The revised ITR-1, ITR-2, ITR-3 and ITR-4 forms aim to improve transparency, simplify compliance and allow closer tracking of high-value transactions through stronger data matching with official records such as AIS, TDS filings and GST data.
While the filing utilities are yet to go live on the income tax portal, taxpayers filing returns for income earned between April 1, 2025 and March 31, 2026 will need to prepare for more detailed disclosures this year.
What has changed in the new ITR forms?
The updated forms seek wider reporting of long-term capital gains (LTCG), buyback-related losses, Futures & Options (F&O) trades, intraday trading income, crypto transactions, foreign assets and other high-value financial activities.
Tax experts say the changes reflect the department’s growing focus on cross-verification of taxpayer disclosures with financial data already available to authorities.
Relief for taxpayers using ITR-1
One of the key changes in ITR-1 (Sahaj) is that taxpayers can now report income from up to two house properties under the simplified return form. Earlier, the form carried tighter restrictions on such reporting.
The form also allows disclosure of long-term capital gains under Section 112A up to ₹1.25 lakh, bringing limited capital gains reporting within the simpler filing structure.
ITR-2 removes separate capital gains breakup
Taxpayers filing ITR-2 will no longer have to separately disclose capital gains earned before and after July 23, 2024, easing a compliance burden introduced earlier.
However, the form simultaneously expands reporting requirements for foreign assets, overseas income, crypto holdings and deduction claims. The revised forms also introduce a secondary address and contact field for improved communication tracking.
Traders and professionals face tighter disclosures in ITR-3
The updated ITR-3 form introduces more granular reporting for speculative income, F&O trades, intraday transactions and buyback-related capital losses.
The government has also strengthened reconciliation requirements between books of accounts, GST turnover, TDS records and data reflected in Annual Information Statements (AIS) and Taxpayer Information Summaries (TIS).
This means traders and professionals may need to ensure closer alignment between their reported income and financial transaction records.
Banking disclosures increase in ITR-4
For taxpayers filing ITR-4 (Sugam) under presumptive taxation schemes, the revised format seeks additional banking-related disclosures, including mandatory reporting of bank balances in certain cases.
The form also requires taxpayers claiming specified deductions to link prescribed forms such as Form 10BA before filing returns.
Who should file which ITR form?
ITR-1 is meant for resident individuals earning up to ₹50 lakh from salary, pension, house property and specified capital gains.
ITR-2 applies to individuals and Hindu Undivided Families (HUFs) without business income but with capital gains, foreign assets or multiple income streams.
ITR-3 is designed for business owners, professionals and traders earning business or professional income outside presumptive taxation schemes.
ITR-4 is applicable to small businesses, freelancers and professionals opting for presumptive taxation under Sections 44AD, 44ADA and 44AE.
No change in income tax slabs
The revised ITR framework follows the notification of the Income-Tax Rules, 2026 by the Central Board of Direct Taxes (CBDT) earlier this year as part of the rollout of the Income Tax Act, 2025.
However, the government has not changed income tax slab rates under either the old or the new tax regime.
