ITR Filing 2026: 5 Important Changes Taxpayers Must Know Before Filing Their Income Tax Return

Income Tax Return filing is not just a yearly compliance activity. It is an important financial responsibility that helps taxpayers report their income correctly, claim eligible deductions, avoid penalties, and maintain a clean financial record.

For Financial Year 2025-26, relevant to Assessment Year 2026-27, the ITR filing process has started with important updates in the income tax return forms. Although the return filing process may look similar at first glance, several reporting requirements have changed this year. Taxpayers should understand these changes before filing their return to avoid mistakes, mismatches, or unnecessary notices.

This year is also significant because income earned during FY 2025-26 will still be assessed under the Income Tax Act, 1961. The newly introduced income tax law will apply from the next filing cycle. Therefore, this return filing season becomes important for salaried individuals, business owners, professionals, investors, and taxpayers having house property income.

Why This ITR Filing Season Needs Extra Attention

Many taxpayers file their income tax return in a hurry as soon as the portal opens. However, filing without properly checking Form 16, AIS, TIS, Form 26AS, bank details, capital gains statement, and tax regime selection may create problems later.

For salaried taxpayers, it is generally better to wait until Form 16 is received from the employer. This helps ensure that salary income, deductions, exemptions, and TDS details are correctly reflected in the return.

For business owners and professionals, the new disclosures in ITR forms require careful reporting, especially in relation to bank balances, presumptive income, and tax regime selection.

Let us understand the five important changes in ITR forms for FY 2025-26.

1. ITR-1 Scope Expanded for More Taxpayers

ITR-1, also known as Sahaj, is one of the most commonly used income tax return forms by salaried individuals and small taxpayers. This year, the scope of ITR-1 has been expanded, making it easier for more taxpayers to file their return using a simpler form.

Earlier, ITR-1 had limitations for taxpayers having income from more than one house property or certain capital gains. Now, some important relaxations have been introduced.

Income from Two House Properties

Taxpayers can now report income from up to two house properties in ITR-1. Earlier, this form was generally limited to one house property. This change is useful for individuals who own two residential properties and have simple income reporting requirements.

However, taxpayers should carefully calculate rental income, municipal taxes, standard deduction, interest on housing loan, and loss from house property before filing.

Limited Long-Term Capital Gains Reporting

Another important change is that certain taxpayers having long-term capital gains under Section 112A can now use ITR-1, provided the capital gains do not exceed ₹1.25 lakh and there are no brought-forward capital losses.

This change may help small investors who have earned limited capital gains from listed equity shares or equity-oriented mutual funds. However, proper reporting is still very important because capital gains data should match with AIS and broker statements.

2. New Capital Gains Reporting Categories

Capital gains taxation has undergone significant changes. The older categories and indexation-based framework have been modified for many assets. Taxpayers selling property, shares, mutual funds, or other capital assets must be extra careful while selecting the correct category and tax treatment.

One of the major changes is the removal of indexation benefit for most assets, along with changes in tax rates. For many long-term capital assets, the tax framework has been simplified, but taxpayers must correctly understand which rule applies to their asset.

What Taxpayers Should Check

Before filing ITR, taxpayers should verify:

• Date of purchase
• Date of sale
• Type of asset
• Holding period
• Cost of acquisition
• Sale consideration
• Applicable tax rate
• Whether indexation is available or not
• Capital gains reflected in AIS and broker reports

The holding period rules have also been streamlined. Listed securities generally follow a shorter holding period for long-term classification, while other assets may have a different holding period. Incorrect classification can lead to wrong tax computation.

3. Separate Disclosure for Unrealised Rent

A new dedicated field has been introduced for reporting rent that could not be realised. This is especially important for taxpayers having rental income from house property.

Earlier, taxpayers filing simpler forms did not have a separate space to clearly report unrealised rent. Due to this, there could be confusion in calculating gross annual value and taxable rental income.

Now, taxpayers can separately disclose the amount of rent that was not actually received. This improves transparency and helps ensure that taxable rental income is calculated correctly.

Why This Change Matters

This change is beneficial for landlords because actual rental income and unrealised rent can now be reported more clearly. However, taxpayers should maintain proper documentation, such as rent agreement, tenant communication, rent ledger, and evidence of non-recovery of rent.

Correct reporting will help avoid overstatement of income and reduce the possibility of future disputes.

4. Mandatory Bank Balance Reporting in ITR-4

ITR-4, also known as Sugam, is generally used by taxpayers filing under presumptive taxation schemes. This includes eligible businesses and professionals covered under Sections 44AD, 44ADA, and 44AE.

For FY 2025-26, taxpayers filing ITR-4 are required to report the total closing balance of all active bank accounts as on 31 March 2026.

This is an important disclosure and should not be ignored.

What Needs to Be Reported

Taxpayers should identify all active bank accounts and calculate the total closing balance as on 31 March 2026. This may include:

• Current accounts
• Savings accounts
• Business bank accounts
• Professional receipt accounts
• Other active accounts used during the year

Before filing ITR-4, taxpayers should reconcile their bank statements with books of accounts, cash receipts, digital collections, UPI receipts, and business income records.

This change increases transparency and may help the department verify financial information more efficiently.

5. Clearer Disclosure for Opting Out of the New Tax Regime

The tax regime selection continues to be an important part of ITR filing. In previous years, many taxpayers were confused about opting in or opting out of the new tax regime, especially those having business or professional income.

This year, the ITR forms include more detailed disclosure requirements for choosing or opting out of the new tax regime. This is particularly relevant for business income taxpayers because regime selection rules may have long-term implications.

Why Tax Regime Selection Should Be Done Carefully

The new tax regime may offer lower tax rates, but it restricts many deductions and exemptions. The old tax regime may be beneficial for taxpayers who claim deductions such as:

• Section 80C
• Section 80D
• HRA
• Housing loan interest
• Education loan interest
• Donations
• Other eligible exemptions and deductions

Taxpayers should compare both regimes before filing. A wrong selection may increase tax liability or reduce eligible benefits.

Practical Checklist Before Filing ITR for FY 2025-26

Before submitting your income tax return, make sure you review the following:

• Form 16 from employer
• Form 26AS
• AIS and TIS
• Bank statements
• Capital gains statement
• Mutual fund and demat reports
• House property income details
• Rent received and unrealised rent
• Loan interest certificates
• Business or professional income records
• GST turnover, if applicable
• TDS and TCS details
• Advance tax and self-assessment tax payments
• Correct tax regime selection
• Active bank account details

A properly reviewed return reduces the chances of mismatch, notice, penalty, or refund delay.

Common Mistakes Taxpayers Should Avoid

Many taxpayers make simple but costly mistakes while filing their returns. Some common mistakes include:

• Filing before receiving complete Form 16
• Ignoring AIS and TIS mismatch
• Not reporting capital gains correctly
• Forgetting savings bank interest
• Not disclosing all bank accounts
• Selecting the wrong ITR form
• Choosing the wrong tax regime
• Not reporting rental income properly
• Missing foreign assets or income, where applicable
• Filing without professional review in complex cases

Even a small mistake can lead to unnecessary communication from the department. Therefore, careful filing is always better than hurried filing.

DhanTax View: File Smart, File Correct

The income tax return is more than a compliance form. It is a financial document that reflects your income, investments, taxes, assets, and financial discipline.

With the latest changes in ITR forms, taxpayers need to be more careful while reporting house property income, capital gains, bank balances, presumptive income, and tax regime selection.

At DhanTax, we believe that accurate tax filing is the foundation of financial confidence. Whether you are a salaried employee, business owner, professional, investor, landlord, or startup founder, correct ITR filing helps you stay compliant and financially prepared.

Conclusion

The ITR filing season for FY 2025-26 brings important changes that taxpayers must understand before filing their return. Expanded ITR-1 eligibility, revised capital gains reporting, separate unrealised rent disclosure, mandatory bank balance reporting in ITR-4, and clearer tax regime selection are key updates this year.

Taxpayers should not treat ITR filing as a last-minute task. Proper documentation, reconciliation, and expert guidance can help ensure a smooth and error-free filing experience.

DhanTax helps individuals, professionals, startups, and businesses with accurate income tax return filing, tax planning, compliance support, and financial advisory services.