4 so you can file seamlessly and avoid dreaded tax notices.

1. The Big Upgrade: Up to Two House Properties Now Allowed in ITR-1 & ITR-4

Historically, the biggest headache for simple salaried individuals or small shop owners who purchased a second home (or a rental property) was that they were immediately disqualified from using the simple forms. They were forced to upgrade to the heavily technical ITR-2 or ITR-3 forms.

• What changed: Starting this year, you can now report income or interest from up to two house properties directly in ITR-1 (Sahaj) and ITR-4 (Sugam)!
• Why it matters to you: If you have a primary home you live in and a second apartment that you rent out, you no longer have to navigate complex schedules. You can stick to the simplified forms, saving you time and professional fees.

2. Micro-Investors Rejoice: Small Capital Gains Permitted in ITR-1

Previously, if you sold even a single mutual fund unit or equity share that triggered a long-term capital gain (LTCG), ITR-1 was locked out for you. You had to move to ITR-2 to declare it.

• What changed: The revised ITR-1 now allows you to report Long-Term Capital Gains under Section 112A (from listed shares and equity mutual funds) up to ₹1.25 Lakh, provided you have no brought-forward or carry-forward losses to declare.
• Why it matters to you: Casual or small-scale retail investors can enjoy the easy workflow of ITR-1 without fearing form disqualification.

3. Communication Safeguards: Secondary Contact Details Added

Have you ever missed an important notice from the Tax Department because it went to an old email ID or a mobile number you no longer use? The tax department is fixing this structural loophole.

• What changed: All forms (ITR-1, 2, and 4) now include dedicated fields to capture Secondary Mobile Numbers and Secondary Email IDs, alongside a field for a Secondary Address.
• Why it matters to you: It adds a layer of safety. If the department cannot reach you via your primary contact info, they will attempt to loop you in through your backup credentials, preventing ex-parte (unanswered) tax orders.

4. Drastic Document Requirements: Dropdowns & Verification for Deductions

If you plan on claiming popular tax deductions like Section 80C (PPF, ELSS, Life Insurance), 80D (Health Insurance), or HRA exemptions, you need to have your paperwork precisely ready.

• What changed:
  • Dropdown Selection: In the filing portal, you must now select the exact clause and subsection for your deductions from a dropdown list rather than writing a lumpsum amount.
  • Specific Disclosures: In ITR-1 and ITR-2, claiming Section 80C deductions may require you to provide your specific policy or investment account number. For National Pension System (NPS) claims under 80CCD, entering your PRAN (Permanent Retirement Account Number) is explicitly requested.
  • Home Loan Scrutiny: For claiming home loan interest under Section 24(b) in ITR-1, a fresh matrix tracks your loan account number, bank name, date of sanction, and total outstanding balance.

5. Enhanced Disclosures in ITR-2 & ITR-4

• Company Buybacks (ITR-2): If you participated in a corporate share buyback that resulted in a loss, ITR-2 now includes an explicit field to report buyback losses due to recent updates in buyback tax laws.
• Financial Disclosures (ITR-4): For small business owners using the presumptive taxation scheme, ITR-4 now demands an explicit, tighter reporting of year-end closing bank balances and basic digital transaction structures to curb unrecorded cash flow.

📅 Mark Your Calendar: The New Due Dates

A massive structural change has been introduced for small business timelines this season. Non-audit business and professional filers have been given a distinct breathing window:

⚠️ CA Cult Warning Note: Do not rush to file your ITR in the first week of June! Employers, banks, and stockbrokers have until May 31 to upload their TDS returns and Statement of Financial Transactions (SFT). Your AIS (Annual Information Statement) and TIS will continuously update and stabilize mid-June. Filing too early creates data mismatches between your return and the department’s database, resulting in an automatic “Defective Return Notice” under Section 139(9).

Which Form Is Yours This Year? A Quick Cheat-Sheet:

• Choose ITR-1 (Sahaj): If you are a resident whose total income is under ₹50 Lakh, coming from Salary/Pension, up to two house properties, simple other sources (like FD interest), and LTCG under ₹1.25 Lakh.
• Choose ITR-2: If your income exceeds ₹50 Lakh, or you have standard capital gains (crypto, property sales, stock trading), hold foreign assets, or are a registered director in a company.
• Choose ITR-4 (Sugam): If you run a small business or freelancing profession with a turnover under ₹2 Crore (or ₹3 Crore in specific digital cases) and opt for the simplified Presumptive Taxation Scheme.

Stay compliant, verify your pre-filled AIS data carefully, and keep following CA Cult for immediate tax alerts!

Also Read: “CBDT Notifies New Forms PAN CR-01 & PAN CR-02 for PAN Correction from 1 April 2026”

Also Read: FAQs and Guidance notes on Forms under Income-tax Rules, 2026

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