The Income Tax Department has introduced several changes to the Income tax return (ITR) forms for assessment year 2026-27 (financial year 2025-26), impacting salaried individuals, traders, and investors alike. The updated forms aim to improve disclosure standards, enhance transparency, and simplify the tax filing process for different types of taxpayers.
The Central Board of Direct Taxes (CBDT) notified the Income-Tax Rules, 2026, on March 20, 2026, as part of the implementation of the Income Tax Act, 2025. According to a gazette notification, “These rules may be called the Income-tax Rules, 2026. They shall come into force on April 1, 2026.”
While the updated framework simplified several provisions under the income tax law, it did not introduce any changes to the existing income tax slab rates under either of the tax regime.
The revised ITR-1, ITR-2, ITR-3 and ITR-4 forms now include additional disclosure requirements related to long-term capital gains (LTCG), buyback losses, Futures & Options (F&O) transactions, foreign assets and high-value financial activities, according to Nishant Shanker, a tax strategy expert and former senior manager of tax at EY.
These updated forms will be used by taxpayers while filing returns for income earned between April 1, 2025 and March 31, 2026. Here are the changes outlined by Shanker:
- One significant change is increased reporting around banking information, including mandatory disclosure of bank balances in certain cases.
- Taxpayers claiming certain deductions now need mandatory linkage with prescribed forms like Form 10BA before filing the return.
- TDS reporting has become more granular, requiring taxpayers to specify the relevant section under which tax was deducted.
- Presumptive taxation reporting continues, but the forms indicate a stronger move toward cross validation with AIS/SFT data and banking disclosures.
Who should file these revised forms?
Here’s a list of different ITR forms and who should file what:
— ITR-1 (Sahaj) should be filed by resident individuals earning up to ₹50 lakh from salary, pension, house property income, interest income and capital gains within prescribed limits.
— ITR-2 applies to individuals and Hindu Undivided Families (HUFs) without business income but having capital gains, foreign assets or multiple income sources.
— ITR-3 is meant for business owners, professionals and traders earning business or professional income outside presumptive taxation schemes.
— ITR-4 (Sugam) should be filed by small businesses, freelancers and professionals who are opting for presumptive taxation under Sections 44AD, 44ADA and 44AE.
