ITR Filing AY 2026-27 (FY 2025-26): Complete Guide to Deadlines, Forms, Tax Slabs, and Key Changes

AY 2026-27 is a unique filing season because it sits at the intersection of two separate tax laws. The Income Tax Act, 2025 came into force on April 1, 2026, replacing the Income Tax Act, 1961 after six and a half decades. But the return you are filing right now, for income earned between April 1, 2025 and March 31, 2026, is still governed entirely by the Income Tax Act, 1961. The CBDT has confirmed this explicitly. The new Act applies only to income earned from April 1, 2026 onwards.

The practical implication is straightforward. In the ITR forms notified for AY 2026-27, you will see Schedule VI-A with deduction entries under sections like 80C, 80CCC, 80CCD, 80D, 80G, and 80TTA. These are the familiar old-law sections. You will not see any ITA 2025 section references. The forms, utilities, and the e-filing portal at incometax.gov.in are all designed for ITA 1961 compliance for this year’s returns.

AY 2026-27 has one additional distinction: it is the last filing season under the Income Tax Act, 1961. Beginning with Tax Year 2026-27 (income earned April 2026 to March 2027), to be filed in 2027, all returns will be governed by the new Income Tax Act, 2025. The new Act introduces a “Tax Year” concept that aligns the earning year and the filing year reference, eliminating the confusing FY versus AY terminology. But for what you are filing today, that change is irrelevant.

AY 2026-27 introduces two new deadline provisions compared to previous years, both introduced by the Finance Act, 2026. First, a new August 31 deadline applies for non-audit business and professional taxpayers. Second, the revised return deadline has been extended from December 31 to March 31 of the following year. Both changes take effect from AY 2026-27 itself.

The CBDT notified all ITR forms (ITR-1 through ITR-7, along with ITR-V and ITR-U) on March 30, 2026. A corrigendum was issued on April 10, 2026, correcting technical errors in certain forms. Taxpayers must use the updated forms available on the Income Tax portal, not versions downloaded before April 10, 2026.

1. ITR-1 Now Covers Two House Properties

This is the most significant practical change affecting salaried taxpayers in AY 2026-27. Previously, ITR-1 could only be used by taxpayers with income from a single house property. Any taxpayer owning two properties, even if one was self-occupied and the other was vacant or lightly rented, was required to shift to the more complex ITR-2. For many salaried professionals in urban India who own a home in their city of work and have a second property in their hometown or as an investment, this forced shift to ITR-2 was a significant compliance burden. From AY 2026-27, ITR-1 allows reporting of income or loss from up to two house properties, subject to all other ITR-1 eligibility conditions being met. The total income cap of Rs 50 lakh and the other exclusions (no capital gains beyond the LTCG 112A limit, no foreign assets, no directorship) still apply.

2. Section 112A LTCG up to Rs 1.25 Lakh Now Reportable in ITR-1

Salaried taxpayers who sell listed equity shares or equity mutual fund units and have long-term capital gains under Section 112A that do not exceed Rs 1.25 lakh (the annual exemption threshold) were previously required to shift to ITR-2 to report these gains. From AY 2026-27, such gains up to Rs 1.25 lakh can be reported directly in ITR-1. However, this provision has strict conditions: it applies only to Section 112A LTCG specifically; if there is any STCG from any asset, the taxpayer must use ITR-2; if there are brought-forward capital losses, the taxpayer must use ITR-2; and if the LTCG under Section 112A exceeds Rs 1.25 lakh, ITR-2 is required. The Section 87A rebate does not apply to LTCG under Section 112A.

3. New Field for Unrealised Rent in ITR-1 and ITR-4

A new dedicated field has been added in both ITR-1 and ITR-4 for reporting “the amount of rent which cannot be realised.” This provision addresses landlords who were unable to recover rent from tenants during FY 2025-26. Earlier, the treatment of unrealised rent required specific manual entries without a dedicated field. The new field provides a structured reporting mechanism. The amount of unrealised rent deducted is not includible in the income under the head house property in the year of non-recovery, subject to conditions under Rule 4 of the Income Tax Rules.

4. ITR-4: New Mandatory Investment Disclosure

Taxpayers filing ITR-4 under the presumptive taxation scheme must now disclose the amount of investments made during FY 2025-26 in a new “Financial Particulars of the Business” section. This is a new anti-avoidance measure addressing cases where taxpayers declared modest presumptive income while accumulating disproportionate assets. The disclosure applies to all ITR-4 filers regardless of their investment amount. Freelancers, shopkeepers, small traders, doctors, and chartered accountants using presumptive taxation must compile their investment records before filing.

5. Section 89A Relief Restricted to ITR-2 and ITR-3

The option to claim relief under Section 89A (for income from specified foreign retirement benefit accounts, which allows Indian residents with accounts like 401(k) or similar plans in notified countries to defer taxation until withdrawal) has been removed from ITR-1 and ITR-4. Taxpayers claiming Section 89A relief must now file ITR-2 or ITR-3 as applicable. This narrows the eligible filer base for ITR-1 further but is relevant only to a relatively small category of taxpayers with foreign retirement accounts.

6. Capital Gains Schedule Simplified: No Date Bifurcation

For AY 2025-26 (last year’s filing), taxpayers reporting capital gains from listed equity shares and equity mutual funds were required to bifurcate their gains between transactions made before July 23, 2024 and those made on or after that date, because the Finance Act, 2024 changed the STCG rate from 15% to 20% and the LTCG rate from 10% to 12.5% effective that date. This bifurcation was cumbersome. For AY 2026-27, since all of FY 2025-26 falls entirely within the post-July 23, 2024 rate structure, no bifurcation is needed. The entire FY 2025-26 STCG on listed equity is reported at 20% under Section 111A and the entire LTCG on listed equity is reported at 12.5% under Section 112A. The separate fields for the pre-July 23, 2024 rates have been removed from the capital gains schedule.

7. Corrigendum of April 10, 2026

The CBDT released a corrigendum on April 10, 2026, correcting technical errors in the ITR forms originally notified on March 30, 2026. The corrigendum covered ITR-1, ITR-4, and schedules including Capital Gains (CG), Other Sources (OS), and CYLA (Current Year Losses Adjustment). Key corrections included a revised Schedule-IT in ITR-1 for better reporting of advance tax and self-assessment tax payments, and corrections to sub-row numbering in ITR-4’s salary schedule under Part B. Taxpayers and professionals must use the forms and utilities available on the portal after April 10, 2026. Forms downloaded before April 10 may be defective.

The new tax regime is the default for AY 2026-27. If you do not make an active choice, the system will compute your tax under the new regime. Salaried taxpayers (without business income) can choose between regimes each year at the time of filing within the due date under Section 139(1). Taxpayers with business income who have previously opted out of the new regime can only switch back once in a lifetime.

Section 87A Rebate: The Rs 12 Lakh Zero-Tax Provision

Under the new tax regime for FY 2025-26, the Section 87A rebate has been increased to Rs 60,000 (from Rs 25,000 in FY 2024-25). The rebate applies to taxpayers whose total taxable income does not exceed Rs 12 lakh. At Rs 12 lakh, the tax computed as per the new regime slabs is exactly Rs 60,000, which is fully offset by the rebate, making the effective tax liability zero. For salaried individuals in the new regime, the standard deduction of Rs 75,000 further reduces taxable income, making gross salary up to Rs 12,75,000 effectively zero-tax.

Standard Deduction

The standard deduction for salaried individuals is Rs 75,000 under the new tax regime for FY 2025-26 (increased from Rs 50,000 in the previous year). Under the old tax regime, the standard deduction remains Rs 50,000 for salaried taxpayers. Pensioners also qualify for the standard deduction on their pension income.

When Does the Old Regime Work Better?

The old regime is generally beneficial when your total deductions and exemptions are large enough to bring your taxable income below what the new regime slab rates would produce on the same gross income. Broadly, for income around Rs 15 lakh with full deductions (Rs 1.5 lakh under 80C, Rs 25,000 under 80D, Rs 2 lakh HRA exemption, Rs 2 lakh under Section 24(b) for home loan interest), the old regime can save approximately Rs 37,700 annually compared to the new regime. For income around Rs 20 lakh with full deductions, the saving is approximately Rs 63,700. For income below Rs 12 lakh with minimal deductions, the new regime’s rebate advantage is typically decisive.

Capital gains tax rates were fundamentally revised by the Finance Act, 2024 effective July 23, 2024. Since the entire FY 2025-26 (April 2025 to March 2026) falls within the post-revision period, the AY 2026-27 ITR forms apply only the revised rates with no bifurcation required.

The Income Tax Department has significantly expanded the Annual Information Statement (AIS) and made pre-filled data more comprehensive in AY 2026-27. Before submitting your return, every taxpayer should verify the following sources of information against their own records.

AY 2026-27 introduces significant extensions to the revised and updated return windows under Finance Act, 2026. These are permanent changes to the Income Tax Act, 1961 that apply from AY 2026-27 onwards.

The extension of the revised return window to March 31, 2027 is practically significant for taxpayers who discover errors, missed deductions, or omitted income after filing their original return. Previously, if you filed your ITR in July 2026 and discovered an error in October 2026, you had only until December 31, 2026 to revise it. Now you have until March 31, 2027, providing a full year’s window from the original filing date in most cases. This is particularly relevant for those awaiting late receipt of Form 16, corrections to AIS data, or realisation of missed deductions.

Gather these documents before logging in to the e-filing portal. Having them ready avoids errors in pre-filled data and ensures accurate reporting.

Disclaimer: This article is for informational and educational purposes only and is current as of June 15, 2026. All information about ITR forms, due dates, tax rates, and regulatory changes is sourced from the Income Tax Act, 1961 as amended by Finance Act, 2024 and Finance Act, 2026; CBDT notifications for AY 2026-27 dated March 30, 2026 and the corrigendum dated April 10, 2026 (Notifications 52 to 64 and Notifications 57 to 63 respectively); and the official Income Tax Department website incometax.gov.in. Taxpayers and professionals should always verify the latest notifications at incometax.gov.in before filing. This article does not constitute tax advice. Always consult a qualified Chartered Accountant for advice specific to your tax situation. Fiscalzenith.com accepts no liability for decisions made in reliance on this article.