ITR Filing This Year: Five Key Changes to Watch For The Income Tax Department has introduced several updates to the tax return filing process for the Assessment Year (AY) 2026–27, which will be the final return cycle under the Income Tax Act, 1961. While the new Income Tax Act, 2025 has been enacted, taxes for the financial year (FY) 2025–26 will still be assessed under the older law. These changes aim to simplify reporting for taxpayers but require careful attention to avoid errors. Here are five major updates that could impact how individuals file their income tax returns. One significant change is the expanded reporting flexibility for taxpayers owning multiple residential properties. Previously, salaried individuals filing ITR-1 (Sahaj) and small business taxpayers using ITR-4 (Sugam) had limited options for disclosing income from multiple homes. Now, these forms allow taxpayers to report income from up to two residential properties. This adjustment benefits individuals with salary income and two houses, enabling them to continue using simpler forms instead of switching to more complex ones. Another key update simplifies capital gains reporting. In the previous assessment year, taxpayers had to categorize gains based on whether transactions occurred before or after July 23, 2024, due to changes in the Budget. This created separate reporting requirements for short-term and long-term gains. For AY 2026–27, these older categories have been removed. Since FY 2025–26 follows a unified capital gains tax structure, taxpayers will no longer need to split transactions by date. This change is expected to reduce complexity in reporting capital gains. Landlords will also notice a new disclosure requirement for unrealized rent.#income_tax_act_2025 #income_tax_act_1961 #income_tax_department #itr_form #assessment_year_2026_27
