CA Sansaar
ITR Filing for AY 2026–27 Begins: ITR-1 & ITR-4 Now Allow Reporting of Two House Properties
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The government has formally launched the income-tax return (ITR) filing season for the Assessment Year (AY) 2026–27 by notifying all seven ITR forms, along with updated verification procedures and revised formats for filing and updating returns. This announcement enables a wide range of taxpayers—including salaried individuals, pensioners, freelancers, professionals, and small business owners—to begin the process of filing their income tax returns. As in previous years, taxpayers whose accounts are not subject to audit are required to file their returns by July 31, making timely compliance essential to avoid penalties or interest.
One of the most significant changes introduced this year is aimed at simplifying compliance for small taxpayers and salaried individuals. The government has expanded the scope of the simplified return forms—ITR-1 (Sahaj) and ITR-4 (Sugam)—to make them more inclusive. These forms can now be used to report income or loss from up to two house properties, which marks an important relaxation compared to earlier provisions. Previously, individuals owning more than one house property were required to shift to more detailed and complex forms such as ITR-2 or ITR-3, even if their overall income profile was otherwise simple.
Under the revised framework, taxpayers filing ITR-1 or ITR-4 can now disclose income from two properties, regardless of whether the properties are self-occupied, rented out, or a combination of both. This change is expected to reduce the compliance burden for middle-class taxpayers and small investors who often own a second property for rental income or future use. However, the simplified forms still come with certain eligibility conditions. Taxpayers who own more than two house properties, or those who have additional income streams such as capital gains, foreign assets, or foreign income, will not be eligible to use ITR-1 or ITR-4 and must instead opt for ITR-2 or ITR-3, depending on the nature of their income.
For individuals earning income from business or profession, the applicable ITR form depends on the taxation scheme they choose. Taxpayers opting for the presumptive taxation scheme—where income is calculated on a fixed percentage basis—can continue to use ITR-4 (Sugam). On the other hand, those maintaining detailed books of accounts under the regular taxation system are required to file ITR-3. This distinction ensures that compliance requirements are aligned with the complexity of the taxpayer’s financial activities.
In addition to individual taxpayers, different forms have been prescribed for various types of entities. ITR-5 is applicable to partnership firms, LLPs, and certain associations, while ITR-6 is meant for companies (other than those claiming exemption under specific provisions). ITR-7 is designated for entities such as trusts, charitable institutions, political parties, and other organizations that are required to file returns under special sections of the Income-tax Act. Each of these forms comes with its own set of rules, disclosures, and compliance requirements.
Overall, the changes introduced for AY 2026–27 reflect the government’s continued effort to simplify the tax filing process, reduce unnecessary complexity for small taxpayers, and encourage timely and accurate compliance.
One of the most significant changes introduced this year is aimed at simplifying compliance for small taxpayers and salaried individuals. The government has expanded the scope of the simplified return forms—ITR-1 (Sahaj) and ITR-4 (Sugam)—to make them more inclusive. These forms can now be used to report income or loss from up to two house properties, which marks an important relaxation compared to earlier provisions. Previously, individuals owning more than one house property were required to shift to more detailed and complex forms such as ITR-2 or ITR-3, even if their overall income profile was otherwise simple.
Under the revised framework, taxpayers filing ITR-1 or ITR-4 can now disclose income from two properties, regardless of whether the properties are self-occupied, rented out, or a combination of both. This change is expected to reduce the compliance burden for middle-class taxpayers and small investors who often own a second property for rental income or future use. However, the simplified forms still come with certain eligibility conditions. Taxpayers who own more than two house properties, or those who have additional income streams such as capital gains, foreign assets, or foreign income, will not be eligible to use ITR-1 or ITR-4 and must instead opt for ITR-2 or ITR-3, depending on the nature of their income.
For individuals earning income from business or profession, the applicable ITR form depends on the taxation scheme they choose. Taxpayers opting for the presumptive taxation scheme—where income is calculated on a fixed percentage basis—can continue to use ITR-4 (Sugam). On the other hand, those maintaining detailed books of accounts under the regular taxation system are required to file ITR-3. This distinction ensures that compliance requirements are aligned with the complexity of the taxpayer’s financial activities.
In addition to individual taxpayers, different forms have been prescribed for various types of entities. ITR-5 is applicable to partnership firms, LLPs, and certain associations, while ITR-6 is meant for companies (other than those claiming exemption under specific provisions). ITR-7 is designated for entities such as trusts, charitable institutions, political parties, and other organizations that are required to file returns under special sections of the Income-tax Act. Each of these forms comes with its own set of rules, disclosures, and compliance requirements.
Overall, the changes introduced for AY 2026–27 reflect the government’s continued effort to simplify the tax filing process, reduce unnecessary complexity for small taxpayers, and encourage timely and accurate compliance.
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