KEY CHANGES IN INCOME TAX RETURN FORMS | Assessment Year 2026-27 vs Assessment Year 2025-26 | TR-1 | ITR-2 | ITR-3 | ITR-4
A. MACRO-LEVEL CHANGES
Applicable Across All / Most ITR Forms
1. Revised Tax Slabs & Enhanced Section 87A Rebate
The most significant macro change introduced through Union
Budget 2025 is the complete restructuring of income tax slabs under the New Tax
Regime, along with a substantial enhancement of the Section 87A rebate.
|
Change / Feature |
Details |
|
Revised Tax Slab — New Regime |
Progressive rates: Nil up to ₹4 lakh; 5% — ₹4L to ₹8L; 10%
— ₹8L to ₹12L; 15% — ₹12L to ₹16L; 20% — ₹16L to ₹20L; 25% — ₹20L to ₹24L;
30% — above ₹24L |
|
Section 87A Rebate Enhanced |
Rebate limit raised from ₹25,000 to ₹60,000 under New Tax
Regime, resulting in nil tax for eligible taxpayers within the prescribed
threshold |
|
Practical Impact |
Many middle-income salaried assessees with total income up
to approximately ₹12 lakh will have zero tax liability under the New Regime |
2. Section 234I — New Fee for Revised Return
A new fee under Section 234I has been introduced for revised
returns filed between 1 January and 31 March of the relevant assessment year.
The deadline for filing revised returns has been extended from 31 December to
31 March; however, a fee is levied for late revised returns.
|
Change / Feature |
Details |
|
Fee — Total Income ≤ ₹5 Lakh |
₹1,000 where revised return filed between 1 January and 31
March |
|
Fee — Total Income > ₹5 Lakh |
₹5,000 where revised return filed between 1 January and 31
March |
|
Forms Affected |
ITR-1, ITR-2, ITR-3, ITR-4 |
|
New Disclosure |
A separate field for Section 234I fee payment has been
introduced in all ITR forms |
3. Section 80G — Enhanced Transaction Details
In Schedule 80G Donations, taxpayers are now required to
furnish additional payment verification details along with the donation amount.
|
Change / Feature |
Details |
|
New Mandatory Field — 1 |
IFSC Code of the bank account used for donation |
|
New Mandatory Field — 2 |
Transaction Reference Number — UPI / NEFT / RTGS / Cheque
number, as applicable |
|
Forms Affected |
ITR-1, ITR-2, ITR-3, ITR-4 |
|
Purpose |
Enables Department’s systems to cross-verify donation
deduction claims against banking transaction data — expect increased scrutiny
of charitable donation claims |
4. Section 80GGC — Political Donation Disclosures
Strengthened
Section 80GGC — Contributions to Political Parties /
Electoral Trusts now mandates additional identification details of the
recipient political party.
|
Change / Feature |
Details |
|
Earlier Required — AY 2025-26 |
Date, Amount, Mode of payment, Transaction Reference
Number, IFSC Code |
|
Additionally Required — AY 2026-27 |
Name of the Political Party or Electoral Trust + PAN of
the Political Party |
|
Forms Affected |
ITR-1, ITR-2, ITR-3, ITR-4 |
|
Impact |
Increased verifiability of political donation claims;
Department can now cross-match with political party returns |
5. Section 10 Exempt Allowances — “Others” Category
Removed
In earlier versions of ITR-1 and ITR-2, taxpayers could
claim exemption for allowances under Section 10 by selecting an “Others”
category and providing a description. From AY 2026-27, this option has been
removed entirely. Taxpayers can now claim exemption only for allowances
specifically listed in the return form.
|
Change / Feature |
Details |
|
Change |
“Others” option in Section 10 exempt allowances removed
from ITR-1 and ITR-2 |
|
Impact |
Standardised reporting; reduces ambiguous or unsupported
allowance claims |
|
Action for Practitioners |
Verify that all allowances claimed by salaried clients are
explicitly covered by a named category in the form before filing |
6. Form 10-IEA — Expanded Disclosure for Tax Regime
Choice History
The disclosure requirements relating to Form 10-IEA for
opting out of the New Tax Regime have been considerably expanded for taxpayers
with business/profession income.
|
Change / Feature |
Details |
|
Earlier Scope — AY 2025-26 |
Details of Form 10-IEA filed only for the previous and
current assessment year |
|
Revised Scope — AY 2026-27 |
Details of Form 10-IEA filed in any assessment year for
opting out of the New Tax Regime |
|
New Field Added |
A separate field for taxpayers who had earlier opted out
but subsequently re-entered the New Tax Regime |
|
Forms Affected |
ITR-1, ITR-2, ITR-4 |
7. Other Cross-Form Changes
|
Change / Feature |
Details |
|
Secondary Address & Contact Details |
Taxpayers must now provide a secondary mobile number,
secondary email ID, and secondary address to ensure uninterrupted
communication with the Department |
|
Foreign Retirement Account Reporting Removed |
Fields for retirement benefit accounts maintained in
notified and non-notified foreign countries removed from ITR-1 and ITR-4 —
reduces compliance burden |
|
Representative Assessee — Simplified Details |
Now only Name, Email ID, and Contact Number required;
earlier PAN and Capacity were also mandatory — applicable in ITR-1, ITR-2,
ITR-3, ITR-4 |
B. ITR-1 SAHAJ — Specific Changes
ITR-1 is filed by resident individuals with salary/pension
income, income from one house property, and other sources excluding lottery and
racehorses with total income up to ₹50 lakh. The key changes in ITR-1 for AY
2026-27 are:
|
S.No |
Change |
Nature / Impact |
Category |
|
1 |
Up to 2 house properties can now be reported |
Earlier, ITR-1 allowed only 1 house property. Now
taxpayers with 2 house properties can file ITR-1 instead of ITR-2 |
Major Relaxation |
|
2 |
Section 234I fee disclosure field added |
New field for fee payable on revised returns filed between
1 Jan and 31 Mar |
New Requirement |
|
3 |
80G — IFSC Code + Transaction Reference mandatory |
Stricter donation verification; all modes of payment
covered |
Enhanced Disclosure |
|
4 |
80GGC — Political party Name + PAN mandatory |
Additional identification details of political recipient
now mandatory |
Enhanced Disclosure |
|
5 |
Tenant details — PAN/Aadhaar or TAN |
Where TDS on rent deducted u/s 194-IB: Tenant PAN/Aadhaar.
Where TDS u/s 194-I: Tenant TAN |
New Disclosure |
|
6 |
Unrealised rent — separate field introduced |
Income from house property now has a dedicated field for
unrealised rent |
New Disclosure |
|
7 |
“Others” category for Sec 10 allowances removed |
Only specifically listed allowances can be claimed |
Restriction |
|
8 |
Foreign retirement account fields removed |
Reporting of foreign retirement benefit accounts no longer
required |
Simplification |
|
9 |
Form 10-IEA expanded history |
Disclosure of Form 10-IEA filed in any year + re-entry
field now required |
Enhanced Compliance |
|
10 |
Representative assessee details simplified |
Now only Name, Email, Mobile required |
Simplification |
|
11 |
Secondary address and contact introduced |
Additional contact details mandatory |
New Field |
Biggest practical change in ITR-1: Taxpayers with 2
house properties can now avoid filing ITR-2. This will significantly reduce
compliance cost for a large segment of salaried taxpayers.
C. ITR-2 — Specific Changes
ITR-2 is filed by individuals and HUFs not having income
from business or profession. It covers salary, multiple house properties,
capital gains, foreign income, etc. Key changes for AY 2026-27:
|
S.No |
Change |
Nature / Impact |
Category |
|
1 |
Capital gain bifurcation pre/post 23 July 2024 removed |
Last year required separate columns for gains before and
after 23.07.2024. This transitional split has been removed |
Major Simplification |
|
2 |
Interest at 9% u/s 194LC — separate reporting field |
New Schedule OS field for concessional 9% tax rate on
interest from long-term / rupee-denominated bonds issued on or after 1 July
2023 listed on IFSC stock exchange |
New Field |
|
3 |
Schedule OS — NBFC/HFC/Company interest under “Other” |
Interest income from companies, NBFCs, and HFCs now
classified under “Other” for clarity |
Clarification |
|
4 |
Section 234I fee disclosure |
New field for fee payable on late revised return |
New Requirement |
|
5 |
80G — IFSC + Transaction Reference mandatory |
Stricter donation verification |
Enhanced Disclosure |
|
6 |
80GGC — Political party Name + PAN mandatory |
Additional details of political recipient |
Enhanced Disclosure |
|
7 |
Unrealised rent — separate field |
Dedicated field in house property schedule |
New Disclosure |
|
8 |
Tenant PAN / Aadhaar / TAN |
Tenant identification details linked to applicable TDS
section |
New Disclosure |
|
9 |
“Others” in exempt allowances removed |
Only listed allowances can be claimed under Section 10 |
Restriction |
|
10 |
Form 10-IEA expanded history |
Full history of regime choice and re-entry |
Enhanced Compliance |
|
11 |
Representative assessee simplified |
Only Name, Email, Mobile required |
Simplification |
|
12 |
Secondary address and contact |
Additional contact details mandatory |
New Field |
The removal of the pre/post 23 July 2024 capital gain
bifurcation in ITR-2 is a significant practical simplification. Last year’s
transitional split was among the most confusing elements of return preparation.
D. ITR-3 — Business / Profession Income Specific Changes
ITR-3 is filed by individuals and HUFs having income from
business or profession other than presumptive income under Sections 44AD /
44ADA / 44AE. Key changes for AY 2026-27:
|
S.No |
Change |
Nature / Impact |
Category |
|
1 |
F&O Disclosure — Turnover and Income reported
separately |
A new mandatory disclosure requires explicit reporting of
Turnover from Futures & Options and Income from Futures & Options as
distinct items |
New Requirement — Significant |
|
2 |
MSME interest disallowance u/s 43B(h) — new disclosure |
New column introduced in ITR-3 to quantify and explicitly
report this disallowance |
New Requirement |
|
3 |
Schedule IF — Interest and Remuneration from partnership
firm |
New Schedule IF introduced for reporting interest and
remuneration received or due from a partnership firm by a partner filing
ITR-3 |
New Disclosure |
|
4 |
Due date updated: 31 August non-audit cases |
Form text now reflects 31 August instead of 31 July as due
date for non-audit business returns |
Important Change |
|
5 |
Capital gain bifurcation removed |
References to old capital gain tax rates removed; only
amended provisions apply |
Simplification |
|
6 |
Interest at 9% u/s 194LC — new column |
Concessional rate column for IFSC bond interest in
Schedule OS |
New Field |
|
7 |
Schedule OS — NBFC/HFC/Company interest |
Classified under “Other” in Schedule OS for clarity |
Clarification |
|
8 |
Presumptive income of non-residents — new reporting field |
New field for non-resident taxpayers to report presumptive
income in ITR-3 |
New Field |
|
9 |
Auditor details simplified |
Now only Date, Acknowledgement Number, Auditor Name, and
PAN required |
Simplification |
|
10 |
Section 234I fee disclosure |
New fee field for late revised return |
New Requirement |
|
11 |
80G and 80GGC enhanced disclosures |
IFSC, Transaction Reference, Political party Name + PAN |
Enhanced Disclosure |
|
12 |
Secondary address and representative assessee simplified |
Additional contact field + simplified representative
details |
Simplification / New Field |
Important Note: F&O disclosure in ITR-3 signals
that the Department is building a dedicated F&O compliance monitoring
module linked to exchange-reported data. Practitioners with F&O clients
must ensure turnover computation is robust and separately stated.
E. ITR-4 SUGAM — Presumptive Income Specific Changes
ITR-4 is filed by individuals, HUFs, and firms other than
LLP who have opted for presumptive taxation under Sections 44AD, 44ADA, or
44AE. Key changes for AY 2026-27:
|
S.No |
Change |
Nature / Impact |
Category |
|
1 |
Up to 2 house properties can now be reported |
Parity with ITR-1; presumptive taxpayers with 2 house
properties need not migrate to ITR-2 |
Major Relaxation |
|
2 |
Financial Particulars — Closing balance of bank account
mandatory |
Closing balance of all bank accounts is now mandatory in
ITR-4 |
New Mandatory Field |
|
3 |
Financial Particulars — Amount of Investments made |
New field for disclosing total investments made during the
year. Currently optional |
New Field Optional |
|
4 |
Section 234I fee disclosure |
New fee field for late revised return |
New Requirement |
|
5 |
80G — IFSC + Transaction Reference mandatory |
Donation verification strengthened |
Enhanced Disclosure |
|
6 |
80GGC — Political party Name + PAN mandatory |
Additional details of political recipient |
Enhanced Disclosure |
|
7 |
Foreign retirement account fields removed |
No longer required to report foreign retirement accounts |
Simplification |
|
8 |
Representative assessee simplified |
Only Name, Email, Mobile required |
Simplification |
|
9 |
Secondary address and contact introduced |
Additional contact mandatory |
New Field |
|
10 |
Form 10-IEA expanded history |
Full history of regime choice and re-entry |
Enhanced Compliance |
Important Note: The mandatory bank closing balance
requirement in ITR-4 indicates the Department’s intent to extend financial
transparency norms progressively to presumptive taxpayers. Ensure clients have
bank statements handy before filing.
F. Analysis & Additional Observations
F.1 Dual-Track Approach — Relief and Tightening
Simultaneously
The AY 2026-27 ITR forms represent a clear twin-track
approach by the Department:
|
Change / Feature |
Details |
|
Relief Track |
Revised tax slabs + enhanced 87A rebate; 2-house-property
eligibility for ITR-1 and ITR-4; removal of pre/post 23 July 2024 capital
gain bifurcation; simplified representative assessee details; foreign
retirement fields removed |
|
Tightening Track |
IFSC + transaction reference for 80G; political party PAN
for 80GGC; bank closing balance mandatory in ITR-4; F&O explicit
disclosure in ITR-3; MSME 43B(h) disallowance column; tenant PAN/Aadhaar/TAN
details |
F.2 Significance of the 2-House Property Change in ITR-1
and ITR-4
A large segment of salaried middle-class taxpayers own a
self-occupied house and one let-out property. Earlier, such taxpayers were
compelled to file ITR-2 — a more complex form. With the AY 2026-27 change,
these taxpayers can now file the simpler ITR-1 or ITR-4 as applicable,
resulting in:
- Reduced
compliance time and cost
- Simpler
e-filing process
- Eligibility
for filing through simpler offline modes
F.3 80G and 80GGC — Data-Matching Strategy
The IFSC Code and transaction reference number requirements
under Section 80G, and the political party Name + PAN requirements under
Section 80GGC, are clear data-matching exercises.
The Department’s systems can now cross-verify:
- Charitable
donation claims against banking transaction records
- Political
donation claims against returns filed by political parties
Practitioners should advise clients to retain bank-validated
receipts for all donations claimed under 80G and ensure political party PAN
details are obtained before filing.
F.4 F&O Disclosure in ITR-3 — Compliance Signal
SEBI data shows lakhs of retail participants in Futures
& Options markets across India. The requirement for explicit disclosure of
F&O turnover and income rather than it being embedded in profit and loss
signals that the Department is building a dedicated F&O compliance
monitoring module, likely linked to exchange-reported data from NSE and BSE.
Practitioners with F&O clients must:
- Ensure
robust computation of F&O turnover
- Separately
compute and report F&O income
- Assess
audit applicability based on turnover threshold
F.5 Section 43B(h) MSME Disallowance — Verifiable
Reporting
Section 43B(h), which disallows deduction for payments to
MSMEs not made within the statutory due dates under the MSMED Act, was
introduced from FY 2023-24. The explicit column in ITR-3 now makes this a
Department-verifiable figure.
For businesses with MSME suppliers, this requires careful
computation based on MSME registration certificates of suppliers and invoice
payment dates.
F.6 Section 234I — Caution on Extended Revised Return
Window
The extension of the revised return deadline to 31 March is
taxpayer-friendly in principle. However, practitioners must clearly communicate
the following:
- Section
234I fee is levied even where there is no additional tax liability in the
revised return
- Fee
of ₹1,000 applies where total income does not exceed ₹5 lakh
- Fee
of ₹5,000 applies where total income exceeds ₹5 lakh
- Original
return filing before 31 December avoids Section 234I fee entirely
F.7 Capital Gain Simplification — Welcome Relief
The removal of the pre/post 23 July 2024 capital gain
bifurcation in ITR-2 and ITR-3 is a welcome practical simplification.
Last year’s transitional split required taxpayers to compute
capital gains separately for transactions before and after 23 July 2024 under
different tax rates. The AY 2026-27 forms apply only the amended capital gains
rates uniformly, significantly reducing computation effort.
G. Applicability Summary — At a Glance
|
Change |
ITR-1 |
ITR-2 |
ITR-3 |
ITR-4 |
|
2 House Properties Allowed |
✔ |
Already allowed |
Already allowed |
✔ |
|
Section 234I Fee Disclosure |
✔ |
✔ |
✔ |
✔ |
|
80G — IFSC + Txn. Reference |
✔ |
✔ |
✔ |
✔ |
|
80GGC — Party Name + PAN |
✔ |
✔ |
✔ |
✔ |
|
Capital Gain Bifurcation Removed |
— |
✔ |
✔ |
— |
|
F&O Separate Disclosure |
— |
— |
✔ |
— |
|
Sec 43B(h) MSME Disallowance |
— |
— |
✔ |
— |
|
Bank Closing Balance Mandatory |
— |
— |
— |
✔ |
|
Investment Disclosure Optional |
— |
— |
— |
✔ |
|
Foreign Retirement Fields Removed |
✔ |
— |
— |
✔ |
|
Sec 194LC @ 9% Interest Column |
— |
✔ |
✔ |
— |
|
Tenant PAN / Aadhaar / TAN |
✔ |
✔ |
— |
✔ |
|
Unrealised Rent — Separate Field |
✔ |
✔ |
— |
✔ |
|
Due Date → 31 August non-audit |
— |
— |
✔ |
— |
|
“Others” in Sec 10 Allowances Removed |
✔ |
✔ |
— |
— |
|
Secondary Address & Contact |
✔ |
✔ |
✔ |
✔ |
|
Representative Assessee Simplified |
✔ |
✔ |
✔ |
✔ |
|
Form 10-IEA Expanded History |
✔ |
✔ |
— |
✔ |
Credit Reference – K.M.Thirumalai Bathran
Disclaimer
This document is a reference compilation prepared for
internal use and professional guidance. While care has been taken to ensure
accuracy, readers are advised to refer to the official ITR forms notified by
the Central Board of Direct Taxes, the Income-tax Act, 1961, and applicable
circulars / notifications before filing returns. This document does not
constitute legal or tax advice.
Prepared By✍️ Rajendra Dangwal Sirji
Tax Lawyer | Business Consultant | Accounts Expert | Legal Awareness Writer
Contact SMart Solutions & Services – Tally Certified Partner
๐ 9522610100 | 9589129914
๐ง smartouch.erp@gmail.com
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