Income Tax Return Filing: Updated Requirements for the Current Assessment Year

The Income Tax Department has notified the ITR forms for Assessment Year (AY) 2026-27 (relating to income earned during FY 2025-26). Several significant changes have been introduced, particularly in light of the Finance Act 2025 amendments to capital gains taxation, the revised Schedule AL requirements, and updated reporting obligations under the Annual Information Statement (AIS) framework.

Applicability of ITR Forms for AY 2026-27

The choice of ITR form depends on the nature of the taxpayer and their income sources:

• ITR-1 (Sahaj): Individuals with salary income, one house property, other sources income up to ₹50 lakh. Not applicable where taxpayer has capital gains, business income, or is a director/holds unlisted shares.
• ITR-2: Individuals and HUFs with capital gains, income from more than one house property, or foreign assets. Does not include business/professional income.
• ITR-3: Individuals and HUFs with business or professional income (including presumptive income where ITR-4 is not applicable).
• ITR-4 (Sugam): Individuals, HUFs, and firms (other than LLPs) opting for presumptive taxation under Sections 44AD, 44ADA, or 44AE, subject to turnover/income limits.
• ITR-5: Partnership firms, LLPs, AOPs, BOIs, and other entities.
• ITR-6: Companies other than those claiming exemption under Section 11.
• ITR-7: Trusts, political parties, research institutions, and other entities filing under Sections 139(4A) to 139(4F).

Key Changes Pursuant to Finance Act 2025

Capital Gains Reporting — Post-Amendment Structure

The Finance Act 2025 introduced significant changes to the capital gains taxation structure, which are now fully reflected in the AY 2026-27 ITR forms:

• Short-Term Capital Gains (STCG) on listed equity shares / equity mutual funds (Section 111A): The tax rate has been revised to 20% (from the earlier 15%) for transfers on or after 23rd July 2024. The ITR Schedule CG now separately captures gains taxable at the new rate.
• Long-Term Capital Gains (LTCG) on listed equity shares / equity mutual funds (Section 112A): The exemption threshold remains ₹1.25 lakh per year, but the tax rate is now 12.5% (revised from 10%). Gains on assets transferred before and after 23rd July 2024 are separately reported.
• LTCG on other assets (Section 112): The indexation benefit has been removed for transfers of certain assets on or after 23rd July 2024, and a flat rate of 12.5% applies. Taxpayers holding assets acquired before this date need to carefully compute gains under the applicable rules.
• Holding Period Changes: The holding period for certain assets (such as unlisted bonds and debentures) to qualify as long-term has been revised. Taxpayers should verify the applicable holding period for each asset class.

Updated Schedule AL (Assets and Liabilities)

Schedule AL requires disclosure of assets and liabilities as at the end of the financial year. For AY 2026-27:

• The threshold for mandatory disclosure has been revised — individuals and HUFs with total income exceeding ₹50 lakh (previously ₹1 crore in some contexts) are required to file Schedule AL.
• The schedule now requires more granular disclosure, including category-wise listing of financial assets, immovable property, jewellery, vehicles, and outstanding liabilities.
• Taxpayers must ensure that all assets held in their name (including jointly held assets) are accurately disclosed.

Annual Information Statement (AIS) and Pre-filled Returns

The AIS framework continues to be the backbone of the income tax return pre-filling initiative. For AY 2026-27:

• AIS now includes data from a wider set of sources including cryptocurrency exchanges, payment aggregators, offshore reporting entities, and foreign assets disclosures under FATCA/CRS.
• The Taxpayer Information Summary (TIS) consolidates the AIS data into a category-wise summary that is used for pre-filling ITR.
• Taxpayers should review the AIS carefully before filing and submit feedback for any incorrect or duplicate entries. Discrepancies between reported income and the AIS data may trigger automated notices.

Key Deductions and Exemptions — Changes for AY 2026-27

• Section 80C: The aggregate limit of ₹1.5 lakh remains unchanged, though taxpayers opting for the new tax regime (Section 115BAC) cannot claim most deductions.
• New Tax Regime (Section 115BAC): The new tax regime with revised slab rates is now the default regime for individuals and HUFs. Taxpayers wishing to continue with the old regime (and claim deductions under Chapter VIA) must specifically opt out.
• Standard Deduction: Under the new regime, the standard deduction for salaried individuals and pensioners has been revised.
• Rebate under Section 87A: Eligibility and quantum of rebate differs between the old and new regime — taxpayers should verify their rebate entitlement.

Due Dates for AY 2026-27

The following are the standard due dates (subject to any extensions notified by the CBDT):

• 31st July 2026: Individuals, HUFs, and other taxpayers not required to get accounts audited (and not having international/specified domestic transactions).
• 31st October 2026: Taxpayers required to get accounts audited (companies, firms with turnover above prescribed limits, professionals with gross receipts above limits).
• 30th November 2026: Taxpayers required to furnish a report in Form 3CEB (transfer pricing report).

Advance Tax Obligations

Taxpayers with estimated tax liability exceeding ₹10,000 (after TDS) are required to pay advance tax in four instalments:

Shortfall in advance tax payment attracts interest under Section 234B (shortfall) and Section 234C (deferment of instalments).

Compliance Checklist for AY 2026-27

• Review AIS and TIS on the income tax portal; submit feedback for incorrect entries
• Identify applicable ITR form based on income sources
• Compute capital gains under the revised rates (pre and post 23 July 2024 transfers separately)
• Prepare Schedule AL with complete asset and liability disclosure
• Verify TDS credits in Form 26AS and reconcile with salary certificates (Form 16) and other TDS certificates
• Determine whether the old or new tax regime is more beneficial and opt accordingly before filing
• Ensure advance tax payments are made by the due dates to avoid interest