Here are 10 major changes that have taken place in terms of the ITR filing process and forms.
Given that the AY 2026–2027 ITR filing is the final one under the previous Income Tax Act and that major changes have been made this year, taxpayers should take all necessary steps to ensure that their income tax returns are filed accurately.
Like every year, the Income Tax Department has enabled online filing and also released Excel utilities for ITR-1 and ITR-4. It means that salaried taxpayers can start their income tax return filing, though they have yet to receive Form 16, which most employers release by around mid-June. Meanwhile, the tax department has introduced significant changes as far as many ITR filing processes and forms are concerned.
Which means, filing returns for FY 2025–2026 will not precisely be the same as it was in the previous year.
Another major change this year was the introduction of the new Income Tax Act 2025, replacing the old 1961 Act. Though the assessment of tax will be done this year based on the Income Tax Act, 1961, only because the assessment will be done for FY 2025-26.
Considering that the ITR filing for AY 2026–2027 is the last one under the old Income Tax Act, and significant modifications have been made this year, taxpayers should take all necessary precautions to ensure accurate filing of their income tax returns. Here are 10 major changes that have taken place in terms of the ITR filing process and forms.
1. Reporting bank account balance mandatory: When filing an ITR-4, taxpayers must include their bank account balance. As of March 31, 2026, taxpayers who are subject to presumptive taxation under Sections 44AD, 44ADA, and 44AE are required to disclose the total closing balance of all active bank accounts in field E21 of ITR 4. Any misreporting of bank balances or non-disclosure triggers tax notices and penalties.
2. Declaring two properties: Instead of only reporting income from one property, taxpayers are now required to disclose income from up to two residential properties. The new income-tax rule allows taxpayers with presumptive business income to file ITR 4 (Sugam) and salaried taxpayers filing ITR 1 (Sahaj) to report income from up to two residential properties.
3. Unrealised rent across ITR forms: For AY 2026–2027, the Income Tax Department added a new field called “The amount of rent which cannot be realized” to ITR forms, including ITR-1 and ITR-4. Previously, there was no separate disclosure field for unrealized rent for taxpayers using ITR-1 or ITR-4.
4. Disclosing the nature of employment: When submitting a return, the Income Tax Department has made it necessary to specify the type of employment (e.g., Central Government Employee, State Government Employee, Employee of Public Sector Enterprise Pensioners, or Employee of Private Sector concern).
5. Abolition of old capital gains tax fields: The ITR forms for AY 2026-2027 have removed the old capital gains tax fields related to the old 15% STCG tax under Section 111A and 10% LTCG tax under Section 112A. The Budget modifications last year meant that different tax rates were applicable, so taxpayers had to declare capital gains separately depending on whether the transactions took place before or after July 23, 2024. This year, the former reporting categories and transaction-date split have been eliminated because FY 2025–2026 has only one capital gains tax structure, making it easier for taxpayers to file their return.
6. The requirement to provide detailed disclosures of assets and liabilities (Schedule AL) has been relaxed. The minimum net worth threshold has been increased from Rs. 50 lakhs to Rs. 1 crore, providing massive relief to middle-income taxpayers.
7. Drop-down Menu for Deductions: To ensure greater accuracy and transparency, deductions claimed under Chapter VI-A (such as Sections 80C to 80U) must now be selected directly from a drop-down menu on the e-filing portal, rather than being manually typed in.
8. Not only AIS but even ITS and GST reconciliation is becoming increasingly important: This year’s ITR filing involves more than just matching your return with the Annual Information Statement (AIS). Tax experts say that, especially business owners, freelancers, professionals and traders, must now also reconcile data carefully with the Income Tax System (ITS) and GST filings.
9. The right form selection has become more important than ever: This year, it has become much more important to choose the right ITR form, especially for taxpayers with multiple sources of income such as salary, capital gains, rental income, freelance work, business income or trading activity. With stricter disclosure norms and modified ITR forms, filing on the incorrect form may result in notices of defective return, delayed refunds, incorrect tax computation, lack of benefit of carry forward of losses, and a higher risk of scrutiny.
10. Pre-filled data should be cross-checked carefully rather than accepted automatically: Taxpayers are advised this year not to depend only on the pre-filled ITR data without enough verification. The Income Tax Department now auto-populates the details from AIS, Form 26AS, TDS returns, banks, brokers and employers, but tax experts say errors, delays or incomplete reporting may occur, taxpayers should carefully cross-check:
- salary income,
- bank interest,
- capital gains,
- dividend income,
- TDS entries,
- deductions,
- GST turnover and business receipts, where applicable.
Disclaimer: This article is for informational purposes only and does not constitute professional tax advice. Tax laws and regimes are subject to frequent changes by the government. Readers should verify details with official Income Tax Department notifications or consult a Chartered Accountant before making any financial decisions.
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