Income Tax Dept Removes ‘Other Exempt Income’ Option from ITR Forms, Revises Schedule EI for AY 2026-27:

The Income Tax Department has removed the option of "Other Exempt Income" from Schedule EI in the updated ITR forms, effective from Assessment Year (AY) 2026-27.

Previously, this option was often used by taxpayers and professionals as a reporting space for various non-taxable receipts. For instance, transactions such as the sale of rural agricultural land or gifts received from specified relatives are generally not taxable under the Income Tax Act, as technically, these are not “income” in the real sense and do not require mandatory disclosure under exempt income schedules.

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However, in practice, many tax professionals still reported such items under the “Other Exempt Income” head. This approach is not always adopted to reduce the overall tax liability but sometimes to avoid unnecessary scrutiny or system-generated notices due to a lack of disclosure.

Now the earlier structure has been revised with the new ITR utility update for AY 2026-27. The earlier option of “Other Exempt Income” has now been replaced with the new option titled “Other Income under Exempt Incomes”.

The key objective of this revision is to improve clarity in reporting and reduce confusion regarding what should or should not be disclosed in exempt income schedules. Taxpayers and professionals will now need to align their reporting practices with this revised format while ensuring that only relevant and required disclosures are made in the return.