ITR filing for AY 2026-27: Major changes taxpayers should know

July 4, 2026 Finance Talk Valli Sarvani

Filing income tax returns has become more streamlined with the latest changes introduced by the Income Tax Department.

The updated ITR forms for the Assessment Year 2026-27 (Financial Year 2025-26) include several revisions aimed at simplifying the filing process while improving disclosures.

One of the biggest changes is the expansion of eligibility for ITR-1 and ITR-4. Taxpayers with income from up to two house properties can now use these forms. Earlier, only individuals with income from one house property were eligible.

Additionally, ITR-1 and ITR-4 now include a separate field for unrealised rent. This allows taxpayers to report rent that could not be recovered from tenants, a provision unavailable in previous forms.

The department has also removed fields related to the earlier capital gains tax rates of 15% for short-term capital gains (STCG) and 10% for long-term capital gains (LTCG) on listed equity securities. These rates no longer apply to gains earned during FY 2025-26.

To reduce confusion around the new tax regime, the revised forms provide clearer disclosure requirements for taxpayers opting in or out through Form 10-IEA. This is expected to make regime selection easier, especially for those with business income.

Another notable update is the addition of a field indicating whether the return is being filed by a representative assessee. This change has been introduced across all ITR forms.

Meanwhile, the provision to claim Section 89A relief has been removed from ITR-1 and ITR-4. Taxpayers seeking relief for foreign retirement accounts must now use ITR-2 or ITR-3.

The department has also strengthened disclosure requirements for deductions. Under Section 80G, taxpayers must now provide the transaction reference number and the bank’s IFSC code for donation claims.

Similarly, claims under Section 80GGC require the name and PAN of the political party receiving the donation.

Following the Budget 2026 amendments, revised returns can now be filed until March 31 of the following tax year.

However, returns submitted after December 31 will attract a late fee under Section 234-I, and the updated forms include a dedicated field for this information.

Finally, taxpayers filing ITR-4 must disclose details of their investments and bank balances. These additions are intended to improve transparency and reporting accuracy.

With these revisions, taxpayers should carefully review the updated forms and assess which tax regime best suits their financial situation before filing their returns.

Image from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on February 21, 2017