Which Income Tax Act Applies for ITR Filing in 2026?

This is the biggest confusion among taxpayers right now — and the answer is straightforward.

The new Income Tax Act 2025 has been enacted, but it becomes effective only from Tax Year 2026-27 onwards. The ITR you file in 2026 is for Financial Year 2025-26 (Assessment Year 2026-27), which still falls under the old Income Tax Act, 1961.

What this means for you:

• All sections, form structures, and deductions you knew earlier — they still apply
• The same ITR forms (ITR-1 through ITR-7) continue
• You will file these returns on the income tax e-filing portal at incometax.gov.in
• The new act will govern returns filed in 2027 onwards

IMPORTANT

The portal’s homepage has been redesigned to reflect the new act, but the filing process for AY 2026-27 remains under the old act. Don’t let the new interface confuse you.

ITR Filing Deadlines for AY 2026-27 (FY 2025-26)

A new deadline category has been introduced this year. Here is the complete deadline structure:

Deadline	Who It Applies To	ITR Form
31 July 2026	Individuals with no business/profession income and no audit requirement	ITR-1, ITR-2
31 August 2026 (NEW)	Individuals/HUFs with business/profession income but no audit requirement; Partners of firms (non-audit cases)	ITR-3, ITR-4
31 October 2026	All persons where tax audit is applicable	ITR-3 (audit cases)
31 December 2026	Belated return filing deadline	All forms
31 March 2027	Last date for revised return (with late fee under Sec 234I)	All forms

NOTE

The 31 August deadline is entirely new. Previously, non-audit business filers also had a 31 July deadline. This extra month provides breathing room for small business owners and professionals.

Key Takeaways

What Changed	Impact
Old Income Tax Act still applies for FY 2025-26 filings	No need to learn the new act yet
New deadline — 31 August added for ITR-3 & ITR-4 (non-audit)	Extra month for business filers
2 house properties now allowed in ITR-1 & ITR-4	Fewer filers need to upgrade to ITR-2
80G donations require transaction ref + IFSC code	Keep payment proof ready
F&O turnover & income reported separately in ITR-3	Clearer reporting for traders
Bank balance mandatory in ITR-4 financial particulars	Even no-books cases must report
Revised return after 31 Dec attracts late fee (Sec 234I)	Revise early to avoid penalty
₹12 lakh tax-free under new regime reflected in forms	Updated tax computation

 

ITR-1 (Sahaj) — Changes for AY 2026-27

Who Can File ITR-1?

ITR-1 is for Resident Individuals with total income up to ₹50 lakh from the following sources:

Income Source	Eligibility Criteria
Salary / Pension	Any amount (within ₹50L total)
House Property	Up to 2 properties (NEW — previously only 1)
Other Sources	Interest, dividends, etc.
Long-Term Capital Gain (Sec 112A)	Up to ₹1,25,000 only
Agricultural Income	Up to ₹5,000

Who CANNOT File ITR-1?

• Directors of a company
• Holders of unlisted equity shares
• Persons with TDS deducted under Section 194N (cash withdrawal)
• Holders of foreign assets
• NRIs (Non-Resident Indians)

What’s New in ITR-1 for 2026

1. Two House Properties Now Allowed

This is a significant relief. Previously, if you owned two house properties, you had to file ITR-2 even if all other conditions of ITR-1 were met. Now, ITR-1 supports reporting of up to 2 house properties, saving many taxpayers from unnecessarily complex filings.

2. Section 89A Relief Column Removed

Earlier, ITR-1 had a column for claiming relief under Section 89A (related to foreign retirement accounts). This was irrelevant because ITR-1 filers cannot hold foreign assets in the first place. The column has now been removed to avoid confusion.

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ITR-2 — Changes for AY 2026-27

Who Should File ITR-2?

ITR-2 is for individuals and HUFs who have income from:

• Salary
• Multiple house properties
• Capital gains (beyond ITR-1 limits)
• Foreign income or foreign assets
• Other sources

…but do not have income from business or profession.

What’s New in ITR-2 for 2026

1. Expanded Interest Income Bifurcation

The “Income from Other Sources” section now has more granular interest reporting:

Interest Category	Status
Interest from Savings Account	Existing
Interest from Deposits (FD/RD)	Existing
Interest from Income Tax Refund	Existing
Interest in the nature of pass-through income	Existing
Interest on Provident Fund (taxable portion)	Existing
Interest from Companies, NBFCs & HFCs	NEW

If you’ve earned interest from any company, NBFC (Non-Banking Financial Company), or HFC (Housing Finance Company), it must now be reported in a separate dedicated column instead of being clubbed under a generic “others” field.

2. Capital Gains Reporting Simplified

In FY 2024-25, the capital gains section had a split — transactions before 23 July 2024 and after 23 July 2024 — due to the mid-year tax rate change introduced in the Union Budget. For FY 2025-26, this bifurcation is no longer needed, and the capital gains schedule has been simplified back to a single reporting format.

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ITR-3 — Changes for AY 2026-27

Who Should File ITR-3?

ITR-3 is for individuals and HUFs who have:

• Income from business or profession (not eligible for presumptive taxation under Sec 44AD/44ADA/44AE)
• Income from salary, house property, capital gains, and other sources
• Partners in firms who also have other business income

What’s New in ITR-3 for 2026

1. Separate F&O (Futures & Options) Reporting

This is one of the most impactful changes for traders. Previously, Futures & Options income and turnover were reported together, often causing confusion during assessments and leading to unnecessary litigation.

Now, ITR-3 has two distinct fields:

Field	What to Report
Turnover from F&O Trading	Total turnover as per Sec 44AB guidelines
Income from F&O Trading	Net profit/loss from F&O transactions

This separation makes compliance clearer and reduces the chance of scrutiny due to misreported figures.

2. MSME Payment Disallowance Reporting

Under the MSME Development Act, if you delay payment to an MSME vendor:

• With agreement: Payment must be made within 45 days
• Without agreement: Payment must be made within 15 days

If payment is delayed:

• The expense is disallowed in that financial year
• Interest at 3× the RBI bank rate is charged on the delayed amount
• This interest is also disallowed in your P&L

ITR-3 now has a dedicated field to report the disallowed interest paid to MSMEs due to delayed payments. This was previously clubbed under general disallowances.

3. Enhanced Partnership Firm Reporting

If you are a partner in a firm, you now need to report additional details:

Detail	Status
Firm Name & PAN	Existing
Whether firm is liable for audit	Existing
Whether Sec 92E (Transfer Pricing) applies	Existing
Percentage share in profit	Existing
Amount of share in profit	Existing
Amount of Interest — Due vs Received	NEW
Amount of Remuneration — Due vs Received	NEW

The new columns for interest and remuneration (due vs received) help the department track timing differences and verify TDS compliance more effectively.

4. Simplified Auditor Details

Previously, extensive auditor information was required. Now, only the following is needed:

• Date of furnishing the audit report
• Acknowledgement number of audit report
• Name of the auditor
• Whether it’s a proprietorship or firm
• PAN or Aadhaar of the auditor’s proprietorship/firm

5. New 31 August Deadline Reflected

The form now accounts for the new 31 August deadline for non-audit cases, with all relevant date validations updated accordingly.

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ITR-4 (Sugam) — Changes for AY 2026-27

Who Should File ITR-4?

ITR-4 is for individuals, HUFs, and firms (other than LLPs) opting for presumptive taxation under:

• Section 44AD — Presumptive income for businesses
• Section 44ADA — Presumptive income for professionals
• Section 44AE — Presumptive income for goods carriage operators

What’s New in ITR-4 for 2026

1. Two House Properties Allowed (Same as ITR-1)

Just like ITR-1, ITR-4 now supports reporting of up to 2 house properties. Previously, having more than one house property would force you to file ITR-3.

2. Bank Balance Now Mandatory in Financial Particulars

This is a critical change for presumptive income filers.

In the “Financial Particulars” section (for cases where books of accounts are not maintained), the following fields are mandatory:

Sr. No.	Field	Mandatory?
15	Sundry Creditors	✅ Yes
18	Investments	❌ No (NEW field)
19	Inventories	✅ Yes
20	Sundry Debtors	✅ Yes
21	Balance with Banks	✅ Yes (was optional before)
22	Cash in Hand	✅ Yes

Previously, reporting your bank balance as of 31 March was optional — taxpayers could choose whether to disclose it. Now it is mandatory. Since even those who don’t maintain books of accounts have a bank account, the government has made this a required disclosure.

3. New “Investments” Field Added

A new optional field for declaring investments has been added to the financial particulars section. While not mandatory, this gives the department additional insight into asset accumulation.

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Changes Common to ALL ITR Forms (ITR-1 to ITR-7)

1. Secondary Address Option

All ITR forms now allow you to add a secondary address in addition to your primary address. This is optional but useful since ITR forms also serve as address proof in many cases. Previously, only one address could be reported (along with two email IDs and two mobile numbers).

2. Section 80G — Donation Deduction (Old Regime)

If you’re claiming deduction under Section 80G for donations under the old tax regime, two new mandatory fields have been added:

New Requirement	Details
Transaction Reference Number	Of the payment made (cheque, IMPS, NEFT, RTGS, UPI)
IFSC Code	Of the bank from which payment was made

TIP

Before filing, gather all donation receipts along with the corresponding bank transaction reference numbers and IFSC codes. This will save significant time during the filing process.

3. Section 80GGC — Political Party Donations

If you’ve donated to a political party, two new fields are now required:

New Requirement	Details
Political Party Name	Full registered name
PAN of Political Party	Required for verification
Transaction Reference Number	Of the payment
IFSC Code	Of the bank used

Previously, only the donation amount was needed without identifying the political party.

4. Late Fee for Revised Return — Section 234I (NEW)

This is an entirely new penalty provision. Here’s how it works:

Revision Timeline	Late Fee
Revised by 31 December 2026	❌ No late fee
Revised between 1 January – 31 March 2027	✅ Late fee applies

Late fee rates under Section 234I:

Total Income	Late Fee Amount
Up to ₹5 lakh	₹1,000
Above ₹5 lakh	₹5,000

WARNING

If you filed a belated return (under Sec 234F) and then revise it after 31 December, you may end up paying late fees twice — once for belated filing and once for late revision. Plan your filing carefully.

5. New Tax Regime Slabs Updated

The ITR forms now reflect the updated new tax regime slabs announced in Budget 2025, where income up to ₹12 lakh is effectively tax-free (including the standard deduction of ₹75,000 for salaried individuals).

6. Simplified Representative Assessee Details

When filing a return on behalf of another person (such as a deceased individual), the required details have been reduced to just:

• Name of the representative
• Email ID
• Contact number

Previously, much more extensive personal information was required.

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ITR Form Selection Guide — Quick Reference

Not sure which ITR form to file? Use this decision matrix:

Criteria	ITR-1	ITR-2	ITR-3	ITR-4
Resident Individual	✅	✅	✅	✅
NRI	❌	✅	✅	❌
Salary Income	✅	✅	✅	✅
House Property (1-2)	✅	✅	✅	✅
House Property (3+)	❌	✅	✅	❌
Capital Gains (LTCG ≤ ₹1.25L)	✅	✅	✅	✅
Capital Gains (above ₹1.25L / STCG)	❌	✅	✅	❌
Business/Profession Income	❌	❌	✅	✅*
F&O Trading Income	❌	❌	✅	❌
Presumptive Income (44AD/ADA/AE)	❌	❌	✅	✅
Foreign Assets / Income	❌	✅	✅	❌
Company Director	❌	✅	✅	❌
Unlisted Equity Shares	❌	✅	✅	❌
Total Income Limit	≤ ₹50L	No limit	No limit	≤ ₹50L
Filing Deadline	31 Jul	31 Jul	31 Aug / 31 Oct	31 Aug

*ITR-4 is only for presumptive taxation cases

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Frequently Asked Questions (FAQs)

Do I need to file ITR under the new Income Tax Act 2025?

No. The new Income Tax Act 2025 applies from Tax Year 2026-27 onwards. For FY 2025-26 (AY 2026-27), you must file under the old Income Tax Act, 1961. All existing sections and deductions remain applicable.

What is the new ITR filing deadline of 31 August 2026?

The government has introduced 31 August 2026 as the deadline for filing ITR-3 and ITR-4 in cases where no tax audit is applicable. This is a brand-new deadline that did not exist before.

Can I show 2 house properties in ITR-1 now?

Yes. Starting from AY 2026-27, ITR-1 and ITR-4 both allow reporting of up to 2 house properties. Previously, only 1 house property was permitted in these forms.

What extra details are needed for 80G donations in 2026?

You must now provide the transaction reference number (of your cheque, IMPS, NEFT, RTGS, or UPI payment) and the IFSC code of the bank from which the donation payment was made. This applies across all ITR forms.

What happens if I revise my ITR after 31 December 2026?

You can still revise your return until 31 March 2027, but a late fee under Section 234I will apply — ₹1,000 if income is up to ₹5 lakh, or ₹5,000 if income exceeds ₹5 lakh. If revised before 31 December, no late fee is charged.

Is bank balance reporting mandatory in ITR-4 now?

Yes. In the Financial Particulars section of ITR-4 (for no-books-of-accounts cases), bank balance as on 31 March is now mandatory. It was previously optional.

How is F&O income reported differently in ITR-3?

ITR-3 now has two separate fields — one for F&O turnover and one for F&O income/loss. Previously, these were clubbed together, which often created confusion during assessments.

What is Section 234I?

Section 234I is a new provision that imposes a late fee for furnishing a revised return of income after 31 December but before 31 March. The fee is ₹1,000 (income ≤ ₹5L) or ₹5,000 (income > ₹5L).

Has the income tax e-filing portal changed?

The homepage of incometax.gov.in has been redesigned to reflect the new Income Tax Act 2025, but the actual filing process for AY 2026-27 remains under the old act. The ITR forms will be available in the download section (Excel utilities first, then online filing).

What are the new requirements for political party donations (80GGC)?

You must now provide the name and PAN of the political party, along with the transaction reference number and IFSC code of your bank. Previously, party identification details were not required.

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Summary: Complete List of ITR Changes for FY 2025-26

Here’s every change at a glance:

1. ✅ Old Income Tax Act 1961 applies (not the new act)
2. ✅ New 31 August deadline for ITR-3/4 (non-audit)
3. ✅ 2 house properties allowed in ITR-1 & ITR-4
4. ✅ Secondary address option in all ITR forms
5. ✅ 80G donations: Transaction ref + IFSC now required
6. ✅ 80GGC: Political party name + PAN now required
7. ✅ Section 234I: Late fee for revised returns after 31 Dec
8. ✅ New regime slabs updated (₹12L tax-free)
9. ✅ Section 89A column removed from ITR-1 & ITR-4
10. ✅ Interest bifurcation expanded (Companies/NBFC/HFC)
11. ✅ Capital gains pre/post July 2024 split removed
12. ✅ F&O turnover & income separated in ITR-3
13. ✅ MSME disallowed interest — separate reporting
14. ✅ Partnership: Interest & remuneration (due vs received)
15. ✅ Auditor details simplified
16. ✅ Bank balance mandatory in ITR-4 financial particulars
17. ✅ New “Investments” field in ITR-4
18. ✅ Representative assessee details simplified