5 Big ITR Changes Taxpayers Must Know Before Filing AY 2026-27

The Income Tax Department has opened online filing and released Excel utilities for ITR-1 and ITR-4, like every year, which allows many taxpayers to start the process before receiving Form 16 from employers, which usually arrives by mid-June.

This year’s tax filing season comes with a few important changes. Even though the tax filing process may appear similar, this year brings several important changes that taxpayers should not ignore.

New disclosure requirements and updated capital gains reporting rules mean filing your return for Assessment Year (AY) 2026-27 may not be exactly the same as last year.

This will be the last return filing cycle under the Income Tax Act, 1961, even though the new Income Tax Act, 2025, has already been introduced. Taxpayers should pay close attention while filing returns as taxes for FY 2025-26 will still be assessed under the existing law.

Here are five key changes that could impact ITR filing for AY 2026-27.

Reporting Income From Two House Properties

For taxpayers who own more than one house, property this year brings one major relief.

Before, salaried taxpayers filing ITR-1 (Sahaj) and small business taxpayers using ITR-4 (Sugam) had restrictions in reporting. Now, while using these forms, taxpayers can disclose income from up to two residential properties.

This change means salaried individuals and small taxpayers owning two houses can continue using simpler ITR forms instead of using more complex ones.

No More Separate Capital Gains Categories

Capital gains reporting may become much simpler for taxpayers this year.

Last year, due to changes announced in the budget, taxpayers had to separately disclose gains based on whether transactions took place before or after July 23, 2024. Different tax rates applied during different periods to short-term and long-term gains.

For AY 2026-27, those older reporting fields have been removed. Since FY 2025-26 follows a single capital gains tax structure, taxpayers will no longer need to split transactions based on different dates.

In short, capital gains reporting is expected to be more straightforward this year.

New Disclosure for Unrealised Rent

Another important change this year is a new disclosure requirement for unrealised rent.

The Income Tax Department has introduced a separate field titled “The amount of rent which cannot be realised” in ITR forms, including ITR-1 and ITR-4.

Earlier, taxpayers using these forms did not have a separate section to report unrealised rent. The new disclosure is aimed at making rental income reporting more transparent and detailed.

Bank Balance Reporting Now Mandatory

Taxpayers filing ITR-4 under presumptive taxation schemes will now have to provide additional bank-related disclosures.

Individuals covered under Sections 44AD, 44ADA and 44AE must report the total closing balance of all active bank accounts as on March 31, 2026.

The disclosure has to be made in field E21 of ITR-4. Tax experts say that incorrect reporting or non-disclosure of bank balances could lead to tax notices or penalties.

Choosing the Right ITR Form Is More Important This Year

Selecting the correct ITR form has become even more important for taxpayers this year
Individuals earning income from the following sources may need to carefully assess which ITR form is applicable to them.
Salary
House property
Capital gains
Freelancing
Trading or business activities

Experts warn that filing the wrong form could result in defective return notices, refund delays, incorrect tax computation, or loss of benefits like carrying forward losses.

What Taxpayers Should Do Before Filing

Although online ITR filing has already started, many salaried taxpayers are still waiting for their Form 16. Experts advise using this time to collect important documents, review bank statements, verify investment proofs and identify the correct ITR form based on different sources of income.

While this year’s changes may not completely transform the filing process, they make one thing clear – taxpayers may need to be more careful and accurate while filing returns to avoid notices, delays or other issues later.