New Delhi: Taxpayers preparing to file their returns for the current assessment year are being advised to take note of several important updates, as the process for filing under the Income Tax Act, 1961 sees notable changes for Assessment Year 2026–27.
While the filing system may appear similar to previous years, experts caution that new disclosure requirements and reporting rules could significantly impact how individuals submit their Income Tax Returns (ITR). This also marks the final filing cycle under the existing tax regime before the transition to the Income Tax Act, 2025 in subsequent years.
Filing begins with updated forms
The Income Tax Department has already enabled online filing and released Excel utilities for ITR-1 (Sahaj) and ITR-4 (Sugam). This allows many taxpayers, especially salaried individuals and small business owners, to begin filing even before receiving their Form 16, which is typically issued by mid-June.
However, despite the early start, professionals suggest using this time to carefully understand the changes and gather all relevant documents before proceeding.
Reporting income from two house properties
One of the most significant relaxations this year relates to reporting income from residential properties.
Earlier, taxpayers using ITR-1 and ITR-4 forms had limited flexibility and often had to shift to more complex forms if they owned multiple properties. Now, individuals can report income from up to two house properties while still using these simpler forms.
This change is expected to benefit salaried taxpayers with additional residential assets, reducing compliance complexity and making filing more convenient.
Simplified capital gains reporting
Capital gains reporting, which was considered complicated in the previous assessment year, has been streamlined.
In AY 2025–26, taxpayers had to classify gains based on transaction timelines due to changes introduced in the Union Budget. Different tax treatments applied to transactions before and after specific dates, leading to confusion.
For AY 2026–27, these distinctions have been removed. Since FY 2025–26 follows a uniform capital gains structure, taxpayers will no longer need to split transactions based on dates in the same manner.
This simplification is expected to reduce errors and make compliance easier, particularly for individuals with investment income.
New disclosure for unrealised rent
Another important update is the introduction of a dedicated field to report unrealised rent.
Taxpayers can now disclose “the amount of rent which cannot be realised” directly in ITR forms, including ITR-1 and ITR-4. Previously, there was no specific field for such reporting in these forms.
This move is aimed at improving transparency and ensuring more accurate reporting of rental income, especially for landlords dealing with non-paying tenants.
Mandatory bank balance reporting
A key compliance requirement has been introduced for taxpayers opting for presumptive taxation schemes.
Individuals filing ITR-4 under Sections 44AD, 44ADA and 44AE must now report the closing balance of all active bank accounts as on March 31, 2026. This disclosure is required in a specified field within the form.
Tax experts warn that incorrect or incomplete reporting could lead to scrutiny, notices or penalties. As a result, taxpayers are advised to reconcile bank statements carefully before filing.
Choosing the correct ITR form is crucial
While selecting the appropriate ITR form has always been important, it has gained greater significance this year due to expanded disclosures and updated rules.
Taxpayers with multiple income sources — including salary, rental income, capital gains, freelance work or business income — must carefully evaluate which form applies to them.
Filing an incorrect form may result in defective return notices, delays in processing refunds, or even denial of certain benefits such as carry-forward of losses.
What taxpayers should do before filing
Experts recommend that taxpayers avoid rushing into filing returns despite the early availability of forms.
Instead, they should wait for key documents such as Form 16, review bank statements, verify investment proofs and ensure accurate income reporting. Understanding the applicable ITR form and the new requirements can help avoid errors and future complications.
Conclusion
Although the ITR filing process for AY 2026–27 may seem familiar, the underlying changes make it essential for taxpayers to exercise greater diligence. From expanded property reporting to new disclosures and simplified capital gains rules, these updates aim to improve transparency and ease of compliance.
A careful and informed approach to filing can help taxpayers avoid penalties, ensure accurate reporting and make the most of available benefits under the current tax regime.