With the government notifying Income Tax Return (ITR) forms for Assessment Year 2026–27, the filing season has effectively begun, giving taxpayers clarity on compliance requirements for FY 2025–26.
While the overall framework remains familiar, the updated forms reflect a mix of continuity and incremental changes aimed at simplifying filing and improving transparency. From expanded eligibility for ITR-1 to enhanced disclosure norms, taxpayers especially salaried individuals and small investors should take note of what’s new before filing their returns ahead of the July 31, 2026 deadline.
What are the changes in ITR Form 1?
A significant update is the inclusion of long-term capital gains (LTCG) under Section 112A, up to Rs 1.25 lakh from listed equity shares or equity-oriented mutual funds, within the scope of this simplified form.
“ITR-1 has been made more inclusive by allowing taxpayers to report long-term capital gains up to a specified exemption limit, enabling those with small equity investments to continue using the simpler form instead of shifting to more complex return forms,” an tax expert said.
Earlier, any capital gains income disqualified taxpayers from using ITR-1, requiring them to file ITR-2. This change expands eligibility, particularly benefiting salaried individuals and small retail investors participating in equity markets.
“The eligibility conditions otherwise remain unchanged: total income must not exceed Rs 50 lakh, and income should be derived from salary, one house property, and other sources (such as interest income),” another tax expert said.
Another key change is that reporting of income from retirement benefit accounts maintained in notified and non-notified foreign countries under Section 89A has been removed from ITR-1 starting AY 2026–27. Taxpayers having such income will now be required to file ITR-2 or ITR-3 from AY 2026–27 onwards.
Common changes in ITR forms 1 and 2
Taxpayers filing ITR-1 are now allowed to provide both primary and secondary mobile numbers and email addresses. Earlier, the form captured only one mobile number and one email ID.
Additionally, taxpayers can now furnish both primary and secondary address details in the ITR forms. Previously, only a single address could be reported.
Taxpayers claiming deductions under Section 80GGC must now disclose the name and PAN of the political party to which the contribution is made. This move aims to improve transparency and ensure accurate reporting of political donations.
“For this filing season (AY 2026–27, for income earned during FY 2025–26), taxpayers must disclose the name and PAN of the political party to claim a deduction under Section 80GGC, thereby improving the traceability of contributions and reinforcing the need for accurate reporting and proper documentation,” another tax expert said.
Experts say that Section 80GGC permits deductions only for contributions to registered political parties under Section 29A of the Representation of the People Act, 1951, or to electoral trusts. Mandating PAN disclosure directly aligns ITR reporting with the eligibility condition and enables cross-verification with the party’s own tax filings.
Points to keep in mind to ensure a smooth and error-free filing process before the deadline
Download your AIS and Form 26AS early: Don’t wait until July. Check these in May/June to ensure your employer and bank have correctly reported your TDS.
Choose your Regime Wisely: The New Tax Regime is now the default. If you want to claim 80C or Home Loan interest for a self-occupied property (Old Regime), you must explicitly opt in while filing.
Report All Savings Interest: Many forget to add interest from Savings Accounts. Remember, under the Old Regime, you get a deduction up to Rs 10,000 (80TTA), but the income must still be reported first.
Update Mobile/Email: Ensure your Aadhaar is linked to your current mobile number for seamless OTP-based e-verification.
Declare Foreign Assets: Even if a foreign bank account has a minimal balance, if you are an ROR (Resident), you must declare it in Schedule FA to avoid heavy penalties under the Black Money Act.
