India Revises ITR Forms for AY2026-27, Impacts Salaried and Small Businesses

The Indian tax authorities have announced revisions to key Income Tax Return (ITR) forms for Assessment Year 2026-27, specifically affecting ITR-1, ITR-2, and ITR-4. These changes necessitate taxpayers to meticulously review their income sources and understand the updated compliance requirements to ensure accurate filing and avoid potential discrepancies with the tax department. ITR-1, also known as Sahaj, is primarily used by salaried individuals and pensioners whose total income does not exceed ₹50 lakh and who do not have income from capital gains or business/profession. ITR-2 is for individuals and Hindu Undivided Families (HUFs) not carrying out business or profession, but who may have capital gains, foreign assets, or agricultural income above ₹5,000. ITR-4, or Sugam, caters to individuals, HUFs, and firms (other than LLPs) opting for the presumptive taxation scheme under sections 44AD, 44ADA, or 44AE, with a total income up to ₹50 lakh. The revisions underscore a continuous effort by the tax administration to streamline the filing process while potentially integrating new data points or clarifying existing categories for income and deductions. For the vast majority of salaried employees and small business owners, understanding these nuances will be critical. The filing deadline for individuals and non-audited entities remains July 31, 2026, for the corresponding financial year. Failure to adapt to these updated forms could lead to processing delays or notices from the tax department, potentially incurring penalties.