10 Changes in ITR Filing in AY 2026-27 You Need to Know Before You File Your ITR

A record 7.28 crore taxpayers filed their income tax returns by July 31, 2024, a jump from 6.77 crore the year before (PIB/CBDT, 2024). That number will likely climb again this year, and for good reason: the government has made some meaningful changes to the ITR filing process for AY 2026-27. Some of these changes make things easier. Others add new compliance requirements. A few could cost you money if you miss them. This article walks you through all 10 changes, in plain language, so you can file confidently before the deadline. For more guidance on taxes and savings, browse the personal finance guides on Tradeviser.

Key Takeaways

  • ITR-1 now covers up to two house properties, so many ITR-2 filers can switch to the simpler form.
  • The ITR-U window is now 4 years, letting you correct returns all the way back to AY 2022-23.
  • ITR-3 and ITR-4 filers get a full extra month: their deadline is August 31, not July 31.
  • Zero tax applies up to Rs.12.75 lakh for salaried employees under the new tax regime.
  • AY 2026-27 is governed by the old Income Tax Act 1961, not the new Income Tax Act 2025.

1. Can You Now File ITR-1 If You Own Two Houses?

Yes. CBDT notified on March 30, 2026, that ITR-1 (Sahaj) now covers taxpayers with up to two house properties, eliminating the need to switch to the more complex ITR-2 just because you own a second home (BusinessToday, 2026).

In practice, we’ve seen many taxpayers with rental income unnecessarily filing ITR-2 for years. This change eliminates that complexity entirely.

Until last year, owning even one let-out or inherited property forced you into ITR-2, with its longer schedules and more fields to fill. That’s changed. If your total income is up to Rs.50 lakh and you have income from salary, one or two house properties, and other sources, ITR-1 is now valid for you.

The revised form also adds a dedicated field for unrealised rent in both ITR-1 and ITR-4. If a tenant owes you rent they haven’t paid, you can now report it properly without jumping through hoops.

Practical tip: If you were filing ITR-2 only because of a second house property (with no capital gains or foreign income), switch to ITR-1 this year. It’s faster and less error-prone.

2. ITR-3 and ITR-4 Filers Get an Extra Month: August 31 Is the New Deadline

This is a permanent legislative change, not a one-time extension. It recognises that small business owners and freelancers need more time to gather books, invoices, and TDS certificates.

Know your deadline based on your ITR form:

  • ITR-1, ITR-2: July 31, 2026 (salaried employees, investors)
  • ITR-3, ITR-4: August 31, 2026 (business income, presumptive taxation)
  • Audit cases (ITR-3, ITR-5, ITR-6): October 31, 2026

Don’t get complacent: Even if your deadline is August 31, filing early lets you catch errors, get your refund sooner, and avoid last-minute portal crashes.

3. Missed a Return Years Ago? The ITR-U Window Is Now 4 Years

Section 139(8A) has been amended to extend the Updated Return (ITR-U) window from 24 months to 48 months from the end of the relevant assessment year. You can now go back and correct or file returns all the way to AY 2022-23.

Think of ITR-U as a financial do-over. If you under-reported income, forgot to include interest from a savings account, or simply never filed for a particular year, this is your chance to come clean without a tax notice.

The penalty, however, increases the longer you wait. Here’s how it works:

  • Within 12 months of the relevant assessment year end: 25% additional tax on the tax and interest due
  • Within 24 months: 50% additional tax
  • Within 36 months: 60% additional tax
  • Within 48 months: 70% additional tax

Act early: Filing ITR-U for AY 2022-23 right now attracts the highest tier of penalty (70%). But that’s still far cheaper than a tax department scrutiny notice, which can include interest, penalties, and prosecution in serious cases.

4.Are Capital Gains Simpler to Report in AY 2026-27? Old Rate Fields Are Gone

The ITR forms for AY 2026-27 have removed the separate rate fields that applied to capital gains arising before July 23, 2024. You now report under unified current rates: STCG at 20% (Section 111A) and LTCG at 12.5% with an exemption of up to Rs.1.25 lakh (Section 112A)

Here’s the most useful part: if your long-term capital gains from listed equity mutual funds (SIPs, for example) or stocks are below Rs.1.25 lakh, you don’t need to file ITR-2 anymore. You can now report those gains in ITR-1 or ITR-4.

Worked example: You earned Rs.80,000 in LTCG from SIP redemptions. Your salary is Rs.8 lakh. Under the new rules, you can file ITR-1. No need for ITR-2. Your LTCG is fully exempt under the Rs.1.25 lakh threshold.

This is a meaningful simplification for the millions of retail equity investors who otherwise dreaded the jump to ITR-2 just for modest mutual fund gains.

5. Must Presumptive Tax Filers Now Disclose Investments and Bank Balance?

If you file ITR-4 under the presumptive taxation scheme (Section 44AD or 44ADA), you must now disclose your total investments as on March 31, 2026, and your bank balance as on March 31, 2026 (Field E21 in the revised form) (Business Standard, 2026).

This is a new compliance layer designed to give the tax department a more complete picture of a taxpayer’s financial position. It’s similar to what ITR-3 filers have long been required to disclose, now extended to the presumptive scheme. In practice, this means presumptive filers can no longer treat their portfolio as invisible to the tax authorities.

What counts as “investments” here? Think fixed deposits, shares, mutual fund holdings, NSC, PPF, and similar assets. More specifically, any instrument that generates passive income or holds capital. Gather your March 31 statements before you sit down to file — a five-minute task that can prevent a scrutiny notice.

Heads up: Leaving Field E21 blank or entering incorrect values may flag your return for scrutiny. Pull your bank statement and investment portfolio as on March 31, 2026, well before filing.

6. Do Section 80G Donations Now Need Transaction References and IFSC Codes?

Claiming a deduction under Section 80G? The ITR forms now require you to provide the UPI reference number, cheque number, IMPS/NEFT/RTGS transaction ID, and the bank IFSC code for every donation. Cash donations above Rs.2,000 remain ineligible for deduction (AngelOne, 2026).

This change is aimed at curbing fake donation claims, which have been a persistent area of abuse. As a result, the new fields make it straightforward for the tax department to cross-verify your claim against the payment trail in real time.

For political party donations under Section 80GGC, you’ll also need to enter the party’s name and PAN. That said, most registered parties have their PAN published on the Election Commission’s website, so this is a quick lookup. No PAN details, no deduction.

Before you file: Dig out your donation receipts. Most registered NGOs and temples send 80G certificates by email. Cross-check the certificate number, date, and PAN against what you enter in the form. The transaction reference is usually in your UPI app history or bank statement.

7. Can You File a Revised Return After December 31? Late Fees Apply From January 1

The Finance Act 2026 has extended the deadline for filing a revised return from December 31 to March 31 of the following year. However, revised returns filed after December 31 attract a late fee of Rs.5,000 (or Rs.1,000 if your total income is up to Rs.5 lakh). A new field for this fee under Section 234I has been added to all ITR forms (ClearTax, 2026).

What does this mean in practice? You now have a longer safety net if you discover an error after filing. Made a mistake in July? You can correct it anytime up to March 31, 2027. But doing so after December 31, 2026, will cost you a late fee.

The sweet spot: file your original return on time in July or August, review it carefully, and file any revision before December 31 to avoid the fee entirely.

Timeline summary:
Original filing: July 31 or August 31, 2026
Revision (no fee): up to December 31, 2026
Revision (with fee): January 1 to March 31, 2027

8. Zero Tax Up to Rs.12.75 Lakh for Salaried Employees Under the New Regime

The New Tax Regime (Section 115BAC) remains the default for AY 2026-27. The Section 87A rebate has been enhanced to Rs.60,000, making income up to Rs.12 lakh completely tax-free. Salaried employees also get a Rs.75,000 standard deduction, pushing zero-tax income to Rs.12.75 lakh (ClearTax, 2026).

72% of taxpayers already opted for the New Tax Regime in AY 2024-25 (PIB/CBDT, 2024). That number will likely rise further given the improved rebate.

Here’s a quick comparison of the two regimes for AY 2026-27:

  • New Regime: Tax-free up to Rs.12 lakh (Rs.12.75 lakh for salaried). No major deductions available (no 80C, 80D, HRA, etc.). Standard deduction of Rs.75,000.
  • Old Regime: Section 87A rebate stays at Rs.12,500 for income up to Rs.5 lakh. Deductions under 80C, 80D, HRA, home loan interest, etc., remain available.

Which regime suits you? If your deductions under 80C, 80D, and HRA exceed roughly Rs.3.5-4 lakh, the old regime may still save you more tax. Run the numbers before you choose, because switching after filing is not permitted for most taxpayers. For a detailed side-by-side comparison, see our income tax resources on Tradeviser.

9. What Are the New Universal Fields Added to All ITR Forms This Year?

All ITR forms (ITR-1 through ITR-7) now include three new universal fields: whether the return is filed by a representative assessee, a secondary address for the taxpayer, and separate primary and secondary mobile number and email fields.

The “representative assessee” field is particularly relevant for returns filed by parents on behalf of minor children, legal heirs filing for a deceased person, or trustees filing on behalf of a trust beneficiary. This means the e-filing portal will now formally capture this relationship, closing a long-standing documentation gap.

The secondary address and contact fields help the tax department reach you if your primary contact fails. However, they’re equally useful on your end: if you’ve moved, changed your number, or updated your email since your last filing, this is the right moment to refresh all contact details in one place.

Quick action: Log in to the e-filing portal before you file and verify that your registered email and mobile number are current. An outdated contact means you’ll miss OTPs and important notices.

10. Does the New Income Tax Act 2025 Apply to AY 2026-27 Returns?

The new Income Tax Act 2025 came into force on April 1, 2026, but it does not apply to AY 2026-27 returns. All returns for AY 2026-27 (i.e., income earned in FY 2025-26) are still governed by the old Income Tax Act 1961. The e-filing portal now shows two separate tabs: one for the old Act and one for the new Act

This is the change that’s causing the most confusion among taxpayers and even some tax professionals. The portal’s dual-tab interface looks unfamiliar. Many people are clicking the wrong tab and starting their filing under the new Act by mistake. When we reviewed the new e-filing portal in April 2026, the two-tab interface caused genuine confusion — selecting the wrong tab silently applies wrong form rules.

The rule is simple: if you’re filing for the financial year that just ended (April 2025 to March 2026), select AY 2026-27 / Income Tax Act 1961. The new Act 2025 tab is only relevant for income earned from April 1, 2026, onward, and that return will only be filed next year.

Critical step: The moment you log in to the e-filing portal, check which tab is selected. Look for “AY 2026-27” and confirm it says “Income Tax Act 1961” beneath it. If it says “Income Tax Act 2025,” switch tabs before you do anything else.

AY 2026-27 ITR Filing: Quick Reference Table

Here’s a consolidated view of all 10 changes so you can scan what applies to you.

# Change Who It Affects What’s New Consequence If Ignored
1 ITR-1 expanded to 2 houses Taxpayers with 2 house properties Can file simpler ITR-1 instead of ITR-2 Unnecessary complexity; no penalty, but extra effort
2 ITR-3/4 deadline: August 31 Business owners, freelancers Full 31 extra days to file No penalty if filed by Aug 31; Rs.5,000 late fee after
3 ITR-U extended to 4 years Anyone with unfiled/incorrect past returns Go back to AY 2022-23; penalty tiers 25-70% Tax notice, interest, and prosecution risk
4 Unified capital gains rate fields Equity investors, mutual fund holders LTCG up to Rs.1.25 lakh reportable in ITR-1/4 Filing wrong form; may trigger defective return notice
5 ITR-4: investment and bank balance disclosure Presumptive scheme filers New Field E21 mandatory Incomplete return flagged for scrutiny
6 Section 80G: transaction reference required Taxpayers claiming donation deductions UPI/NEFT reference + IFSC mandatory Deduction disallowed; demand notice
7 Revised return until March 31 (late fee post Dec 31) All taxpayers who need to correct returns Extended window with Rs.5,000 fee after December 31 Rs.5,000 late fee (Rs.1,000 for income up to Rs.5 lakh)
8 Zero tax up to Rs.12.75 lakh (salaried, new regime) Salaried employees under new regime 87A rebate up to Rs.60,000; zero tax to Rs.12 lakh Overpaying tax if old regime assumed by default
9 New contact and assessee fields All taxpayers; especially representative filers Secondary address, extra mobile/email fields added Missed notices if contact info is outdated
10 AY 2026-27 uses old Act 1961 (not Act 2025) Every taxpayer Portal has two tabs; select AY 2026-27 / Act 1961 Filing under wrong Act: defective or rejected return

Which of These 10 Changes Has the Biggest Impact on Your Tax Bill?

For most salaried taxpayers earning under Rs.12.75 lakh, Change 8 (the enhanced Rs.60,000 rebate under Section 87A) is the most impactful — it can eliminate your entire tax liability. For investors with equity mutual fund SIP redemptions under Rs.1.25 lakh, Change 4 is equally significant because it lets you stay on ITR-1 instead of switching to ITR-2.

Here’s a quick breakdown by taxpayer type:

  • Salaried employee (income under Rs.12.75 lakh, new regime): Change 8 matters most. Zero tax liability with no action needed.
  • Freelancer or consultant (ITR-3 or ITR-4 filer): Change 2 gives you an extra month. Change 5 adds a new compliance requirement, so check Field E21.
  • Equity investor (SIPs, stocks): Change 4 simplifies your capital gains reporting. If LTCG is under Rs.1.25 lakh, you may no longer need ITR-2.
  • Taxpayer who missed filing earlier years: Change 3 is your opportunity. You can now file an updated return going back to AY 2022-23.
  • Donor claiming 80G deduction: Change 6 is non-negotiable. Get your UPI reference numbers ready before you sit down to file.
Note: This impact ranking is based on CBDT data showing 72% of taxpayers are now on the new regime, combined with the enhanced Rs.87A rebate that eliminates tax liability entirely for the majority of individual filers.

How to Use This Checklist Before You File

Start by confirming which ITR form you need. If you only have salary income, up to two house properties, and LTCG under Rs.1.25 lakh, ITR-1 is likely your form. If you have business income, check whether ITR-3 or ITR-4 fits. Once you know the form, gather the documents specific to the new fields: investment statements as on March 31, 2026, bank balance proofs, 80G donation receipts with transaction references, and Form 26AS.

Log in to the e-filing portal and verify your pre-filled data. Confirm the AY 2026-27 / Act 1961 tab is selected. Cross-check your TDS credits, capital gains from your broker’s tax P&L statement, and interest income from your Form 26AS and AIS. Choose your tax regime only after running a comparison calculation. File before July 31 (or August 31 if you file ITR-3/4) to avoid late fees and enjoy a faster refund.

Frequently Asked Questions

Can I switch from the new tax regime to the old regime while filing AY 2026-27 ITR?

Salaried employees can switch between regimes every year at the time of filing. However, if you have business income (ITR-3/4), switching back from the new regime to the old regime is allowed only once in a lifetime. Think carefully before you opt out of the new regime if you’re a business filer. Our new vs old tax regime comparison can help you decide which option saves more in your specific situation.

What is the last date to file ITR-U for AY 2022-23?

AY 2022-23 corresponds to FY 2021-22. With the 48-month ITR-U window measured from the end of AY 2022-23 (March 31, 2023), the last date to file ITR-U for that year is March 31, 2027. A 70% additional tax penalty applies. File sooner to avoid compounding interest.

I donated to an NGO via UPI last year but lost the transaction ID. Can I still claim 80G?

Yes, but you’ll need to recover the transaction reference. Check your UPI app’s transaction history or your bank statement for the relevant date. The donation organization should also have the reference number and can issue a corrected receipt. Without a valid transaction reference, the deduction may be disallowed.

Will the new Income Tax Act 2025 affect my ITR filing this year?

No. AY 2026-27 covers income earned from April 1, 2025, to March 31, 2026, which falls entirely under the old Income Tax Act 1961. The new Act 2025 will apply to income earned from April 1, 2026, onward, which you’ll report in AY 2027-28. Select the correct tab on the portal before you start.

Ready to File Your ITR for AY 2026-27?

The changes this year are real but manageable. Know your form, gather your documents, confirm your tax regime, and don’t let the dual-tab portal confuse you. The filing window is open now. Every week you wait is a week closer to the deadline rush. Start today and file without stress.