ITR filing AY 2026-27: From unrealised rent to two house properties -- key changes taxpayers must know

The Income Tax Department has begun the phased rollout of online filing and Excel utilities for ITR-1, ITR-2 and ITR-4 on the e-filing portal for Assessment Year (AY) 2026-27. With the utilities now available, taxpayers can start filing income tax returns for Financial Year (FY) 2025-26.

While the annual tax filing process may appear routine, several important changes in ITR forms and disclosure requirements could impact how individuals, salaried employees, landlords, and small business owners file their returns this year.

Here's a point-by-point look at the key changes for AY 2026-27:

1. Unrealised rent

A significant change has been introduced for taxpayers earning rental income.

For AY 2026-27, ITR-1 and ITR-4 forms now include a dedicated field titled "The amount of rent which cannot be realized."

This provision is aimed at landlords who were unable to recover rent from tenants during the financial year. Earlier, there was no separate field to disclose unrealised rent, making reporting less transparent.

The addition is expected to improve clarity and help taxpayers accurately report rental income and deductions.

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2. Two houses

One of the biggest relief measures this year is for individuals who own two residential properties.

Taxpayers can now report income from up to two house properties while continuing to use simpler return forms such as ITR-1 and ITR-4, subject to eligibility conditions.

Previously, many taxpayers with two homes were often required to shift to more complex return forms, increasing compliance requirements.

The change is particularly beneficial for salaried individuals who may own a self-occupied home and an additional residential property.

3. Old Capital Gains

The government has simplified capital gains reporting requirements in the latest ITR forms.

For AY 2025-26, taxpayers had to separately report capital gains arising from transactions executed before and after July 23, 2024, due to changes introduced in the Union Budget.

Different tax rates applied during different periods, creating confusion for many investors.

According to tax platform ClearTax, the earlier capital gains tax rates applicable to listed equity shares—15% for short-term capital gains (STCG) and 10% for long-term capital gains (LTCG)—are no longer relevant for FY 2025-26 reporting.

As a result, the separate reporting fields linked to those earlier rates have been removed from the relevant ITR forms, making return filing simpler for investors.

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4. Mandatory disclosure

A new compliance requirement has been introduced for taxpayers filing ITR-4.

For AY 2026-27, individuals opting for the presumptive taxation scheme under ITR-4 must now disclose details of:

Investments
Bank balances

The move is expected to improve transparency and provide tax authorities with a clearer picture of taxpayers' financial positions.

Taxpayers using the presumptive taxation regime should ensure that their financial records are updated before filing returns.

5. Section 89A relief

Another notable change relates to taxpayers holding foreign retirement accounts.

Section 89A allows eligible Indian residents to claim relief from double taxation on income accrued in specified foreign retirement benefit accounts.

For AY 2026-27:

The option to claim Section 89A relief has been removed from ITR-1 and ITR-4.
Such claims can now be made only through ITR-2 and ITR-3.

Tax experts say this move simplifies ITR-1 and ITR-4 forms while ensuring that taxpayers with more complex foreign income situations use the appropriate return forms.

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6. Donations under Section 80G

Taxpayers claiming deductions for charitable donations under Section 80G will now have to furnish additional information.

The new details required include:

Transaction Reference Number
IFSC Code of the Bank

The enhanced disclosure norms are aimed at improving verification and reducing the scope for incorrect deduction claims.

Individuals planning to claim donation-related tax benefits should retain all payment receipts and banking records.

7. Donations to political parties

Taxpayers claiming deductions for donations made to political parties will also face stricter reporting requirements.

The following details must now be disclosed:

Name of the Political Party
PAN of the Political Party

The change is intended to strengthen transparency and improve audit trails for such deductions.

8. Representative assessee filings

All ITR forms now include a new reporting field indicating whether the return is being filed by a representative assessee.

A representative assessee may file returns on behalf of another taxpayer in specific situations, such as for minors, deceased persons, non-residents, or individuals unable to file returns themselves.

The addition is expected to improve identification and tracking of such filings.

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What taxpayers should do

With ITR utilities now available, taxpayers should review the revised forms carefully before filing. Landlords, investors, presumptive taxpayers, and individuals claiming deductions should pay particular attention to the new disclosure requirements.

The changes are aimed at simplifying return filing in some areas while increasing transparency and reporting accuracy in others. Filing with complete documentation and verifying eligibility under the correct ITR form can help avoid notices, processing delays, or deduction mismatches later.