The Central Board of Direct Taxes (CBDT) has introduced several important changes in Income Tax Return (ITR) forms for Financial Year 2025-26 (Assessment Year 2026-27).
The new updates aim to make tax filing more transparent, simplify reporting, and improve compliance under the new tax regime.
Some of the biggest changes impact taxpayers filing ITR-1, ITR-3 and ITR-4, especially those earning through capital gains, business income, or Futures & Options (F&O) trading.
Here’s a simple breakdown of all the major changes taxpayers should know before filing returns next year.
Bigger Relief for Small Taxpayers Filing ITR-1 and ITR-4
ITR-1 (Sahaj) and ITR-4 (Sugam) are simplified tax return forms mainly used by salaried individuals, pensioners, and small businesses with income up to Rs 50 lakh.
One major relief is that taxpayers can now own up to two house properties and still file ITR-1 or ITR-4.
Earlier, these forms were allowed only for people with one house property.
This change is expected to help more middle-class taxpayers use the simpler return forms instead of shifting to more complex ITRs.
Another important change is related to foreign retirement accounts like US 401(k) plans.
Specific disclosure fields for such accounts have been removed from ITR-1 and ITR-4.
However, taxpayers with foreign assets or overseas retirement income may still need to file ITR-2 or ITR-3 because foreign asset reporting rules continue separately.
New Reporting Rules for Business Owners and Traders in ITR-3
ITR-3, mainly used by business owners, professionals, and active investors, has received several major updates.
One of the biggest changes affects Futures & Options (F&O) traders.
The revised form now asks taxpayers to separately report F&O turnover and related income in the trading account section.
This means traders will have to maintain clearer records and proper reconciliation of transactions.
The government has also introduced stricter reporting for delayed payments to Micro and Small Enterprises (MSMEs).
Taxpayers must now disclose interest paid on delayed payments that cannot be claimed as tax deductions.
Partners in partnership firms will also need to provide additional details such as:
Interest received from the partnership firm
Remuneration received from the partnership firm
These additions are meant to improve transparency in partnership income reporting.
Extended ITR Filing Deadline Brings Relief
A major change introduced through the Finance Act 2026 is the extension of the ITR filing due date.
For taxpayers engaged in business or profession whose accounts do not require audit, the deadline has been extended from July 31 to August 31.
This relief will mainly benefit small businesses, professionals, and partners in non-audit firms who often struggle to complete filings within the earlier timeline.
Important Changes in ITR-4 You Should Not Miss
The revised ITR-4 form now makes it compulsory for taxpayers to disclose all bank balances under Schedule BP.
Earlier, this disclosure was optional.
Now, taxpayers must report bank balance details along with other business-related financial information.
Tax experts say this change is aimed at improving financial transparency and reducing mismatch in reported business data.
Taxpayers still need to separately disclose all active Indian bank accounts under the bank account details section, excluding dormant accounts that have been inactive for more than three years.
New Donation Reporting Rules Under Section 80G
Taxpayers claiming deductions for donations under Section 80G will now have to provide more detailed information.
The updated forms require:
IFSC code of the bank
Transaction reference number for payments made through UPI, NEFT, RTGS, IMPS or cheque
Similarly, taxpayers claiming deduction under Section 80GGC for political donations must now disclose:
Name of the political party or electoral trust
PAN details of the political party
The government says these changes will improve transparency in donation-related deductions.
Capital Gains Reporting Gets Simpler
There is good news for investors as the government has removed the requirement to separately report capital gains earned before and after July 23, 2024.
This rule was earlier introduced because of transitional tax rate changes but is no longer relevant for AY 2026-27.
As a result, capital gains reporting in ITR-2 and ITR-3 becomes simpler and easier to manage.
New Rules for Interest Income Reporting
Taxpayers earning interest from:
Fixed deposits
NBFCs
Housing Finance Companies (HFCs)
Debentures
will now need to report this income under the “Other” section of Schedule OS if they are not involved in money-lending business.
A separate reporting field has also been added for interest income taxable at concessional rates under Section 194LC.
This is expected to help better matching of TDS credits and reduce tax mismatches.
Simpler Contact and Address Details in New ITR Forms
CBDT has also simplified personal information reporting in the revised ITR forms.
Representative assessees now only need to provide:
Name
Email ID
Contact number
Earlier, PAN, Aadhaar and detailed address information were also required.
Additionally, the new forms now include:
Secondary address field
Primary and secondary mobile numbers
Primary and secondary email IDs
These updates are aimed at improving communication and making taxpayer details more organised.
What These Changes Mean for Taxpayers
The new ITR forms for FY 2025-26 focus heavily on better transparency, cleaner reporting, and simplified filing for small taxpayers.
At the same time, the government is tightening disclosures for traders, businesses, and taxpayers claiming deductions.
Experts believe taxpayers should carefully review the new reporting requirements before filing returns next year to avoid errors, notices, or delays in processing refunds.
