The Central Board of Direct Taxes (CBDT) has introduced several important changes in the Income Tax Return (ITR) forms for FY 2025-26 (AY 2026-27).
The updated rules aim to make tax filing more transparent, improve income reporting, and align returns with the new tax regime. Some major updates also focus on capital gains, F&O trading, bank disclosures, and donation reporting.
Here’s a simple breakdown of the biggest changes taxpayers should know before filing their returns.
Major Changes in ITR-1 and ITR-4
ITR-1 (Sahaj) and ITR-4 (Sugam) are simplified tax return forms meant for individuals earning up to Rs 50 lakh annually.
ITR-1 is generally used by salaried employees and pensioners, while ITR-4 is for small business owners and professionals under presumptive taxation schemes.
More People Can Now Use Simplified ITR Forms
One of the biggest changes is that taxpayers owning up to two house properties can now file ITR-1 or ITR-4.
Earlier, these forms were available only to people with one house property.
This move is expected to help more taxpayers use simpler return forms instead of complicated ones.
Changes in Foreign Retirement Account Reporting
CBDT has removed certain disclosure fields related to foreign retirement accounts from ITR-1 and ITR-4.
However, taxpayers with foreign assets or overseas retirement accounts like US 401(k) plans may still need to file ITR-2 or ITR-3 because foreign income disclosures continue there.
Important Updates in ITR-3
ITR-3 is mainly used by business owners, professionals, traders, and individuals earning income from multiple sources.
Separate Reporting for F&O Trading
The new ITR-3 form now asks taxpayers to separately disclose Futures and Options (F&O) turnover and related income.
This change increases reporting requirements for active traders and makes reconciliation more detailed.
MSME Payment Delays Under Scanner
Businesses now need to separately report interest paid on delayed payments to Micro and Small Enterprises (MSMEs).
Under tax rules, such interest payments are not allowed as deductions.
A new disclosure column has been added to capture this information.
Partnership Firm Income Reporting Expanded
Partners in partnership firms now have to separately disclose:
Interest received from the firm
Remuneration received from the firm
The government wants clearer reporting of partnership-related income through this update.
ITR Filing Deadline Extended
For certain taxpayers whose accounts do not require audit, the return filing deadline has been extended from July 31 to August 31.
This applies mainly to businesses, professionals, and partners in non-audit firms.
New Reporting Under Section 44BBD
A new presumptive taxation section, Section 44BBD, has been introduced for non-residents involved in electronics manufacturing projects in India.
The revised ITR forms now include separate reporting fields for this category.
Big Change in ITR-4: Bank Balance Disclosure Mandatory
Taxpayers filing ITR-4 will now have to mandatorily disclose bank balances under Schedule BP.
Earlier, this disclosure was optional.
Previously, taxpayers mainly reported items like creditors, debtors, inventory, and cash in hand.
Now, bank balances have also become a compulsory part of business financial reporting.
However, taxpayers were already required to provide bank account details separately in the return form.
Common Changes Across Multiple ITR Forms
CBDT has also introduced several updates that apply across different ITR forms.
More Details Needed for Political Donations
Taxpayers claiming deductions under Section 80GGC must now disclose:
Name of the political party or electoral trust
PAN details of the political party
This aims to improve transparency in political donations.
Extra Fee Reporting for Revised Returns
The time limit for filing revised returns has been increased from 9 months to 12 months.
But revised returns will now attract an additional fee under Section 234-I.
Taxpayers must separately report this fee in the ITR forms.
Donation Reporting Gets Stricter
People claiming deductions under Section 80G now need to provide:
IFSC code
Transaction reference number for UPI, NEFT, RTGS, IMPS, or cheque payments
This is expected to strengthen verification of donation claims.
Changes in Interest Income and Capital Gains Reporting
Simpler Capital Gains Reporting
The earlier requirement to separately report capital gains before and after July 23, 2024 has now been removed.
This simplifies reporting for taxpayers filing ITR-2 and ITR-3.
New Interest Income Reporting Rules
Interest earned from companies, NBFCs, housing finance companies, fixed deposits, and debentures must now be properly disclosed under the “Other” category in Schedule OS.
A separate column has also been added for interest income taxable at concessional rates under Section 194LC.
New Contact and Address Details Introduced
The revised ITR forms now include a separate field for “Secondary Address.”
Similarly, taxpayers can now provide:
Primary and secondary mobile numbers
Primary and secondary email IDs
For representative assessees, only basic details like name, email ID, and contact number will now be required.
Earlier, more extensive information such as PAN, Aadhaar, and address details had to be provided.
What These New ITR Changes Mean for Taxpayers
The new ITR forms for AY 2026-27 clearly show the government’s push towards better transparency and more accurate income reporting.
While some changes simplify return filing, others increase disclosure requirements for traders, businesses, professionals, and taxpayers claiming deductions.
Taxpayers should carefully review the updated forms before filing returns to avoid errors, notices, or delays in processing refunds.
