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IT department notifies AY 2026 27 ITR forms, allows up to two house properties in ITR 1 and 4, adds new deduction details, removes Relief 89A, warns on AIS match and e verification
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The Income Tax Department has notified the Income Tax Return (ITR) forms for the assessment year (AY) 2026-27, introducing certain updates aimed at improving compliance and reporting accuracy.
The changes affect salaried individuals, pensioners, and professionals alike.
Key changes in ITR forms
According to CA Chandni Anandan, Tax Expert at ClearTax, the major revisions in the ITR forms include:
- Reporting of House Properties: Taxpayers using ITR-1 and ITR-4 can now declare income from up to two house properties, up from the previous limit of one.
- Expanded Deduction Details: Additional details such as transaction reference numbers under Section 80G and name of the political party under Section 80GGC must be provided when claiming deductions.
- Relief 89A Removal: Forms ITR-1 and ITR-4 no longer support Relief 89A for salary arrears.
- Capital Gains Reporting Simplified: The earlier distinction between pre- and post-Budget 2024 capital gains reporting has been removed.
Choosing the right ITR form
Selecting the appropriate ITR form is critical for accurate filing. ClearTax provides guidance on suitability and key exclusions:
| ITR form | Best suited for | Key exclusions |
| ITR-1 (Sahaj) | Residents with income up to ₹50 lakh from salary, up to 2 house properties, other sources, and LTCG u/s 112A up to ₹1.25 lakh | Not for directors, NRIs, unlisted shareholders, or foreign asset holders |
| ITR-2 | Individuals/HUFs with capital gains (stocks/property) or foreign income/assets | Not for business or professional income |
| ITR-3 | Individuals/HUFs with business or professional income (including F&O trading) | Comprehensive for complex portfolios |
| ITR-4 (Sugam) | Residents with business/professional income under presumptive taxation (Sec 44AD/44ADA) | Income must be below ₹50 lakh; not for NRIs |
Common mistakes to avoid
CA Chandni Anandan advises taxpayers to watch out for:
- Mismatched AIS/TIS: Ensure your return reconciles with the Annual Information Statement; discrepancies, such as unreported dividends, can trigger notices.
- Bank Account Validation: Failing to pre-validate bank accounts can delay refunds.
- Verification Delay: Returns not e-verified within 30 days are treated as “not filed.”
Note To Readers
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.